Many companies are on a path to become more sustainable. Large efforts are undertaken to establish sustainability measuring and emissions reporting systems following the ESG regulation wave. More sustainable options or offset mechanisms are integrated in the offering. But around the corner, an even bigger challenge is lurking: Changing the customer habits to more sustainable behavior. There is a lot of evidence that customers do not follow. Every change in products or offering demands a change in customer behavior. Underestimated and not on the radar is the challenge of customer adoption of these new solutions.
Eager companies
A recent survey amongst companies (Deloitte, 2023) has shown that 75% of companies have increased their sustainability investments. MITSloan (2016) reports that 90% of executives believe that sustainability is important. More and more companies pledge ambitious emission reduction paths to achieve net-zero targets. ESG reporting is being established alongside financial reporting systems and will even become mandatory in the EU. Sustainability related initiatives are initiated throughout companies, involving many departments, not just the head of ESG. Some of these initiatives are internal, like Scope 1 reduction measures or gaining ESG transparency in the supply chain. But many are customer facing, like developing more sustainable products or transforming the assortment to a lower CO2 footprint. Green-washing is no longer an option.
What was once a fringe topic has moved to the core business: Companies are eager to move on sustainability. But: Do customers share this eagerness?
The Say-Do gap and the challenge of changing habits
At first glance customers seem to be onboard with behaving more sustainably. There are various studies and surveys that claim to show that e.g. 90% of GenZ demand sustainable products (Forbes, 2022). Another report indicated that 65% of customers (HBR, 2019) say they want more sustainable and eco-friendly products. There are many other reports that consistently point in the same direction. But, do customers actually walk the talk and act accordingly?
Unfortunately they do not. Only about 26% of shoppers that indicate that they want sustainable products shop accordingly. They only indicate their intention to act accordingly (Nielsen, 2015). The number of people that will act is much lower. A look at CO2 compensation for flying confirms it: Less than 5% of customers compensate for their emissions (ATAG, 2020 and Politico, 2022). Customers might say they will behave in one way or another, but act differently: There is a Say-Do gap.
In a recent discussion with an innovation leader that also heads sustainability of a global construction material supplier, one of the largest CO2 emitters, she brought up the key challenge: “Reporting is important. We need the data to start and measure. But the real challenge will be to convince my customers that the new, more sustainable product delivers the same value as the one they have been using for years if not decades”.
We believe this challenge is universal: Products that deliver value build trust over years. Habits become deeply ingrained. New, more sustainable solutions are a call to customers to change their deeply ingrained habits.
And habits are stubborn: Changing habits is extremely challenging in any market or industry – from retail to finance to engineering to healthcare. Think of your last new year resolution.: People really mean it and intend to go to the gym more often – but then fail to live up to it.
Companies having defined CO2 reduction goals and having set up the reporting systems will soon be in a position where the reduction path will stagnate. Because all quick-fix measures have been implemented and the product offering is not converting to more sustainable offerings. So, what can be done to create new habits faster and speed up sustainability adoption?
How can companies speed up sustainability adoption?
Here is some good news: This challenge is known to us at Vendbridge from more than 120 projects in innovation. Because innovation, at its core, also requires a habit change from customers.
Our approach to tackle this habit change challenge is to find the levers of change via a process to unearth deep insights about customer motivation beyond superficial understanding of attitude or intentions. We call this process CFI, standing for Customer-Focused Innovation.
CFI identifies and quantitatively measures unmet customer needs and focuses growth missions, like developing more sustainable product offerings, on those unmet needs. The basic assumption is: People only change if they perceive a benefit. And a benefit is a solution to a problem, i.e. the unmet need. If people don’t see the benefit of sustainability - and believe us there are many - they don’t follow. Therefore, a reframing is needed behind a different benefit.
It is based on Jobs-to-be-done and has successfully been applied over 120 times to sharpen growth initiatives. You can find out more about the CFI approach here.
A recent CFI case in grocery shopping found: Not for all customers does sustainability have the same relevance, i.e. there are different segments of customers with different sustainability needs. Here are the four segments we found:
The segments are created using two dimensions related to sustainability. First the level of aspirations they have in terms of sustainability, i.e. some want to be very sustainable, some have less ambition or even none at all. Secondly, life does not always allow you to realize ambitions, i.e. the level of barriers to achieving said ambitions. This gives four distinct clusters that have different sizes in the market.
The Super-Sustainables are a minority in the grocery market. They have high-ambitions like living a vegan or vegetarian lifestyle, they care about how the food has been produced and under what conditions for workers and nature. The Super-Sustainables also have found ways in their daily life to overcome barriers to implement a sustainable lifestyle. For example, they know the best markets for sustainable products or take pleasure in healthy, but less tasty food. The increase in vegetarian meat alternatives is welcomed by them and they were amongst the first to try them out. They already have sustainable habits.
The Conflicted is a larger slice of the market. They are in constant tension between the ambition level, which they share with the Super-Sustainble to some degree, and the many challenges they face to live according to these ambitions. For example, they are not willing to pay the price for the organic option or they live in environments that do not allow them to comply with their ambitions, like a corporate canteen with no sustainable food options. The barriers they face can range from the simple fact that they don’t have that much time and sometimes go for the easy fast food. Or they don’t want to upset someone or cause trouble when they are guests, etc. Or they live in an environment where their sustainability ambitions would make them stand out too much.For them, changing to more sustainable habits looks like a mountain to climb over.
The Relaxed are the majority of the market. It is not that they lack the knowledge about sustainability and all the issues related to it. They just have a much lower ambition level or are less strict with themselves. They don’t want to change. Sustainable or not, they are at ease. To activate them and change their habits is a key challenge.
Then, in a ying-yang kind of way, the Super-Sustainables are balanced out by an almost equally large group of people of Anti-Sustainables. The Anti-Sustainables not just have low sustainability aspirations, they actively behave anti-sustainably as a counter-reaction. For them, sustainability is a burden, an ideology that they are fighting against. Changing their habits will be a very delicate affair.
An additional deliverable of our CFI approach are measured unmet needs. This means that CFI can extract needs from customers (in qualitative interviews) and measure how important they are and how well they are served today (through quantitative surveys). The result is a Value Map:
Each dot in this map represents one customer need. Some of the needs (right of the vertical line) seem to be more important than others (left of the line). And some of the needs are less well served (below the line) than others). These are all needs that customers have when they shop for groceries. Some of them have nothing to do with sustainability, like finding a product quickly in a store, others are clearly sustainability criteria, e.g. knowing as precisely as possible how much CO2 was emitted in order to transport the product to the place of purchase.
The Value Map clearly shows what the Pain Points (important needs, that are not well served) and the Essentials (important needs, but well served) are. This allows to steer messaging, communication and many other initiatives into a direction that resonates with customers.
Can the Value Map and with it the Pain Points be analyzed for each of the sustainability segments? Of course!
With this fact base at hand clear, precise and actionable strategies can be formulated because the customer Pain Points and sustainability criteria are known. This reduces assumptions and discussions about what matters to the customers. Strategies formulated based on the customer Pain Point have a much higher likelihood of successfully moving customers to more sustainable behavior.
Knowing these 4 segments is only the starting point. The question is, how to act based on this insight and change customer habits. The first action is to recognize that each of the four segments needs a totally different strategy. Super-Sustainables and Anti-Sustainables can not be approached the same way, with the same products. The Conflicted needs other approaches than the Relaxed, if you want to succeed. But what is it that resonates with these segments? How should products and communication be shaped to achieve higher changes of changing purchasing behavior? This comes down to the habit changing power of the Value proposition.
Value propositions that click with each segment
Humans are creatures of habit. We like to stick with them. But customers will change their habits under two conditions: If the pain of today's solution gets unbearable or the promise of the value of a new solution vastly exceeds the value of today's solution. Customers have a strong status quo bias (see this seminal HBR article for more, 2006) and don’t like change. This can lead companies to overestimate the success chances of their new products and underestimate the effort it takes to make customers change their ways.
The key message of the segments is that not for every segment sustainability is in itself a benefit, only for the Super-sustainables. Therefore the scientifically proven more sustainable solutions must be enriched with benefits that resonate with each cluster. Only for the Super-Sustainables is the sustainability of the product a benefit, for the others, sustainability plays a different role.
Role of sustainability
Super-Sustainables: Core benefit of the new product, i.e. Promise
Conflicted: Sustainability as a Reason-to-believe
Relaxed: Sustainability as a side note, what is the Promise?
Anti-Sustainable: Do not mention sustainability, what is the Promise?
Based on our projects we have developed a Value proposition canvas that creates stories with a higher chance to change habits because it is aimed at overcoming a set of customer barriers to change. For example aiming value Propositions at the customer Pain Points have a much higher chance to create new habits, because they solve a big customer problem. The desire to have a concrete Pain Point solved creates much higher customer motivation than a possible gain. Research has shown that people respond much more to communication about Pains than about positive attributes (Frank, D.‐A., Chrysochou, P., & Mitkidis, P., 2023) and negativity bias research shows that “negative information consistently affects consumer decisions more than positive information of equal intensity”. If you’re interested in the details of how we at Vendbridge craft habit-changing value propositions then go here for more [Link zum Value Prop Artikel]. Here is the canvas:
In this context it is only important to note that the Promise of the new solution is a promise of a benefit or value of the product. What to do, when for 3 out of 4 customer segments sustainability is not a strong enough value or benefit?
Only when we know the Pain Points can the Value Propositions really be made concrete. However, there are four meta-strategies that can be derived.
Super-Sustainables: This is the most obvious strategy. Emphasize the sustainability benefits of the new products in product design, packaging, communication and recycling. Key is to find out what signals sustainability to the hearts and minds of the Super-Sustainables. This varies across categories and industries. While it might be durability in one case, e.g. clothing, it’s about regionality in another, e.g. fresh produce.
There are many examples of sustainable products that are launched at the general market, but in reality their value proposition is only resonating with Super-Sustainables. This can be a dangerous trap. However it is of course a valid strategy to only target this section of the market. A good example is Patagonia.
Conflicted:
This calls for a more sophisticated strategy. On the one hand, you need to lower the barriers. At the same time, you need to emphasize the category benefit and use sustainability as a reassurance that the purchase is good. The category benefit conveys why the customer should buy the product in the first place. The reassurance benefit gives the customer a reason to purchase and justification to purchase without a bad conscience.
Think of labels like Nikin or others in clothing that plant trees, etc. for each product that is purchased. In this case the core benefit of the product is something else, like style, etc. but the sustainability concerns and barriers are lowered.
A good example is Tesla: It promises great acceleration and performance, better connectivity and navigation, being future-oriented thanks to some futuristic features. Teslas knew and it reassures on sustainability simply by being an electric car.
Relaxed:
The challenge with the Relaxed is to activate them to switch from an existing and established solution to a new, more sustainable product. You need to stress the category benefit in combination with a USP that might not be linked to sustainability at all. The sustainability message will simply not resonate with them.
A good example is Planted, a meat replacement product that promises better taste than meat while being more sustainable. Taste is one of the key category benefits of food, not sustainability.
Anti-Sustainables:
Anti-Sustainables call for a completely different approach. Ignore sustainability and find ways to reframe sustainable products via other relevant benefits.
Speed up the adoption of more sustainable solutions
After the challenge of measuring and reporting emissions accurately the next big challenge in sustainability will be the necessary change of customer behavior to more sustainable solutions. At the moment adoption rates of sustainable solutions are slower than desired by companies. This is perplexing because when asked directly customers state that they want more sustainable solutions but then don’t act accordingly: The Say-Do-Gap.
The Customer-Focused Innovation approach avoids this gap by focusing on the Job-to-be-done and the customers needs and sustainability criteria. When measured in a market this allows to create concrete and actionable strategies based on Pain Points with a higher likelihood to change customer behavior.
In addition the CFI approach can reveal sustainability segments so that strategies can be refined and targeted accordingly.
In the effort to speed up sustainability and lower emissions, understanding how to change customer behavior is key. Get ready now so you can tackle this challenge ahead of time!
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