Customer experience (CX) is a key differentiator and primary driver for business success. Huge investment goes into increasing loyalty and customer lifetime value. But increasingly, a company’s values and actions, in particular sustainability, are playing a part in consumer demand.
The trend is clear – a study shows that between 2015 and 2019, green marketed products contributed an outsize share of consumer goods growth in the US.
Conscientious consumers want to know that their services and product choices have a positive sustainable impact. Therefore, forward-thinking businesses are using sustainability as a powerful lever to increase customer loyalty and consumer spending. And when businesses get this right, performance benefits, and so does the planet. It’s a win-win.
To appreciate where sustainability fits into consumer demand, we need to understand that several factors such as price, quality, convenience, and speed come into play. Whilst sustainability is increasingly important to customers, 55% of consumers say they still base their purchasing decisions on convenience and cost over sustainability and environmental impact, according to a PFS report.
This is sometimes referred to as the ‘green gap’ – the difference between consumer intentions and what they actually buy. However, many organisations are finding success in their attempts to reduce this green gap.
An important part of this success story comes from the role that sustainability plays in generating a stronger emotional response and deeper engagement from new and current customers. A great example of this is the Adidas X Parley shoes, which are produced from the equivalent 11 plastic bottles collected from the Indian Ocean and Caribbean Sea. The shoes were first produced in 2015 and by 2020, Adidas had sold in excess of 30 million shoes at around £170 per pair. Conscious customers saw that Adidas were able to produce high quality shoes that were also having a positive sustainable impact through their more sustainable product design, and were willing to pay the difference in price for a product that better aligned with their values.
For organisations to develop successful sustainable products and services, they will need to carefully manage the impact to the customer experience. The key here is to minimise any negative impact on price, quality, and convenience, whilst using the sustainability lever to maximise the benefits of driving value alignment with customers to create brand advocates.
In parallel, organisations need to manage the internal trade-off between generating customer demand and creating a positive impact on the planet, with business feasibility and viability in terms of cost, operations, and technology.
This new way of thinking and driving innovation is nicely summarised in this circular economy model introduced by the Board of Innovation ‘How to hit the innovation sweet spot’.
Some organisations are leading in this space and reaping the benefits. Tesla for example, has nailed a sustainable value proposition that is right in the centre of the innovation sweet spot and is bearing fruit with a soaring market valuation (more than Toyota, Ford, and Volkswagen combined).
A few characteristics that bring to life Tesla’s successful value proposition include:
To bring sustainability into your CX, you need to take a step back, look at end-to-end value streams, and reflect on and adapt your business model.
Consumer expectations, employee sentiment, and wider government regulations mean that every organisation needs to consider how they bring sustainability into their organisations and their customer experiences. Considering this, here are a few final tips:
If you would like to see more of our thinking or listen to our Sustainability podcasts, click here.