Now more than ever people are wide awake to the devastating effects of climate change. Public concern is growing year on year as instances of extreme weather and natural disasters make global warming an observable reality. Every day our newsfeed is filled with social and environmental movements as people push back on the impacts that consumerist culture has had on the planet and on people. From this awakening a new consumer has been born, one who believes that accumulating things is not the same as happiness and has a social responsibility to create change. One of the critical ways that the conscious consumer takes action is through their buying behaviours.
When it comes to the climate, the majority of consumers point the finger of blame directly at brands. According to Gartner, 59% of consumers say that businesses are the biggest contributors to climate change. In 2019 a GlobalData research study reported that 79.8% of consumers believe that retailers are not doing enough to address issues around sustainability and climate change. The new-age consumer is sentient and paying close attention to the actions of brands.
So the pertinent question is, why should brands be paying attention to conscious consumers?
Here are three critical reasons why brands need to build relationships with conscious consumers right now:
1. Reputation is everything
In today’s society, consumers can’t eat a croissant at a café before first reading a review online. In an economy where referrals are king, reputation is everything. In fact, research has shown that 84% of people trust online reviews just as much as a personal recommendation. Research from Accenture says that 62 % of consumers say their purchasing consideration is driven by a company’s ethical values and authenticity, while nearly three-quarters crave greater transparency in how companies source their products, ensure safe working conditions, and their stance on important issues such as animal testing. Consumers are demanding transparency and authenticity from the brands that they engage with. Having a strong reputation can build trust in the minds of current and future customers, improve loyalty, and expand your brand through word of mouth.
Perhaps more importantly, what can a bad reputation do to a business?
Take the recent scandal involving major fashion brand Boohoo, who was accused of poor working conditions and severely underpaying staff. Despite responding to these allegations swiftly, the reputational damage was done and shares have plummeted dramatically as a result and online retailers Next, Asos and Zalando have now dropped Boohoo from their sites.
A famous investor and business tycoon Warren Buffett once said: “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
Building a relationship with conscious consumers is ultimately helping to grow a lasting brand reputation.
2. Improve the bottom line
There’s no denying that one of the key primary objectives for any business is to maximise profits. The reality is that business leaders need to compromise and make difficult decisions on a daily basis in order to keep their companies afloat. For decades brands have been willing to compromise ethical standards, believing that it was part and parcel of running a successful business.
But can build relationships with conscious consumers actually improve the bottom line?
According to research from PayPal, 55% of Australian consumers qualify as ‘conscious consumers’. While a study by Nielsen revealed that the majority of Australian consumers are either highly or somewhat willing to pay more for products that are environmentally friendly or sustainable (62%), contain organic or all-natural ingredients (59%), or carry social responsibility claims (55%).
While it is true that virtuous intentions do not always translate fiscally, it is imperative that brands understand that the trend of value-based purchasing is not going anywhere. As the demand for ethically produced goods evolves, businesses will need to adapt and form transparent relationships with conscious consumers.
By adopting ethical business practice brands can simultaneously grow corporate culture, which carries a significant implication on performance — better performance yields better results. Similarly, demonstrating a compliant business function can broadcast a favourable public image to stakeholders, leading to increased profitability. From a marketing perspective, having an ethical reputation built on authenticity and transparency can also be a highly effective marketing tool.
In the short-term building relationships with conscious consumers might not seem profitable, but brands must adapt a long-term perspective in order to reap the rewards.
3. Connect with Millennials and younger consumers
Millennials now account for the biggest global generation of consumers and brands must be strategically poised to connect with them. Research from PayPal has found that those under 35 lead the charge when it comes to identifying as ‘conscious consumers’ in Australia. According to Nielsen, 73% of global Millennials are willing to pay extra for sustainable offerings.
Having grown up in a connected world, the Millennial consumer is conscious of environmental initiatives and actively invested in the betterment of society. Generational shifts have meant that younger consumers hold a lot of economic power — and they know it. As an actress and Millennial activist Emma Watson has said: “As consumers, we have so much power to change the world by just being careful in what we buy.”
Then there is the potential buying power of the elusive digital native generation, known as Gen Z. Research from McKinsey says that while Millennials tend to have a ‘green’ focus on environmental issues, that Gen Z is looking more broadly social issues. A staggering nine out of ten Gen Z consumers believe companies have a responsibility to address environmental and social issues. These passionate and principled consumers are looking for ethically made and produced materials from authentic, cause-led brands who they identify or align with.
In order for businesses to tap into the spending power of younger generations, they must understand and connect with the values of conscious consumers.
Beyond reputation, profit, and connecting with younger consumers, businesses should make ethical and environmental considerations to contribute to a better society. By building relationships with conscious consumers, brands can work collectively with the people who invest in them to create a more sustainable and equitable world.
There has been a fundamental shift in consumer expectations of retailers. It represents a great opportunity for brands to listen to their customers and make strong commitments towards ongoing change. By stepping up and building relationships with conscious consumers, brands can become platforms for movements and leaders for change.
While there are multiple compelling reasons for businesses to adapt to a conscious consumption model, possibly the most compelling one is that we must collectively take action before we reach the environmental tipping point.
At the opening address of the recent Petersberg Climate Dialogue, Kristalina Georgieva the Managing Director of the International Monetary Fund said it best: “If this recovery is to be sustainable — if our world is to become more resilient — we must do everything in our power to promote a green recovery. In other words, taking measures now to fight the climate crisis is not just a ‘nice-to-have’. It is a ‘must-have’ if we are to leave a better world for our children.”