As a business, you likely orient your service or product offering toward a perceived or actual demand in the market. And, if you offer a high quality product or service that your customers want, then your business thrives. At least that is the basic idea.
The question is – how do you make sure that your customers keep coming back? How do you stay on top of a consistently evolving market dynamic? One option is to find out what your customers want and give them that in addition to your product or service . In the past, businesses figured out that great customer service was a competitive advantage. One of today’s competitive advantages is sustainability.
Consumers in the US and in other countries are increasingly looking to purchase products and services that are not only high quality but also do not harm the planet or the community. If you are a smaller business, sustainability, or the Triple Bottom Line of People, Planet and Profit, is a great opportunity to differentiate yourself from your competition – and if the competition is already doing it, to catch up!
You might be asking what you are missing out on if you do not implement sustainability. Let’s look at three market-related opportunities you would be missing out on:
1. New customers
Your potential market is likely larger than just your current customers. Customers today have many choices and there is fierce competition for every dollar. Growing your market presence means delivering what your target market wants and has come to expect. In many cases, that is high quality products and services from organizations that are socially and environmentally aware and active.
So how big is that untapped market potential? Obviously it depends on your industry, product/service and other factors, but let’s take a bird’s eye view as a starting point. If you look at it through the generation lens, the Millennials, the largest living generation, clearly prefer to purchase products and services from companies that also do good internally and externally. This is relatively well known by now, and marketers everywhere are looking to get a share of that generation’s dollar. Millennials make up 21% of consumer discretionary purchases, estimated at over a trillion dollars, so their preferences will be heeded by many businesses.
If you look at it from a values lens, the LOHAS (Lifestyle of Health and Sustainability) consumers are a market segment that many haven’t heard of and that represents one in four adults in the US. This segment was estimated to have $290 billion spending power in 2010 and has been growing since. These are individuals that purchase from values-based businesses. LOHAS consumers typically distrust larger brands and support smaller and local businesses that are seen as contributing to the local economy and community.
Of course, there is some overlap between Millennials and LOHAS customers, but LOHAS customers are also made up of Gen Xers and Baby Boomers, not just Millennials. So, if you are overlooking the LOHAS segment and/or Millennials, then you are missing a significant market opportunity. If you are looking to attract them, then sustainability, CSR (corporate social responsibility) and related approaches are the way to go.
2. New or enhanced products
Implementing sustainability-related projects at your organization might be seen as time-consuming and costly. However, there are many studies that show that looking at your operations through a sustainability lens can foster creative thinking and spur innovation. Innovation can mean new product lines, more streamlined operating processes, and/or incremental improvements in existing products or services.
Larger companies have identified sustainability as a source of innovation. There are many examples that have been shared in case studies about the profits that have been generated as a result of implementing sustainability and related innovation. Some examples include Unilever and GE. According to Unilever, their sustainable brands grew 46% faster than the rest of the business and delivered 70% of its turnover growth. GE’s Ecomagination program, which launched in 2005, was designed to build more efficient machines that had less environmental impact, and generated over $200 billion in sales in its first ten years.
There are various approaches to implementing sustainability in an organization in order to spur innovation. You can look at ways to minimize inputs into the business, identify ways to decrease the amount of natural resources used higher up in the supply chain, or streamline current production so as to reduce packaging or waste leaving the business, for example. One easy way to start is to ask your colleagues for input and ideas – and be open to considering and implementing them!
3. New contracts
While some businesses deal directly with consumers (B2C), there are other businesses that provide products and services directly to other businesses (B2B). As many larger businesses are looking to become more environmentally sustainable, they are also looking at what their vendors are doing, and asking vendors to become more eco-friendly. According to the CDP (formerly Carbon Disclosure Project), ‘115 organizations representing over $3.3 trillion of spend, request environmental data from more than 11,500 global suppliers’.
Once again, there are many examples available of larger companies that are doing this. Since 2008, Walmart has increasingly been asking its vendors to adhere to environmental and social standards, and is sharing those expectations on its website and via its Sustainability Index program. In 2010, IBM began asking their 28,000 suppliers to start tracking their environmental data. On its website, IBM clearly requires its suppliers to have a corporate social responsibility and environmental management program in place. These are just two of many organizations that are doing this.
If you haven’t taken step to implement sustainability, then you might be missing out on opportunities for obtaining new contracts. One good starting point? Implement a sustainability policy that provides some high-level, starting guidelines
If you're considering implementing sustainability at your organization, be sure to download our free sustainability checklist that can help you determine what you are already doing and some additional actions you can take.