Are your sustainable initiatives delivering the best ROI? photo

Are Your Sustainability Initiatives Delivering the Best ROI?

Shari Aaron, Radius Insights, Radius Global Market Research 2021/08/shari-aaron-bio.jpg

by Shari Aaron

SVP, Growth & Innovation

Every brand is seeking to reduce its footprint on the planet. For some brands, especially those who have a presence in Europe, they are required to take action on reducing plastic and carbon usage because of government regulations. Other organizations are facing pressure from investors or lobbying groups. But primarily, the overriding factor in developing new sustainability initiatives is consumer demand across all demographics and shoppers.

CEOs and boards understand that having sustainable products, services, and processes is the “greens fee” (pardon the pun) for operating in today’s consumer marketplace. These executives, along with their brand teams, fear that sustainability and profitability are not compatible. Yet there is evidence that sustainability does pay off in terms of company performance. For example, a recent McKinsey article outlined how sustainability has been a growth driver for brands, and those marketed as sustainable have been growing five to six times faster than those brands that have not imbedded a sustainable benefit in the product.

Executives, along with their brand teams, fear that sustainability and profitability are not compatible. Yet there is evidence that sustainability does pay off in term’s company performance.”

 

We know from our research studies as well as industry-specific studies that consumers are willing to pay more for sustainable products which often do come at a price premium due to sourcing issues and supply chain logistics. This is the core sustainability challenge for brand marketers: which consumers want a sustainable benefit and are willing to be loyal to the brand because of it, even if it means paying more? Just as there is no one beverage or cosmetics consumer, there is no one sustainability consumer either. Some consumers are further along the sustainability journey, especially Gen Z consumers who are very concerned with the changing climate change and depletion of natural resources, and believe it is the responsibility of companies to fix the issues. On the other end of the spectrum, there are consumers who are climate change doubters, but issues around protecting wildlife and water resources resonate deeply with them.

 

Are your sustainable initiatives delivering the best ROI? - inset image

This is the core sustainability challenge for brand marketers: which consumers want a sustainable benefit and are willing to be loyal to the brand because of it, even if it means paying more? Just as there is no one beverage or cosmetics consumer, there is no one sustainability consumer either.”

 

Brand teams that deeply understand where their consumers fall on the sustainability spectrum will be able to make smarter strategic decisions on what specific sustainability elements to add to packaging and product development. Before heavily investing in new factories, processes, and ingredients to deliver on sustainability, company executives and brand teams should start first with understanding what sustainable factors consumers care about most, and then ask what is doable and affordable to drive more brand loyalty and sales? Energy and resources should be put into sustainable initiatives that matter most to consumers. Some consumers may care more about a change in food ingredients while others want to see a major reduction in plastic usage in packaging.

Brand teams have a great opportunity and responsibility to provide R&D, product development, and innovation teams with a rigorous and granular analysis of the sustainability motivations and preferences of consumers. These insights will lead to new offerings and messaging that will resonate with consumers. With a consumer sustainability spectrum as a guiding tool, brands can focus on the key areas where they can make a meaningful difference with sustainable offerings while still delivering profitable growth.

Contact us to learn more about creating a consumer sustainability spectrum for your brand.

Learn how we created one for a leading food and beverage retailer.