Could Smart Label help restore consumer loyalty?

By Elizabeth Crawford

- Last updated on GMT

Source: Smart Label
Source: Smart Label

Related tags Consumers Label

Widespread confusion about how packaged foods are made and labeled is eroding consumer trust in brands and threatening future product sales, according to new research from Label Insight.

The data company’s Food Revolution Study of more than 1,500 consumers conducted in the US in April reveals more than a third of people admitted they are sometimes confused by what food labels mean and at some point in the prior month more than 80% consumed at least one ingredient that they did not recognize.

“That confusion is causing fractures in the trust relationship that consumers have with the brands they buy,”​ Patrick Moorhead, chief marketing officer for Label Insight, said during a Sept. 27 webinar.

He explained that “an alarming … three-quarters of people don’t trust the accuracy and completeness of food labels.”

He added that the juxtaposition of this finding with the one that 94% of respondents also said that it is important to them that brands and manufacturers are transparent about what’s in their food explains how a significant 37% of consumers say they would switch brands if another brand shared more detailed product information.

“Loyalty is up for grabs, and the way to win is to provide consumers with the detailed product information that they are asking for and expecting brand manufacturers to provide them,”​ Moorhead said, adding that “loyalty drives long term value and purchases.”

What consumers want to know

Much of the top information that consumers want about products is mandated to be on labels by the FDA, including a full list of ingredients, which 71% of shoppers said they want before making a purchase decision, according to Label Insight’s survey.

But simply complying with the regulation is not enough, because consumers also want to understand what each of those ingredients are, what they do in the product and where the ingredient was sourced, according to the survey.

Specifically, it found 83% of consumers surveyed would find value in having access to more in-depth product information. This includes where the product was made, which 54% of respondents cited as important, and how it fits into a specific diet, which 53% say they consider when shopping.

Obviously, real estate on product labels and packaging is limited, but if brands don’t provide this information they either will lose sales or consumers will look elsewhere for answers and the brand will lose control of its messaging, Moorhead warned.

“We live in a world where consumers demand and expect instant information and, like water in the foundation of a building it will get in, and consumers will find the information that they want whether or not we provide it to them,”​ he said.

“Often today, the gap in this product information is leading third party sources to have inaccurate, unstructured and potentially derogatory information about the product,”​ he added.

Digital labels offer one solution

Manufacturers can retain control of their messaging and provide consumers with the information that they want without cluttering packaging by offering easy-to-find digital labels, Moorhead said.

He explained that when asked what would make grocery shopping easier, consumers ranked digital labels that offer extended product information the highest at 27%. This was followed closely by the ability to order (and ostensibly research) online and pickup in the store, which was listed by 26% of respondents, and dedicated in-store sections that include only items that meet certain dietary restrictions, which was listed by 24% of respondents.

Smart Label is perhaps the most high-profile, and hotly contested, solution to offering digital labels. Provided by Label Insight, Smart Label technology can help manufacturers label more than 17,000 attributes per product and tap into a library of more than 250,000 ingredient definitions that can help consumers understand what they are eating.

One of the most debated elements of a Smart Label is the use by some companies of QR codes on packaging that consumers can scan in stores to pull up more information on their smart phones. Designers often complain that QR codes detract from package aesthetics and some manufacturers doubt that consumers would actually use them in the store, given that they often make product selections in a few seconds.

But Moorhead says there are other ways to connect consumers to Smart Labels. One of the most effective ways, he says, is to change the Internet landing pages for each brand to a Smart Label page so that when consumers research a product by visiting its webpage they have all the data they need.

Another option, Moorhead said, was to have Smart Labels linked to UPC codes or other images on packages that when scanned by the consumer will pull up information on the shopper’s phone. This would act much like the QR code, but in a less visually disruptive fashion, he said.

Go beyond physical packaging

No matter how manufacturers direct consumers to Smart Label pages, the most effective ones are those that go beyond mere replicas of the Nutrition Facts Label and data on product packages, Moorhead said.

He explained: “Restoring consumer trust through transparency is about more than creating product replicas of labels online. This is the opportunity for brands to claim their information, tell the story about the hows and whys of their product, provide it to consumers in the way they prefer it and digitally unlock that loyalty from increased transparency.”

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