Turning the business lens to gain consumer perspective has always been crucial tool in gaining competitive advantage for businesses. But if we honestly reflect on how often we actually do this we might not like the answer.
The reality is that this approach is going to be even more important in this rapidly changing world where the “triple crunch” of financial meltdown, climate change and societal health and wellbeing are giving businesses and their stakeholders plenty to worry about. The financial crunch seems to be stealing the show and getting all the publicity, but look beyond that and the other two crunches are slowly but surely working there way back onto the radar. Climate change is not going to go away and the societal fall-out of the financial crunch is already leading to sporadic civil unrest and will have much longer-term consequences.
In the minds of many consumers these issues are manifesting themselves in an increasing awareness of the economic, societal and environmental issues. They are joining the dots on how these issues are linked together and are effectively creating sustainability lens through which they will examine businesses. This lens is impacting on their views on business and ultimately on their purchasing decisions. Businesses that don’t recognise this and find way to respond to it are set to lose out in an already competitive marketplace.
This view is backed up by new research from the Sustainability Priorities Monitor© (SPM©) conducted in March by Sustainable Advantage. It shows that this awareness is present at number of levels that have an impact on business.
At the highest level, respondents see business having role to play in healthy society; they do not disconnect business from society as some business people seem to suggest. They see need for all sectors of society to be working together and collaborating to find solutions. Businesses that are seen to be taking this approach will gain credibility in these consumers’ eyes.
In the brand context, 71 percent of respondents agree/strongly agree that they think more highly of businesses that are taking steps to be socially and environmentally sustainable and 80 percent agree/strongly agree that businesses need to take responsibility for their social and environmental impacts. The big question that always comes back from these kinds of results is, “what does that mean when it comes to purchasing behaviour?”
The SPM asked the respondents how much of an influence number of factors had on their decision to buy products and/or services from business? The results are shown in the table above.
There are no surprises in “value for money” topping the table, but what ‘value’ is now defined as may be about more than just price. With more consumers looking to link markets, products and services with meaning (their values) it is worth exploring the possibilities around this connection. What does your brand stand for in sustainability sense could be very good question to ask.
Customers’ needs and service also rank highly, but again, how many businesses truly take the time to understand the needs of their customers at deep level to identify what the opportunities here are.
Ethical practices and recommendations from family and friends had higher influence for close to three quarters of the respondents. Again, aspects that would be obvious to many.
What is interesting though is that further down the list areas that have the potential to be blind spots for businesses are being used as part of the consumers’ lens. Areas around sourcing of products, employment practices, values and community involvement are cited by over six out of 10 consumers.
Businesses that are looking after more than their own self-interest have clear advantage over those that don’t.
But do consumers trust businesses to do this? The short answer to this question is bit of wake-up call for business. Consumers’ trust in business to balance economic, social and environmental responsibility is not strong. Only 27 percent of respondents said they did trust business to do this and 37 percent said they didn’t. The remainder, just over third, were uncertain and could tip either way depending on what the business does.
The challenge for business is that when asked if given the current economic climate respondents felt that it is more or less important that they can trust businesses in general to balance making money with looking after the environment and caring for their customers, their employees and the communities they operate in, the resounding response from 67 percent of respondents was that it is more important.
Consumers are sending very clear signal to business that goes beyond the world of price and promotion and into the world of values. Businesses that don’t understand the nature of trust relationships with their customers stand to lose great deal and that’s the last thing they need right now.
The reason for this concern is in the more detailed findings where the research showed that 75 percent of respondents already don’t buy from businesses they don’t trust and that over half the respondents said that they had stopped buying from businesses they didn’t trust in the past six months.
The research shows that the issue then escalates as these consumers take range of actions, many in concert. While close to 70 percent will complain, 60 percent say they tell family and friends, 36 percent talk to colleagues at work and three percent will go online and tell the world in blog. This is dangerous territory for any business as it very quickly loses control over the issue.
The good news
Evidence as far back as the 1920s shows that the organisations that continue to take the time to truly understand and keep in touch with their consumers come through economic downturns and recessions in better shape than their competitors.
The good news is that while the survey shows that trusting businesses to be open and honest with their communications is quite low, there is strong evidence that there is desire for information around the aspects of sustainability.
It is apparent from this set of findings that the consumer is turning the sustainability “lens” on business and in doing so is actively engaged in seeking information. The opportunity for businesses is to find ways to remain vigilant on spotting the changing priorities of their consumers and in that way cover the blind spots and gain competitive advantage.
Consumers want message that’s relevant to them (it fits with what they care about) and that they can trust. This means being vigilant on understanding their needs and valuing their opinions on how and where to tell your story. Know their values and yours and play to your strengths. The use of consistent and simple language, not terminology, is also key as you can always back it up with more information which they will find if you help them.
Above all use this apparently inherent desire for information to educate and inspire them and take them on journey of rewarding discovery that reinforces their loyalty to you.
Nick Jones is director of Sustainable Advantage. [email protected]