Why has Coca-Cola been systematically searching for sustainable packaging and bottle solutions across the worlds of start-ups, research and patent offices? And why has Maersk been collaborating with H&M to sail more slowly and expensively? The answer is simple: we’ve finally reached a tipping-point when it comes to sustainability and the circular economy. Large organisations have realised that sustainability makes sense, financially as well as ethically.
Even business-to-business companies are feeling the pressure, but they’re also seeing the possibilities. Maersk’s customers are no longer just large companies with products in containers, but also the end-users who are going to buy the clothes or trainers. Why? Because end-users care about the carbon emissions from transporting their clothes. Suddenly, a company like Maersk has to think like a business-to-consumer organisation. That’s a very big shift, and also an opportunity to stand out positively in an industry that typically doesn’t focus on the end user.
Over the last five to seven years, we’ve witnessed a tectonic shift when it comes to who has the power in the customer relationship. Customers are in charge now, and companies have to get as far into their customers’ universe as possible to remain relevant. The drastic moves we’re seeing from large companies show the massive power that lies with end-users, today and in the future.
Customer focus trends
Of the trends we see driven by customer expectations, the most prominent is sustainability. We’re now seeing brands and products actively being deselected if they’re not a part of a customer’s personal sustainability journey.
Just ask the banks how important it is to stay relevant in a customers’ eyes, when everyone can move their banking business somewhere else at any time. If I would rather ‘talk’ to a portal about all facets of buying a house, it moves the relationship away from my bank, meaning they’ll play a smaller part of my universe – maybe forever.
The Ellen MacArthur Foundation, who we’ve worked closely with on identifying the opportunities of sustainability, estimates that the business potential for sustainability will be £1.5 trillion by 2025.
Customers aren’t expecting companies to be perfect or to have all the answers yet. But they do expect companies’ initiatives to be authentic and irreversible. Just look at Maersk’s impressive effort, the personal responsibility Søren Skou is taking in that field, and the goals of being carbon neutral by 2050. It is both authentic and irreversible.
Our research also shows that, as a company, you should think hard about the fact it’s not enough for customers to know that a product is sustainable. They also need to see and feel it. That explains why both Coca-Cola and Carlsberg have released pictures to the press of packaging prototypes made of recycled cardboard. It is about ’look and feel’. The customers want to feel and see that the products are sustainable.
The possibilities for sustainability and circular economy lie in new products, new business models and new value chains. When Maersk and H&M come together to reduce carbon emissions by transporting H&M’s goods at a slower rate of knots – literally sailing more slowly – we’re moving to a type of ‘Fairtrade’ for transportation. H&M is imagining that their customers are going to be paying for the more expensive transportation when they shop at H&M, and they’re expecting customers to be willing to pay for lower carbon emissions.
Our research shows that seven out of 10 customers are willing to pay more for products that are sustainable or come from a sustainable company. If that phenomenon gains even more traction, most strategies and business models are going to need a check-up, so they don’t miss the opportunities brought about by the tectonic shifts in customer demand.