Is the number of conscious consumers growing? On the whole, consumers will weigh up the price of a product or service to its relative value and make a purchasing decision based on the outcome. Businesses strive to stay competitive and provide value to their customers to retain them. It’s this basic premise that underpins consumerism.
But what happens when customers begin to take into account the process of production, extracting raw materials, packaging, shelving, means of disposal, and not to mention; the use of the profits to which their purchases contribute?
The moment a customer stops to reflect on what they’re buying and where they buy it from, they become conscious consumers. At this point, price and value become part of a much larger purchasing decision-making process.
On the whole, consumers are becoming increasingly concerned with the social, environmental, political, and economic impacts of the products they buy. From production to disposal, conscious consumers are thinking about the impact of their purchases. But how does this affect your businesses, and how can your business promote it?
What drives conscious consumerism?
Conscious consumers tell us why they buy eco-friendly products: (GlobalWebIndex)
Respondents of the Global Web Index survey on conscious consumerism feel incredibly strongly about the planet’s future, the environment, and health. These comments can direct businesses to adopt appropriate ESG initiatives.
Why your business needs conscious consumers
‘Dollar Voting’ is a modern concept that emerged in the 1950s as a component of individual participation in the economy and as a form of pure democracy in individual choice in the market. It stands today as an analogy that considers each dollar spent as a vote for what consumers believe in.
Each conscious consumer actively participates in strengthening the causes they believe in. Environmental, Social, And Corporate Governance (ESG) as an investment approach has surged in popularity in recent years among both retail and institutional investors. This trend has been growing concurrently with the evolution of consumer behavior and the rise of conscious consumerism.
Younger generations, millennials, in particular, are amassing more spending power and, at the same time, are weighing organizations’ ESG policies when making purchasing decisions. As for investors, it’s believed that 2020 will be the ‘tipping point’ for ESG investing (NASDAQ). Meaning, not only are the growing number of conscious consumers paying more attention to where they allocate their ‘dollar vote,’ but so too are investors.
In order to benefit from this changing paradigm, brands will need to demonstrate a clear commitment to sustainability, positive social change, and responsible corporate governance. Those that don’t will likely fall behind.
Stock market performance of sustainable companies versus non-sustainable counterparts: (Forbes)
Another reason why companies need to attract and resin conscious consumers is that it pays to do so. The graph above illustrates that sustainable companies are valued higher in the stock market. What’s more, a third of UK consumers claim to be very concerned about issues regarding the origin of products. In fact, a study from the Global Poverty Project reveals that 74% of consumers surveyed would pay an additional 5% for their clothes if they could be guaranteed that the workers who produced the garments were being paid fairly and working in safe conditions. To put these figures into perspective, the fashion industry alone could take 125 million people out of poverty by adding just 1% of its profits to workers’ wages.
How to get conscious consumers on your side – and keep them
Defining and executing sound ESG propositions enables companies to enter into new markets, secure customer loyalty, deliver value to stakeholders, and attract conscious consumers. It’s never too late for a company to start driving ESG initiatives.
Attracting conscious consumers – a preliminary checklist
- Source products locally and invest sustainably.
- Get involved with a charity. Sponsor a cause or establish a charitable initiative.
- Stay on top of ESG news and set goals around conscious consumerism.
- Rebrand yourself as an ethical organization and then live up to your branding.
- Keep in regular contact with your supply chain and manufacturers.
1. Set realistic goals
Each company will have very different ESG business approaches. It is important to identify a few criteria that, when adopted, would undeniably lead to measurable improvements in society or the environment. Ideally, a company’s ESG initiatives will reflect its values and seamlessly align with core business strategies. From here, it becomes easier to scale and sustain these initiatives over time.
To successfully attract and retain conscious consumers, it’s important to pick a few key issues to focus on and execute the initiatives well. Businesses should clearly articulate priority initiatives and avoid trying to execute more than 5 at the same time.
2. Ensure conscious marketing aligns with reality
Part of the force driving conscious consumers towards particular brands and away from others is their demand for transparency from brands. Since modern conscious consumers have virtually limitless access to information, there’s nowhere for businesses to hide. This is great news for the companies genuinely committed to making a positive impact but can be incredibly damaging for those who say they are working towards social change – but aren’t.
Not only will a lack of transparency drive conscious consumers away, but if a company’s actions don’t match their corporate message – modern conscious consumers will turn against them.
Keep in mind that the passion held by conscious consumers doesn’t only drive their purchasing decisions, but it also compels them to attend marches, demonstrations, and protests to have their cause listened to. It also encourages them to spread the word when they encounter companies actively undermining their cause. And thanks to social media and online review sites, there’s no shortage of places to spread the word.
Of course, word of mouth works both ways. If a company is leading the charge in corporate diversity or environmental conservation- they should talk about it. Make sure to mention your ESG initiatives in your marketing campaigns to attract new customers and inform them of your commitment. As long as you follow through, they will take care of the rest.
3. Be active and track your progress
Begin by making your ESG objectives a core part of your corporate identity and culture. The company’s transformation into a conscious business begins with the individuals inside the company. For example, to demonstrate leadership in climate action, encourage members of the team to take action in their personal lives to improve the environment and the businesses investment actions.
As your activities become noticed, track your ESG program’s progress regularly and look for areas of improvement. Be sure to publish your achievements to ensure analysts and investors can stay abreast of your work.
Consider benchmarking your progress by using ESG ranking indicators that rate companies in relation to industry peers. And remember that not every single one of your ESG initiatives will lead to immediate ROI. But by demonstrating a true commitment to change – you’ll capture the loyalty of the growing number of ESG-minded conscience consumers.