Sustainability Series: Part4
Customer is still very much part of the sustainability equation
In part-1 of the series, we introduced the problem and acknowledged the challenges of climate change along with the need to walk towards sustainable development. In part-2 of the series, we focused on how organizations can increase their sustainability engagement. We also discussed a six-step process for introducing sustainability benchmarking while maintaining long-term value creation. In part-3 of the series, we discussed evaluating the sustainable performance across the value-chain of an organization.
In the last part of this series, we will converge on the journey of the an important stakeholder of the system — you can call him a customer, a consumer, a buyer, or a decision-maker.
Let us understand better by asking the WHY, the WHO, and the HOW about customers in this equation.
The WHY: Why should businesses factor-in the customer while adopting sustainable business strategies?
To pick-up speed in this climate change race, we need to do a relay race than sprinting. Granting only policymakers to impose penalties, premiums, and policies could make the whole operations fear-driven. Fear as a trigger for such radical change in a short period will not have a long-term effect. Instead, we should improve awareness and empower people to make the right decision. Moser¹ argues that fear can cause attitude and behavioral change but only in situations where the individuals feel personally “at risk,” among other factors. While empowering people with the right information will provide them access to foster sustainable lifestyle changes, creating an impact at an individual level for climate and to invest in climate-positive companies and climate-positive products, creating a revenue feedback loop for your companies.
Supply and demand still rule the market. Moreover, consumers’ buying-power plays a vital role in this equation. The end customers need to send demand signals for sustainable products and sustainable companies to the market. Moreover, the current trends show that corporate sustainability is in high demand across gender and generations. While customers have the intention to support climate-positive brands, we need to do more to close the intention-action gap.
Furthermore, capturing this trend would also allow the business to gain newer market share by converting sustainability-minded customers, which leads to an important question.
THE WHO: Who are these customers? Do they exist?
To better understand how consumer preferences and priorities keep changing, as well as the resulting impacts on brands, the IBM Institute for Business Value (IBV), in association with the National Retail Federation, conducted a research study of 18,980 consumers in 28 countries³. The results were very similar to the Global Confidence Survey conducted by the conference board regarding sustainability, environmental, and/or personal wellness attributes being significant factors in selecting brands across age groups.
81% of the respondent worldwide belong to one of two shopper segments: Value-driven consumer (41%) who want good value and Purpose-driven consumer (40%) who seeks products and services aligned with their values. While 57% of consumers are willing to change their purchasing habits to help reduce negative environmental impact, 71% of those who indicated that traceability is valued were willing to pay a premium price for the brands they provide it.
Consumers prioritize companies that are sustainable, transparent, and aligned with their core values when making decisions. They’re willing to pay more and even change their buying habits for brands that get it right².
THE HOW: How can we empower customers throughout their journey?
Earning customers’ confidence through transparency and traceability is the main observation that I took from this survey. Customers would see right through phony, vague claims about sustainability. For consumer products, providing product information, traceability of production methods, and source material allows greater transparency.
But what makes the most difference is when you are there to anticipate your customers’ needs and make their journey non-elusive. To harness these effects, companies should focus on conveying the sustainability message in 5 areas: Strategic commitments, Value-chain management, Innovation, Environmental Performance, and Social Responsibility.
Each of these areas engages in educating the public on what specific actions your company is taking to reduce environmental impact and why these actions make a difference. Recently, I came up with a strategy to perform a benchmark ranking activity for sustainable product companies.
For OneCommunityGlobal, a global teacher/demonstration hub that provides research, blueprints, and necessary support for sustainable and fulfilling living experience everywhere, a ranking system was created by considering five indices within each of the above categories.
The 5 indices are 1) Having a sustainability section on the website, 2) a sustainability report available for the public, 3) sustainability goals of the company,4) sustainability initiates, and 5) partnerships and collaborations with other sustainable organizations all allows you to tell your sustainability story. As mentioned in part2 of the series — While communicating, transparency is the key. Having more initiatives and partnerships to create awareness and engage with the customer during their sustainable decisions journey will empower them to make smarter choices, making them your valuable advocate.
People say they want sustainable choices, but how do we ensure they choose one?
Although branding plays an important role here, branding alone does not help an uninformed customer differentiating between greenwashed and climate-positive investments. What re-inforces the brand and closes the intention-action gap is when an individual can engage in sustainable conversation along his decision journey. Every day, people make hundreds of decisions, whether they are small or big. Decisions such as electing policymakers, the strategic direction of the company, eating habits, travel plans, fashion, or investments (the list continues) provide opportunities to make better-informed and sustainable choices. Furthermore, allowing smart businesses to maintain a competitive advantage by making the journey of its customers non-elusive.
Finally, it brings us to a full circle. When Profit and purpose go hand-in-hand, results will be showed. When companies measure, capture, and improve their sustainable performance with a data-driven strategy, a long-term value creation happens, allowing them to maintain their competitive advantage and create newer opportunities. Flourishing the customer relationships posts point of sale and empowering them with information to make smarter decisions brings us one step closer to addressing the problem of climate change.
For Part1 Part 2, and Part 3 of the article.
[1] : Moser SC. More bad news: The risk of neglecting emotional responses to climate change information. In: Moser SC, Dilling L, editors. Creating a Climate for Change: Communicating Climate Change and Facilitating Social Change. Cambridge, UK: Cambridge University Press; 2007. pp. 64–80. [Google Scholar]
[2] : Park, Leslie (January 10, 2020) IBM Study: Purpose and Provenance Drive Bigger Profits for Consumer Goods In 2020 https://newsroom.ibm.com/2020-01-10-IBM-Study-Purpose-and-Provenance-Drive-Bigger-Profits-for-Consumer-Goods-In-2020
[3] : Haller,Karl, Lee,Jim, and Cheung, Jane ( Accessed on March 10, 2020) Meet the 2020 consumers driving change https://www.ibm.com/downloads/cas/EXK4XKX8
