Will Sustainability Outgrow its Binky?
As readers of this blog already know, I had the opportunity to speak at the Sustainable Brands conference this past week. We shared our latest research in this space – which was well received by the way. We also had the opportunity to hear from other research firms about their findings. Of further interest, we heard what companies are learning from their own internal research endeavors.
Personally, I found the entire experience absolutely fascinating! As someone who lived and worked through the environmental movement of the early ‘90’s I was very interested to see how this latest resurrection of the green theme was actually being implemented within companies. The environmental movement of the early ‘90’s was predominantly regulatory driven with environmental science companies springing up practically overnight to handle the testing requirements of new regulation applied to the construction industry. Given this focus, there was not a lot of reason for anyone outside of the development community to attempt to understand the movement, let alone change their own business practices.
It looks like this time around, the environmental movement part two (sustainability) might actually stick!
In a way, it is another story of the chicken or the egg – which comes first? There are three primary areas of convergence that have to work in tandem in order for a “trend” to actually reach the momentum necessary to be viable for business. I believe I witnessed factors that showed this convergence is happening in the area of sustainability and creating real dynanicism and momentum.
Technology Provides Options
Throughout the conference, every so often you heard the cry – especially from international attendees – that doing sustainability or going green has to cost more money and therefore must be more expensive to the end consumer. The wringing of hands occurred as to “how do we get the consumer to buy off on this and understand they need to pay more for a ‘better-for-the-environment’ product.” This message has not been lost on consumers in the U.S. From a number of studies, including our own, the percentage of U.S. consumers who think green costs extra ranges from 67 percent to 74 percent. This is one of the major barriers to broad market acceptance of most green initiatives in the U.S.
I am happy to report that technology is once again changing the economic realities of the monetary equation in going green and establishing a strong sustainability presence. In fact, technological advancements in many areas are allowing companies to produce and introduce innovative, sustainable products to their end-markets – without charging extra! This is breaching a major barrier from the past and was very encouraging to see.
Business is Experiencing Real Benefits
Some say business has been reticent to move on sustainability initiatives because the consumer has not been ready. Well, our own research, which we unveiled at the conference, proves this is not the case and has not been the case for quite some time.
Let’s be honest, much like the commitment to customer experience which I have been preaching from the advocacy pulpit for over two decades, there are times when businesses just do not want to take action that can be seen as taking a risk. “We’re doing just fine and have been for years,” “I’ve never talked to them before.” These are just a few of the excuses we have heard about not committing to a long-term focus on customer experience.
While the excuses are different for sustainability, they flow freely from the tips of executives’ tongues. However, given time, enough of the case studies we were privy to this past week will start filtering through the business community. Once that happens in enough quantity, I believe we will pass a threshold where the discussion can mirror that of the adoption of online.
The questions will be: how did your company make that move? What was the trigger point for acceptance throughout the company? What are the communication mechanisms and messages that worked best for you? These will be only some of the questions the majority of businesses will start asking in the very near future.
What are some of the benefits to business?
It starts with the fact that business as usual is more costly than changing to today’s sustainable alternatives. The poster child for this fact is Wal Mart. They saved $10 billion dollars (that’s straight to the bottom line dollars) through changing their packaging requirements throughout the company.
It moves through to the consumer as companies start to realize sustainability must be one of the lenses through which they view their business – from their consumer’s eyes. The impact of this results in a ratio of more impact in a negative direction than positive but the point is, if you don’t know where your brand is positioned on the elements of sustainability you lose by default. It was demonstrated that a one percent increase in brand for sustainability (presented well) resulted in an increase of $8.7 million in revenue. Inversely, a decrease in brand for sustainability (poorly applied and messaged = green washing) cost the company $24.4 million in revenues.
This is very similar to what we discovered in consumers’ response to a company’s online efforts. The negative backlash against online efforts done poorly was three to four times as severe as the positive response to online efforts done well. The primary point in all this is we have reached a tipping point where the consumer will reward companies for doing sustainability very well and inversely, they will punish companies severely for doing it poorly. This is a critical juncture that has to take place before the lemming nature of business leadership kicks in and executives feel comfortable that the rules of the new paradigm fit that of a more traditional ROI model.
Finally, there is one often overlooked impact which all businesses will soon have to face. This is indeed a trend encompassed by a whole lot of other research data the likes of which most companies have a hard time digesting. This is the ability to woo top talent from the younger workforce to meet tomorrow’s demands.
There is no question the younger generation is seeking a new set of requirements from the companies they chose to work for. Green or sustainable initiatives are theoretically set in a new standard of transparency and authenticity. Two characteristics very appealing to the younger up and coming workforce. Two characteristics which traditional and established companies have not been very good at implementing.
Customer Experience Is Critically Important
I absolutely LOVED this part of the conference! No matter who was speaking, no matter the company they were representing or what process they were highlighting – the terms “market research” and “customer experience” were freely and unashamedly used as a central component to describe the what, why, and how’s of sustainability.
It was like watching an industry in its infant stage realizing a truth I have forced down the throats of industries for over two decades. The good news for me – all the leaders at this conference got it! Already!
They realize the required buy-in for future success of their initiatives rests solely on the consumer’s response to their initiatives.
If we look at it through the eyes of past “movements” it’s a strange combination of the Total Quality Management (TQM) movement and the online paradigm shift. TQM because companies realize a cost savings benefit. But, as I said during the heyday of TQM, no company ever paved their way to industry supremacy through cost savings alone. While providing a company much needed bottom line impact, there is a limit to the benefits of cost-savings. At some point, you have to make a statement and grow, something not accomplished through cost-savings.
It’s eerily similar in nature to the changes in consumer behavior brought on by the advent of the internet and online everything. However, this time, while technology is providing businesses the ability to conduct innovation, the real change is taking place in consumer’s attitudes first and then followed by actions, much the same manner which consumers took to the internet.
The challenge not adequately addressed by companies present at the conference – the what, why and how of holding marketing accountable for doing a good job of selling a company’s benefits to consumers of their green or sustainable endeavors. However, unlike in the past, this time, the convergence of focus on three key areas: technology, business benefits and customer experience – gives rise to optimism that sustainability in some form will impact and change business moving forward in lasting way. Only time will tell whether this wave can weather the impact of hostile economic conditions that helped derail the environmental movement of the early ‘90’s, but there is much that provides a strong indication that your company, if you work for one, will soon be wrestling with the issue of sustainability and it’s impact.
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Where “CUSTOMER EXPERIENCE” Came From
I promised the answer to the previous question of where did “customer experience” come from – and here it is.
In the very early days of the internet, we worked with a company called PointCast. If you remember that far back in the formation of the internet – Prodigy was one of the leading online service providers, dial-up was the only way to get online and there were a mere 5 to 6 million people online in total, most of whom sat in cubicles at Fortune 1000 firms – than you undoubtedly were aware of PointCast. They were one of the first companies to “push” content across the net to individuals. Their content was in essence “streamed” in real-time to users who wanted to stay immediately up to date on news-bites of importance to them.
Since their technology clogged company networks because of bandwidth requirements, IT departments began blocking access to PointCast’s content streams to preserve internal bandwidth for mission critical applications. This led to their early demise. Today, we gratefully realize the success of their concept every time we use simpler executions of push technology such as RSS feeds.
All that background to say that in conducting user experience research for PointCast, we realized a very important relationship that was to hold true in all our studies regarding electronic interactivity since that time. Unlike any other form of interaction we studied – whether retail buying, banking through tellers or self-service kiosks, conducting business via telephone, professional business service interaction, or even software applications (we have studied them all) – there was a very special linkage between the person using an electronic interaction on the internet and the ability of that interaction to effect change in behavior.
In other words, if you made a change to an internet-based application, you could predict quite accurately whether that change would impact actual behavior and to what degree. In statistical terms, the relationship between meaningful improvements made in an internet process (website efficiency, shopping cart close rates, registration process, etc.) was 85% likely to cause the desired change in actual behavior.
To anyone reading this who thinks this is not a stunning number, realize there are entire business lifecycles, econometric models, government planning departments, and pundits who have made very good livings off of understanding that the simple correlative relationship between a person’s education level and their future household earning level is roughly 55%.
In brick and mortar retail buying, the relationship between what a store does between their walls (remodeling, discounting, etc) and the impact on buying behavior is a mere 22% on average. In efficacy of advertising dollars, the ability to pinpoint effectiveness of a campaign to desired results is considered strong if it can be proven to be 50% related. In B2B buying decisions regarding professional services, the correlative (and yes, I’ll use the term causal) relationship could be pushed to 63% within a captive, discrete target audience in a regulated environment. So, put in terms of the world as we knew it at that time, the finding of the depth and breadth of relationship between what occurred online and what a person actually did as a result of that was, and in some cases still is, revolutionary!
It took a special company to make the rest of the world sit up and take notice that this formulaic relationship was not only statistically valid but also very meaningful from a business perspective. Of course, I’m talking about that little start-up in our great Pacific Northwest – Amazon.com.
When we started working with their first Vice President of Marketing, the discussion on the table was whether sufficient numbers of people would buy books online. In hindsight it may seem like a ridiculous thing to ponder, but at that time the prevailing theory on book buying was that an individual HAD to feel the book and flip through the pages prior to buying it. After a few months, that argument was proven false and the discussion then turned to “what else will people buy online?” The rest, as they say, is history.
It was during this early time in the internet world that, between our clients and us, the phrase used to describe this tight correlation between a person’s actions or behavior and their response to the functionality of an online interaction was deemed the “customer experience.” We won’t argue if our clients want to say they came up with the term, they know we were there in the room at the same time:-) Today, if you listen to an interview with Jeff Bezos where he is asked the mission of Amazon.com, you will hear something like this; “our mission is to provide the optimal customer experience at every point of contact a customer makes with our company.”
Now you know what that means and why he’s so passionate about it. It makes great business sense, explains their growth curve to today, and there is rock solid proof behind the theory.
This relationship between online interaction and end-user behavior was so strong that it led to misguided early claims about website efficacy, published predominantly by interactive agencies of the day. Time and advances in online technology capabilities have shown the waywardness of those early claims. The relative success (i.e. increased page views, increased time spent on site, other “hard” metrics, etc.) early in the adoption of websites was oftentimes incorrectly credited to a mastery of the redesign itself rather than understanding the impact of the halo effect occurring across all websites at the time driven by this tight correlation between action, behavior and website functionality. The majority of redesigns WERE positive in impact simply due to website design quickly adapting and capitalizing on this relationship (most of the times unbeknownst to the designers) in order to grasp consumer’s meaningful attention, and ultimately, their dollars.
Prior to this very early stage of internet development, the terms “customer” and “experience” had not been put together in any manner other than accidentally or as a simple extension of traditional market research techniques. And, even in those very few areas where the latter occurred (yes, we know about those analyst firms claiming they did “customer experience audits” prior to the formation of the internet as a usable online vehicle for consumer interaction), it was merely another term for either operational research or customer overview market research.
And that my friends, is where “customer experience” comes from and more importantly, why it exists as a term today!
More about what it should actually mean to a company later.
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Perfecting the Customer Experience 