By Jamie Wimberly, CEO of EcoAlign

Vistage E-Newsletter, April 2008, Vistage International

 

There is a growing green gap between companies and their customers in regard to climate change and environmental concerns, with companies treating those business risks as something to be managed by public relations and lobbying. In turn, consumers themselves are increasingly stating that environmental issues are important to them, that they are looking for ways to be more environmentally-conscious, but their actual purchasing behavior and lifestyle decisions dictate otherwise.

 

Internally, the green gap is manifested in the oftentimes conflicting directives from the executive team, with purchasing agents and energy managers told to reduce costs even while being pressured to make investments in green or renewable technologies that sometimes have longer payback times. A recent Vistage poll of 275 CEOs and senior executives found that 31 percent of the respondents said that a vendor’s "eco-friendliness" was a moderately or highly import factor in purchasing decisions.

Our firm has conducted numerous market research surveys on business and consumer feelings toward green products and services, in general we have found that a majority of consumers consider a company's environmental track record to be important.  However, this finding becomes difficult to translate into an offering that is going to work for all customers.

 

Our research has shown that different customer segments are relatively more willing and able to pay higher prices than other segments, and sometimes the differences between customer segments can be significant and pose generational or demographic conflicts. Seniors (over 55) have been more active in their efforts to buy green products and services; the young (18 – 35) are apt to be louder about their concerns in regard to the environment yet to do less about those concerns.

 

While consumers are looking for ways to be more environmentally-conscious, our research (over 3 surveys) has found that actual purchasing behavior and lifestyle decisions dictate otherwise. For example, 80 percent consumers indicated that they would like to buy more energy efficient bulbs, only 6 percent of consumers actually bought compact fluorescent light bulbs in the preceding year.

 

Many companies have thus far treated activist and climate change pressures as something to be managed by public relations and lobbying. One would be hard pressed to miss BP's efforts to brand the oil company as being "Beyond Petroleum."  Yet, when asked how committed BP is to using or providing renewable energy, only 50 percent of Americans thought the company was actually committed.  Public relations and lobbying put a bandage over the green gap; they do not necessarily meet customer expectations.

 

So what is the best avenue for companies to take when it comes to aligning their offering with their customer’s green value proposition? The solution is a five-step process outlined below:

 

1)  Determine your client’s value proposition

 

Full-page ads run everyday in major newspapers trumpeting green and environmental messages, but most of the messages miss the mark, as many customers don’t have fundamental understanding of terms such as "energy conservation," "smart energy," "clean energy," "sustainable," and other terms. With numerous surveys my firm has uncovered this misalignment between the words regularly used by companies in their communications and the consumers they are trying to reach.

 

Not only does the messaging with these catch phrases not resonate with many consumers, but it goes against over 100 years of accumulated behavior and attitudes around consumption.  In our society, consumption and waste are oftentimes equated to wealth and personal worth, while environmental stewardship is associated with business restrictions, cost increases and hippies.

 

Spending the necessary money to conduct market research is the foundation for creating memorable, measurable campaigns that are grounded in core business and customer expectations around the company's brand and the value created.

 

2) Meet the value proposition

 

Once you’ve done your market research, fill the green gap with a business strategy. That strategy should aim to provide customer benefits of increased performance, aesthetics, functionality, solutions, and value while working to reduce carbon output and/or promote sustainability.

 

A lot of money is waiting to be made by companies that figure out how to solve the green gap before their competitors, either through cost efficiencies, improved processes, better employee morale and retention, higher brand value, or a premium for their offering, to name a few possible benefits that translate to money. Moreover, with the expectation that the U.S. will soon have a cap or trade system for carbon credits, everything companies do that impacts their carbon footprint will be monetized in the future, meaning their will be a discernible cost and/or bonus for company actions in this space.

 

In today's market, value creation is more than just creating a widget and selling it. Value creation is not about building scale and competing on price. It is about optimizing assets and business practices that, in turn, wholly engage the customer in a relationship over time. Customers are increasingly saying that the environment is important to them. To be of increased value, offerings need to reflect customer wants.

 

3) Integrate your messaging

 

Corporate communications, public relations, investor relations, and marketing departments need to coordinate and integrate messaging around environmental objectives that consumers and stakeholders will believe.  Most advertisements with environmental messaging look and feel like public relations efforts.

 

Environmental goals and sustainable offerings can’t just sit in annual reports, advertisements, committee notes and the mind of the CEO. To benefit from sustainable efforts, a company’s employees enterprise-wide need to understand and accept those goals and become ambassadors to the market and society.  If your line workers and call center employees don’t understand or accept the environmental goals set, you have already lost your marketing campaign.

 

4) Act what you preach

 

In our last EcoPinion survey (March 2008), we asked what a company would need to do to be considered an environmental leader. 77 percent of Americans polled think that a company needs to first strive to become more energy efficient or greener with their own operations and facilities.  In other words, companies need to provide tangible evidence that they are committed to reducing their carbon footprint before being viewed credibly as being an environmental leader.  Without this tangible evidence, green marketing and advocacy efforts are not taken seriously by consumers.

 

5) Communicate the Value

 

There is an old marketing mantra:  "If it is not communicated, then it is not valued."

 

When it comes to sustainable products and services companies must communicate the value proposition that their clients want in terms that the customer understands. While it may be scientifically accurate to describe reductions per ton of carbon, customers really don't have a good sense of what that means to society or to them personally.  The translation process would begin on how green initiatives are providing value in regard to the customer value chain around comfort, convenience, aesthetics and lifestyle, to name a few attributes of value.

 

Closing the green gap must be tied to value creation.  From a company's perspective, environmental strategy has to move beyond a defensive management of risk, and be viewed as a business opportunity to cut costs through efficiency gains and bringing new products and services to market.  From a consumer’s perspective, the offering needs to intersect with the consumer’s perceptions and attitudes toward value, on their terms and not simply by corporate or government fiat.

 

Jamie Wimberly is the CEO of EcoAlign, a strategic marketing agency focused on  energy and the environment. EcoAlign’s mission is to align consumer behavior with energy and environmental needs for products, services, and programs.  For more information on EcoAlign or to obtain the EcoPinion survey reports at no charge, visit www.ecoalign.com. EcoAlign is an affiliate of the Distributed Energy Financial Group LLC.