Creating Conscious Messages Part 1: Replace Fear with Value
This article series is about messaging: how to do it in a way that is transparent, realistic, and uplifting vs. exaggerated, manipulative, and negative.
This is the first article in a 4-part series on how to craft conscious marketing messages. Each article explores a specific communication practice to avoid in order to better respect customers, create value, and grow your business. Additional articles in this series include:
Introduction to Conscious Messaging
This article series is about messaging: how to do it in a way that is transparent, realistic, and uplifting vs. exaggerated, manipulative, and negative.
That all sounds intuitive and easy to agree with, but it’s pretty darn hard to put into practice. Case in point: writing the headline for this series. I wrote more than 20 iterations before making my final selection which embodies the ideas I’m espousing.
My goal is to change the status quo in marketing to make the discipline more conscious, but my draft headlines - “How to Avoid Manipulating Your Customer” and “Stop Using Fear to Sell” - were utilizing the very tactics that I’m about to argue we should all avoid.
This series lays out an aspiration for marketing and brand messages. An aspiration we might not reach all the time, but striving for it requires that we are conscious of the messages we create and the impact they will have on our customers and our business.
There is a common culprit behind communication that exaggerates or manipulates: putting business interests ahead of customer interests. We almost always think we are putting customer interests first, but when we closely examine how we use messages to sell our products and services, occasionally we unconsciously mislead and pressure to generate sales.
We all want to avoid these outcomes, both because it doesn’t feel right and because it doesn’t lead to long-term business growth, which is why it’s critical to expose these tactics and root them out of our messaging.
There are 4 common messaging practices that I consider unconsciously manipulative. Each article in the series will explain why we want to avoid these practices and what to do instead.
PART 1: Replace Fear with Value
I recently took my husband indoor skydiving for his birthday. The “flight” itself was thrilling, an experience I can’t wait to repeat. However, every other part of my customer experience was dominated by a single business strategy: upsell.
From the website where I bought my tickets two months in advance to the check-in process to check-out, I was bombarded with these messages: “You’ll wish you bought 4 flights instead of 2,” “Everyone prefers the high-fly,” “Don’t miss out on pre-buying a future flight because your 50% discount expires today.”
Contained within each of these messages are the seeds of fear, which elicit doubt, worry, and comparison: What if I’m not doing everything I can to make this the best experience possible? Only 5 minutes after entering the building, I was exhausted, full of distrust, and disappointed I couldn’t just enjoy the adventure I had already purchased.
These messages are everywhere. Whether by capitalizing on existing fears or creating a sense of fear that didn’t already exist, the dominant perception is that fear sells. Articles abound on topics such as “How to use fear to generate clicks,” and common messages highlight “5 Ways you are ruining….” or “Sign up for our newsletter or you won’t get access to….” The use is so pervasive, and in many cases subtle, that we might not even recognize the tactic as fear.
Using fear to sell is not new. We can see evidence of this strategy in a 1920 Listerine ad campaign pictured below titled “Don’t Fool Yourself,” featuring women who alienate their own children because of bad breath.
While using fear to sell is not a new idea, this practice has become explicit and normalized within the world of marketing, resulting in more brands intentionally using fear-based communication to incentivize sales.
Why Avoiding Fear Marketing Matters
I argue we should avoid creating needs based on fear for two critical reasons: First, using fear, even subtly, can have a negative impact on our customers. Secondly, it may not be as effective as we think.
A conscious marketer’s goal is to create value by offering a product or service that will make customers’ lives better - part of that value includes the message itself. Marketing can build trust, give hope, educate, and inspire, or it can pressure, generate skepticism, create anxiety, and spark negative emotions. Our messages present a great opportunity to put our customers well-being first.
How Fear Marketing Harms Our Customer
Fear-based communication activates a fight or flight reaction because the body senses an emotional threat. Planting seeds of doubt exploits this physiological response (“What if I miss out on X? Will I be successful without Y? Will this bad thing happen if I don’t buy Z?” ) creating or exacerbating feelings of inadequacy, negativity, comparison, and sometimes hopelessness.
Fear of Missing Out (FOMO) can negatively affect mental health, create sleep disturbances, and lead to overall unhappiness by reducing satisfaction with our own lives. Marketing that elicits FOMO, also known as “FOMO Marketing,” introduces new desires that make customers feel less off in their current circumstances in hopes of selling more. Whether or not the customer buys, the message leaves a residue of negative feelings.
Is that our goal?
We may think these strategies are harmless. What can one email headline do? Or one advertisement? But by employing these tactics, we give our consent, even our endorsement, to the practice of making people doubt or feel bad about themselves in hopes of persuading them to buy our products and services.
Fear-Marketing Hides Low Demand
Ethics aside, many marketers advocate this selling tactic because they think it works. While there is some data to show that fear-based strategies increase conversion rates and short-term sales, in the long run, they can contribute to lower retention and lifetime customer value and create brand distrust.
When fear is used in messaging, rarely is the goal to reduce or eliminate a customer's pre-existing concerns. Instead, fear is typically manufactured or exaggerated to induce a feeling of need. Why? Because the value of the product or service is not obvious.
A common message strategy involves helping your customers “avoid failure” in order to create urgency to buy: “If you don’t buy our service, all these bad things could happen!” Frequently, the harm or the risk associated with failure is exaggerated or infrequent and is based on an underlying assumption that there is not enough demand without fear.
If a brand depends on fear-based communication to generate interest, a bigger problem likely exists: the product/market fit may be off, customer needs are not understood, or the benefits don’t resonate. Addressing these fundamentals is a much more effective strategy to deliver long-term growth than using fear for short-term sales.
When we have a product that meets real customer needs, we don’t need to artificially create demand to sell our product or service. Rather, we can craft a value-focused message that explains how the product solves their problem.
Fear Reduces Customer Satisfaction
If customers feel pressured, buy more than they want, or the product doesn’t deliver on expectations, they often stop trusting the brand. Customers who feel disappointed share negative reviews, talk badly about the company, or stop buying altogether. For long sales cycles common in the B2B world, building trust takes months and sometimes years. Short-term fear-inducing tactics are counterproductive.
The “Joy of Missing Out” (JOMO), aimed at combatting FOMO, describes a state of mind of being present and intentional with one’s time and purchase decisions, and finding satisfaction in those choices, even when there are known tradeoffs. A study published in the Journal of Organizational Psychology looked at consumers’ satisfaction with purchases when the participants experienced FOMO vs. JOMO. Those who experienced JOMO showed significantly higher levels of product satisfaction compared to those who experienced FOMO.
This study indicates that when we use our messages to evoke feelings of JOMO - that is, being present, fulfilled, and satisfied - our customers experience higher product satisfaction and likely better brand loyalty compared to FOMO, which elicits negative feelings of anxiety, regret and fear.
Fear Drives Avoidance
Evolutionarily we are wired to avoid negative emotions. Research on brain responses to advertising shows that emotionally negative content creates a repel reaction that can prevent emotional engagement. Explicitly negative fear-based messaging often does not result in the desired behavior. For example, public service campaigns targeting anti-smoking, texting and driving, and climate change have been largely ineffective at using fear to reduce the desired behavior.
In academia, two philosophies explain how to motivate behavior. “Avoidance motivation” is a fear-based strategy and “approach motivation” is a benefit-based strategy. “Advertising that focuses on the negative can backfire because people avoid the advertising in the first place,” explains Elise Temple, Ph.D., a neuroscientist who specializes in testing the effects of advertising on the brain. “Very rarely does fear motivate people to buy a product. An approach-based motivation is often more effective, as it increases the likelihood that the viewer will engage with the main idea, and it associates your brand with positive messages.”
Showing a problem may remind a customer why your solution matters to them if they have a pre-existing need; however, even in that scenario Temple advises making problem communication extremely brief with the majority of messaging benefit-focused. Fear-based “clickbait” headlines may deliver clicks, but customers often feel misled and disappointed - emotions that won’t lead to sales.
Can You Spot Fear in Your Messaging? Ask Yourself These Questions:
⦁ Am I using fear or FOMO to induce a desire for my product or service?
⦁ Does my messaging diminish or criticize my customers’ current experience?
⦁ Do I exaggerate the fear beyond what my customer experiences?
⦁ Am I making my customers more afraid or anxious based on my communication?
⦁ Is using fear in my message grounded in actual harm or danger to my customer? (If so, this might be a legitimate use of fear in your message)
How to Avoid Creating Messages Based on Fear
If you find yourself using fear as a strategy, focus on the benefits. Regularly talk to your customers to identify needs and wants in their own words. We often overlook this step assuming we already know this information. Only after uncovering their real challenges and desires can we craft compelling messages that describe the value we create.
Once the message is defined, check for tactics that use scarcity and fear. They can sneak into execution even when the strategy is not based in fear. [As I mentioned, writing this headline required multiple revisions!]
There are three elements that you can modify to shift from fear-based messaging to value-first messaging:
1) Language & Copy: Use positive and encouraging messaging in your copy that focuses on what customers will get by engaging in your product or service and less so what they will miss out on.
2) Tone: Consider the tone of voice, music, and color palette to create an overall mood that helps convey the benefit vs. an anxiety-inducing or negative tone that inspires doubt or comparison.
3) Imagery: Show the benefit versus the problem as a more effective way to deliver the desired purchase behavior. Visualize people capable of reaching or experiencing the desired end state versus models who are so aspirational that they create an unrealistic standard for the customer.
Here are a few simple examples of how to transition from a fear-based message to a value-first message:
Not using fear pushes us to better understand our customers’ interests and forces us to better communicate the value we offer. In doing so, we avoid creating a sense of inadequacy, hopelessness, anxiety, and negativity. When we create emotions of fulfillment, intentional decision making, and being content with what one has, we can produce greater customer satisfaction. Not only is this the right thing for our customers, but it also results in messaging that customers trust which leads to long-term business growth.
Check out the next article in this series on Creating Conscious Messages in October!
Conscious Marketing: It’s Time for a Revolution
When I applied to my first job as a brand manager, I explained to my brother what the job entailed. He clarified, “So you’re going to manipulate people into buying things they don’t want?”
When I applied to my first job as a brand manager, I explained to my younger brother what the job entailed. He clarified, “So you’re telling me that you’re going to manipulate people into buying things they don’t want?”
His shrewd observation provoked me to ask my interviewer the very same question the following day (bold 22 year old that I was!) to assure myself I was not making a bad career choice. The interviewer responded, “People are smart and know what they want. They only buy things that they value and need.” His answer satisfied me for the time being, and so I began my career in brand management.
But my brother’s question has lingered in my mind throughout my career. Have I ever manipulated people into buying things? Am I giving my customers full information to make an informed decision? Do my messages and content improve their lives?
This personal journey has recently led me to explore “conscious marketing.”
What is Conscious Marketing?
There are a growing number of conscious movements discontent with the status quo, seeking a new way to operate: conscious capitalism, conscious consumerism, conscious travel, and conscious fashion are just a handful of examples.
I define this business-focused idea of “conscious” as: “Heightened awareness of impact, accompanied by purposeful action.” We can apply this definition to marketing:
CONSCIOUS MARKETING DEFINITION:
Marketing executed with awareness of its impact and purposefully designed to maximize good and minimize harm
According to this definition, I don’t think we are fully “conscious” yet within the world of marketing and brand management. We don’t always understand the impacts of our approaches which prevents us from taking purposeful action to maximize good and minimize harm.
The first step toward becoming more conscious is to evaluate marketing and branding’s positive and negative impacts:
On the positive side: Brands and marketing connect people to goods and services that improve their lives, and they can also be a source of inspiration, education, transformation, and creativity at both an individual and communal level.
On the negative side: Brands and marketing have the potential to harm to our customer and our culture through manipulation, unsustainable consumption, and by establishing unhealthy or unrealistic cultural norms.
We often assume that marketing or brand communications are neutral, but they are not. Words and images, and the channels through which they are delivered, have the power to build up or to tear down, and we need to reflect on the medium, the methods, and the message we use to achieve our sales objectives.
The power of marketing and branding to influence culture is undeniable. The sheer volume of content and spending dedicated to putting messages, images, and products in front of people presents a tremendous opportunity to impact the world for the good. An opportunity that, unfortunately, is often squandered.
Is Today’s Marketing Effective?
Let’s examine a few facts that should make us question whether today’s branding and marketing approaches are effective:
Only 34% of customers trust the brands they use, ranking quality, value for money and transparency as the top drivers of trust.
Advertising makes up 36% of all world spam content, totaling 44 billion emails per day.
81% of Americans believe businesses are not transparent in how they use personal information shared by consumers, who often become the product for advertising and lead generation.
Nearly 43% of customers use ad blockers, citing too many ads and intrusive ads as top reasons.
How did we get to this point?
My hypothesis is that we’ve accepted and normalized a set of practices and principles that we believe is “time tested”—and required—to grow business. Here are a few examples:
Using wealth and idealized beauty to create an aspirational lifestyle that is unattainable for our everyday customer.
Applying knowledge of brain science to modify our communications and increase its subconscious influence.
Following customers around the internet, capturing their data without their knowledge.
Maximizing the number of messages we distribute to "stand out" and "break through the clutter," even when they are unwanted by the recipients.
Exaggerating benefits, even if we are legally compliant and technically accurate, which results in misleading our customers.
Reinforcing customers insecurities and fears to create demand for our products and services.
Most brand leaders don’t intend to mislead or put their own interests ahead of the customers’. I, too, have used and benefited from many of these practices over the past two decades. I often feel like I’m operating in a system that is out of my control—it’s simply the way things work.
With an aspiration to positively impact the world, I find it’s essential to revaluate the methods I use to define what brands stand for and attract customers. We need more purposeful approaches to understand meaningful customer needs, develop messages that create value, offer pricing that is fair and transparent, and reach our audience with respect on their terms.
Conscious Marketing Practices: A Starting Point
Here are a few ideas to transform common marketing practices. We know that trust, transparency, integrity, and relevancy are the foundation of a strong and enduring brand, but it takes vigilance avoid defaulting to the norm.
Examples to Inspire Us
There are many brands to learn from who are doing this well today. Brands not just evolving their business models but the ways in which they communicate who they are and what value they offer to customers.
REI has closed on Black Friday since 2015 for its Opt Outside campaign, encouraging both consumers and employees to spend the day outside.
Dove and Aerie do not retouch or digitally enhance the models in their advertising.
Apparel brand The Slow Label publishes what it costs to make each one of its products, so that the margin is fully transparent.
Eileen Fisher and Patagonia have blogs are dedicated to educating customers on issues of sustainability, ethical fashion, and reducing product waste which complement their sustainably sourced materials and circular product offerings.
These practices are not necessarily the right ones for every business, but we can seek to understand the consequences of our marketing and branding choices and ask whether there's a better way.
We Can Learn Together
My view is that of a practitioner, not an academic or a journalist, so I understand that conscious marketing approaches must build the business.
I intend to write more about brain science, pricing, digital marketing, brand purpose and mission, sustainability, transparency, and advertising. In doing so, I will share strategies and methods that both grow revenue and respect our customers. Practices that expand market share and profitability without pushing products on customers who don’t want them. Messages that advocate for a more sustainable and ethical system and incentivize behavior toward positive change.
I welcome your ideas, your case studies, your do’s and don’ts. Please share examples of companies you see doing this well, so we can learn together. My hope is that collectively, we create a better way to grow, where branding and marketing are no longer part of the problem but part of the solution.
How to Begin Your Circularity Journey
We are collectively living as though there are 1.7 earths. By 2030 it will be 2 earths. Circularity may be the way forward.
We are collectively living as though there are 1.7 earths. By 2030 it will be 2 earths. It’s no surprise this level of consumption is unsustainable, but there remains a debate on how we are going to collectively solve this problem. Whether you’re a sustainability guru or not, the market is demanding that businesses evolve to remain relevant, profitable, limit the impact of regulation, and address customer needs.
One of today’s central sustainability themes is the circular economy. Now becoming a more mainstream concept, term circular economy describes an economic system that has no waste or emissions, keeps products and materials in use, and regenerates natural systems. What many businesses have enthusiastically embraced is the $4.5 trillion opportunity it presents. While it may be hard to conceive how this concept can equate to 20% of US GDP, eliminating waste, it turns out, is pretty big business. And we have a lot of waste. Like the 40% of food that is thrown away each year.
Imagine if products or packaging were endlessly reused, if supply chains were perfectly efficient, or if all natural resources were regenerated. When we can recover and reuse the materials, nutrients, and energy that power our world, all of that can be reinvested, fueling tremendous economic growth.
But where does a company begin?
Here are 3 insights from those already making progress:
It’s a journey, so take baby steps
When we live in a world that is single-use oriented, one that is designed to maximize consumption and disposal, it’s hard to envision a different way. The first step is simply to take a first step. Target has begun to explore ways of making it’s business model more circular by using Lifecycle Analysis to optimize store signage, and implementing a popular carseat trade-in program. They have admitted that it was almost overwhelming to design a truly circular economy, given their current business model, but they are working to define what “circular” means for Target innovation and operations.
A more closed loop approach has been adopted by Adidas, who recently launched its FUTURECRAFT.LOOP shoe, which is made from a single material (reusable TPU) so that it can be a fully recycled. Customers return the shoe, which is ground into pellets and eventually transformed into a new one. However Adidas didn't start with such a complicated technical challenge. They have been learning how to design a more circular approach since 2017, when the company produced 1 million shoes made from recycled ocean plastic in the Adidas x Parlay line. Sales were so strong that Adidas made 5 million in 2018 and have committed to 11 million pairs in 2019.
Image Source: Adidas
Eileen Fisher is generating sales on slightly damaged inventory through a “not so perfect” offering, a concept that unexpectedly attracted a new set of price conscious customers who are unable to afford their full price clothing. The progressive clothing manufacturer has also been incentivizing shoppers to return used clothing since 2009 through it’s RENEW program, either reselling the clothing or recycling the fabric for future designs.
Image Source: Eileenfisher.com
Design your innovation to be irresistible
An essential component of success with any innovation, especially sustainable or circular, is making it irresistible. This can be challenging for sustainable solutions because they must fight the commonly held perception of being less effective, inefficient, or more complicated. As William McDonough, one of the fathers of the circular economy, said, “The circular economy should be a better alternative, not a sacrifice.”
Loop, a TerraCycle project, is bringing back the milkman concept by providing popular brands in reusable packaging delivered to the home. “People sign up because it’s no waste, but they stay because of the premium experience. Its thoughtful, delightful,” said Virginie Helias, Chief Sustainability Officer of Procter & Gamble. The program is still in pilot phase, having just launched in Paris and New York, but the participating companies informally said that the initial results (albeit 2 weeks of them) were promising.
Image Source: loopstore.com
Plant-based meat is no longer an oxymoron thanks to Beyond Meat and Impossible Foods. After decades of “tasteless” veggie burgers or an entire portabella mushroom sadly attempting to substitute for a beef burger, these companies have designed against the promise of parity to meat on all fronts, except the carbon footprint. “If you don’t have a product that’s just as delicious and craveable as meat from cows, you’re not even allowed to play in this space,” said Rachel Konrad of Impossible Foods.
With ~90% reduction in carbon footprint vs. beef, these plant-based protein companies are committed to making global food consumption more sustainable. The skyrocketing stock price of Beyond Meat after going public last month and the recent $300 million investment round for Impossible Foods seem evidence enough that the product is irresistible, and so is it's equity.
Image Source: Impossible Foods
Crowd Source Your Innovation
BigCo’s are eager to capitalize on the potential of circular models, but recognize they often struggle with in-house innovation. This challenges represents a growing opportunity for startups and smaller companies to partner with larger organizations to deliver innovative solutions. Google and SAP have launched the Circular Economy 2030 Challenge that provides funding, services and mentorship to businesses with a revenue generating idea that advances a circular economy (and also uses Google Cloud and SAP services).
Meanwhile BASF created the Circularity Challenge, a six month accelerator for startups to enable a circular economy, focusing on plastics, energy storage, and recycling value chains. These companies are recognizing that good ideas can come from anywhere, not just organizations with million dollar R&D budgets, and they are actively searching for transformative solutions from around the world.
Image Source: BASF.com
While sustainable innovation can be viewed by some as an additional expense or a less profitable investment, the circular economy is already fertile ground for disruption. It requires new business models, new behaviors, and new cultural norms. However, companies must challenge the status quo and start asking new questions to advance. When they do, there is ample room for growth and good.
4 Reasons Your Company's "Good" Should be Part of Your Core Business
Frederick Buechner asked: “At what points do my talents and deep gladness meet the world’s deep need?” This is a great question to pose when searching for personal purpose, but it also applies to brands and companies.
Frederick Buechner asked: “At what points do my talents and deep gladness meet the world’s deep need?” This is a great question to pose when searching for personal purpose, but it also applies to brands and companies. Said another way from a business lens:
“At what points do our core competencies meet the world’s deep need?”
There is growing pressure on businesses to have a positive social and environmental impact. Consumers are voting with their wallets and their employment decisions for companies that serve society in addition to the bottom line. Governments continue to legislate on issues such as the environment, privacy, ingredients, and worker rights.
A common approach to address this call for action is to continue business as usual, and identify a separate set of social responsibility or environmental programs, establish a charitable giving program, or advocate for popular political point of view. While these approaches have merit in certain circumstances, they often ignore the most significant contribution a company can make to society—through its core business.
While it may seem obvious that the positive social and environmental impact a company has should be connected to its core business, I have seen many companies and brands invest in efforts that are not strategically tied to their products or operations. This Colbert Report clip (starting at 1:15) parodies the causes corporations support that seem disconnected from their business. At best it’s a missed opportunity for social and business impact, at worst it invites criticism of hypocrisy and growing backlash.
Here are 4 reasons we should focus a company’s “doing good” on the core business:
1) It’s Authentic
In an age of corporate distrust, where some consumers expect that companies are trying to get a quick win through a “do good” gimmick, helping through your core business is an intuitive fit. UPS donates shipping and logistics expertise during natural disasters. PetSmart promotes adoption of pets. Marriott trains employees to watch for signs of human trafficking in their hotel rooms.
Everlane, an e-commerce fashion brand, has made “ethical sourcing” part of its tagline. In an industry known for sourcing low wage labor in developing countries, Everlane shares the factory name where each item is produced, with extensive information and photos on each facility.
[Image source: Everlane.com]
On the flip side, many brands “go pink” during October in support of Breast Cancer. While raising money to support research for this disease is a noble cause, it’s easy to question brands’ motivations that have nothing to do with women or health.
Many companies are also taking political stances that don’t have a clear connection to their business. While leadership might feel they have a moral obligation to support a particular issue, I wonder if their voice is best used in that way or could rather advocate for needed change in their own industry.
2) It Motivates Employees
Much research has been done on the best ways to motivate employees, with growing evidence showing that the external motivators of bonuses and perks can be short-lived. Daniel Pink argues in his book Drive that the three most important motivators are autonomy, mastery, and purpose. He defines purpose as, “the yearning to do what we do in the service of something larger than ourselves.”
In order to successfully give employees a sense of purpose, it has to be about their core work. An annual employee volunteering day or the existence of a separate corporate foundation run by a handful of employees will not suffice. Each employee must understand how their daily work helps contribute to something meaningful and valuable.
A simple way companies can elevate the value of their core business with employees is through skills-based volunteering. Many firms such as IBM, Fidelity, and Deloitte, donate technology expertise and consulting services to nonprofits or communities who could never otherwise afford them. One of the biggest reasons these organizations continue such programs is not the social impact, it’s the leadership development the programs create for employees who participate.
[Image Source: IBM Service Corps]
Creative agencies often take pro bono work for nonprofits to help with issue advocacy and fundraising. When employees are doing their primary job in service of an under-resourced population, it creates a greater sense of purpose for their work. In turn, companies see higher employee satisfaction and higher retention. A friend who owns a small business told me he has approximately 2X longer employee retention because of his skills-based pro bono program. It works for the community and for his business.
3) It Builds Reputation and Loyalty Among Customers
Any buyer of TOMS shoes or Warby Parker eyewear knows that part of their purchase helps provide footwear and eyeglasses, respectively, to people in developing countries. These brands have been built around a business model that provides the same benefit to paying customers as those in need.
For 30 years, Annie’s has sold organic food, backed by a company mission of helping grow the volume of organic crops farmed nationally. Patagonia, a brand that stands for experiencing the rugged outdoors, has innovated with more responsible sourcing for over two decades, and products today are produced from nearly 70% recycled or renewable fiber. For four years, REI has shut its doors on Black Friday to give employees and customers a chance to #optoutside.
[Image Source: REI.com]
Each of these brands have a devoted following because they have remained committed to their core mission. Importantly, the brands’ product offerings and company actions seamlessly integrate product benefits with “doing good,” making the two inseparable.
According to the 2018 Edelman Earned Brand study, 64% of consumers self-report as “belief-driven” buyers, expressing both hope and confidence that brands can address society’s social ills. But the brands that do this most effectively are those that integrate their beliefs and social good into the core strategy and identity of the brand.
4) It Does the Greatest Good
While the prior three reasons might seem to serve the company’s self-interest, the final one is about social interest. Companies are uniquely positioned to use their own innovation and expertise to solve social problems that only they or their industry can address. I would argue the pharmaceutical industry’s greatest contribution to society’s challenges isn't what their cash can do, it’s their drugs to populations that can’t afford them.
P&G, Nestlé, Unilever, Pepsi partnered on Loop, an e-commerce delivery service with reusable packaging, demonstrating a significant effort to address the massive issue of single-use plastic waste around the world. These are problems that the industry itself played a large part in creating. Many would say that they have a responsibility to solve, but they also might be the best ones to help solve.
[Image Source: Greenbiz]
There are many companies making important progress in integrating social impact into their core business strategy. However, even the prevailing concept of “giving back” assumes that business has “taken” something. My hope is that we continue turn our efforts of giving back to our core business, so that eventually business itself can be seen as “giving” through its primary goods, services and operations.
Importantly, this is not a selfless exercise on behalf of companies. What works for society also must work for business, as they too must benefit from their efforts. The exciting part is that GOOD business is also good BUSINESS.
5 Insights Every Brand Should Know about the Sustainable Shopper
We’ve all heard that customers prefer sustainable products and will pay more for them, but what does the sales data actually tell us? Let’s dive in.
I recently attended Nielsen’s 2019 Sustainable Shopper webinar. In a space where data is often claimed, it can be hard to know whether consumers actually behave the way they intend when it comes to “doing good.” In this case, it’s real sales data, so we can gather insights from the way consumers actually behaved.
Here are my top 5 takeaways:
1) Sustainability benefits are mainstream and outperform conventional products by A LOT
While we may qualitatively sense that there are increasing volumes of products with sustainability attributes, it can be hard to tell if these products outperform those without. The Nielsen shopper data shows that products with “sustainability” claims, along with those that have no artificial ingredients and clean label, show significant sales increases vs. year ago compared with conventional products. Specifically, we see 5.8% growth for those sustainability benefits compared with 0.4% of conventional products. That’s ~14X higher growth rate.
If we look at multi-year trends since 2014, sustainable product sales have grown by nearly 20%. The compound average growth rate (CAGR) of these products is four points higher larger than conventional products (3.5% vs -1.0% comparatively) (1).
One might dismiss this growth rate by assuming it was on a tiny base, which might make it easier to deliver bigger growth, however, I found the following slide on Nielsen’s website showing that sustainable products now make up over 22% of store sales, according to 2017 data. That’s not a tiny base. Sustainability has arrived, and the growth rate is real.
2) There is no 1-size-fits-all sustainability benefit
The breadth and diversity of sustainability benefits are increasing. Nielsen categorized the claims across 6 sectors: social responsibility, sustainable farming, sustainable resource management, sustainable seafood, sustainable packaging, and animal welfare. These categories do not even include the charitable giving space of financial donations generated by product sales.
While some benefits are seeing significant sales growth, notably “sustainable fishing” (+27%), “free range” (+16%), and “B-Corp” (+15%), others are seeing declines, such as “less packaging” (-7%) and “farm raised” (-3%).
While consumers previously may have viewed the space as a monolithic “better for the planet” benefit, consumers are becoming more knowledgeable about the specific attributes they want to purchase in their products. The mere existence of a sustainability claim does not guarantee the average sales trends, so one has to diver deeper on specific benefits consumers desire within the broad sustainability space.
These sustainability benefits vary in how much they deliver personal benefits for the consumer, environmental benefits and social benefits. When a company can deliver both personal and "better for the world," there is a sweet spot of social impact and business opportunity.
3) Consider category purchase drivers when identifying sustainability benefits
Even within specific sustainability attributes, brands have to evaluate category specific trends and purchase drivers for their current and future product offerings. While certain sustainability topics might dominate the current media, such as reduction of single use plastics, these are not necessarily the best ones to pursue for your brand. First, because those issues might not be a brand's biggest environmental impact, and secondly, because benefits have vastly different rates of sales growth across categories.
In grocery we see significant growth among organic, and clean label products, whereas in beauty and personal care there is a greater emphasis on paraben-free claims.
The slide below further demonstrates the variation a single attribute can deliver across a variety of categories. We see the sales growth of products with “fair trade” compared with total category sales across 4 categories. In Nutrition Bars, Coconut Water, and Supplements, “fair trade” significantly outperforms the category, whereas in Ice Cream, “fair trade” under-performs the category.
Product benefits, combined with the perception of supply chains, environmental impact, health, and product safety, and all affect how consumers perceive the value of different sustainability benefits across categories.
4) Ingredient related claims see some of the highest high growth rates, not just among food and beverage categories
Some of the highest growth rates among sustainability products are for ingredient related claims. A core reason ingredients are becoming more important as primary product benefit is the consumer link to both health and product safety. A recent study showed that recalls of hazardous meat and poultry were up 83% since 2013, providing legitimacy to concerns around product safety.
While the importance of ingredients might seem intuitive for products that are consumed, the trend is just as notable in many cases for personal care and beauty products. In slide 22 shown above, we see that ~60% of cosmetics and facial skin care are “paraben-free,” which means the lack of these ingredients is essentially becoming price of entry in those categories.
We also see in vitamins, minerals, and supplements as well as in personal care that show ingredient related growth rates from ~8-25% compared with conventional products.
5) The Sustainable shopper is urban, affluent, well-educated and often has young children
This data has remained relatively consistent for some time, and is largely driven by the Millennial generation. While it may be that these consumers have historically had more access to products with sustainability benefits on the coasts, the trend seems to be moving inward, according to commentary in the webinar, with cities like Chicago and Cincinnati showing increasing consumption of these products.
For companies, one of the benefits about this consumer is that they are more affluent, which means that brands can be confident in being able to charge a premium for sustainability benefits if they are perceived as relevant for the category. Sustainability attributes should be a primary consideration as brands establish their innovation pipeline for the next 3-5 years.
Even though I’m a big fan of sales data, I couldn’t resist including a couple of relevant insights from the claimed data.
6) Link Sustainability claims to premium factors (i.e. attributes that consumers will pay more for)
One of the challenges with making sustainability claims, is that it actually increases the cost of goods to deliver those products. It may be that sustainably-sourced ingredients are more expensive, or the manufacturing process is more complex or runs smaller volumes, or perhaps a 3rd party certification incurs additional costs.
An essential business strategy to offset these costs is to increase prices, but if consumers are unwilling to pay for higher prices, then delivering sustainable products may not be financially viable. That’s why brands need to deliver sustainability benefits that are associated with factors that consumers will pay higher prices for.
Consistent with most product attribute data, the two biggest premium factors are Quality/Safety and Superior Function or Performance (49% and 46%, respectively, of consumers were willing to pay more for these benefits. Frankly, I’m surprised we’re not seeing even higher numbers than that.) Increasingly consumers are associating sustainability attributes like organic, or antibiotic-free with these premium factors.
7) The US lags developing countries when it comes to demand for corporate environmental practices
In a list of the top 11 countries where consumers say it’s important for companies to improve the environment, the US don’t make the list. Not by a long shot. All 11 are developing countries, with responses ranging from 92-97%. The US is at 68% (this data point is pulled from a separate Nielsen deck). One of the primary reasons cited for this variation is the visibility of negative environmental impacts due to lack of environmental regulation, such as no formal waste management processes, and higher water and air pollution.
For global companies that develop their innovation in the US and export it to other countries, they may be missing an opportunity to capitalize on the even greater relevance of sustainability in developing countries.
It’s exciting to see that products with sustainable benefits continue to outperform conventional products. The brands that understand consumers preferences by category, and innovate to understand the link between environmental, social and personal benefits, have an opportunity to be differentiated in the marketplace. With over 22% of products now considered to have some kind of “sustainability” benefit, it’s become a crowded marketplace, and that demand will continue to increase.
Consumers are becoming more informed and more savvy about the specific benefits they want by category. The time is now to innovate for the sustainable consumer, because soon, we will just call her the consumer.
(1) - https://www.nielsen.com/us/en/insights/news/2018/was-2018-the-year-of-the-influential-sustainable-consumer.html