Is building loyalty with customers the key to withstanding global shocks? asks WWF-UK's Rhiannon Shah
It is not yet clear which brands will withstand the pandemic. Entire industries are likely to be transformed, like aviation which won’t see a return to pre-Covid-19 flight levels for years. Where this leaves marketing will likely be complicated for some time. So how can marketing adapt to this shock and to future shocks likely from climate change and nature loss around the world?
One option, when the lockdown eases, is to ‘build back stronger, harder and faster’ and use all the techniques of marketing to get people to fly more, buy more and consume more – basically ‘a new super-charged normal’ to make up for the losses of the past few months. This strategy is no doubt favoured by those who see marketing as purely a commercial function. But there is another strategy that could have value for years to come and help brands withstand external shocks. This other strategy – already favoured by some progressive companies – will help brands to withstand shocks like covid-19, climate change and nature loss which are already showing their damaging effects on both livelihoods and the economy. Instead of building back stronger and harder, marketing as a strategic function responsible for brand values can push the business to ‘build back better’ and not go back to an idealized ‘normal’. A better version of ‘business-as-usual’ ultimately will create business resilience against a variety of external shocks, build customer loyalty over time and achieve the holy grail of sustainable growth. Here’s why this is important…
In the past 50 years, the human population has doubled, the global economy has grown nearly fourfold and global trade has grown tenfold, driving up the demands for energy and materials. How this reconciles with a finite planet is tackled in the 2019 IPBES report and is sobering reading. Our demand for resources is now so great that we only have 10 years left to reduce the impact of production and consumption before we trigger what scientists call ‘self-amplifying’ changes to the planet that will be devastating on our communities and on our economy. All of this matters fundamentally to marketing departments. Shifting huge amounts of stock and getting customers to buy more exponentially is eating into the natural capital on which the stability of our planet is based.
Make no mistake, the current health crisis is no silver bullet for the environment. Yes, we are in a period of slow living and we see signs that nature is at least getting a breather. But the way it goes from here totally depends on what we decide to do next. With figures based on the current enforced global lockdown, analysts from Climate Action Tracker predict the global slump from covid-19 will cause emissions from fossil fuels and industry to fall in the range of 4-11% in 2020.
Mike Barry, Director of Sustainable Business at M&S chats to School of Marketing
The International Energy Agency predicts emissions this year will fall by almost 8% reaching their lowest level in 10 years, declaring the crisis the biggest shock since the Second World War.
But recent analysis by the Carbon Brief states if we want to put the world on a path for less than 1.5C warming – which is what all countries and the business community supported with the Paris Agreement five years ago – emissions will actually have to fall 7.6 per cent every year throughout this decade. So that’s not just the next 6 months. Every year. For the next 10 years. Lessons learned from the 2008 crash show that emissions also initially dropped, but then surged back, quickly returning to pre-crisis emission levels as the economy cranked into gear again.
So how we stimulate the economy and get people back into work without repeating the destructive habits of ‘business-as-usual’ will take some serious visionary thinking and great leadership. If we don’t, scientists are warning consequences will be dire. Climate Action Tracker for one, projects that global temperature will reach 3C by the end of the century and others claim it will be even higher. Business visionaries like Paul Polman and Mike Barry are amongst many who are urging business leaders in all departments to learn from our slow living in lockdown and re-imagine business so it tackles the scientific challenge ahead. Their call to action is to use this time to double-down on sustainability and embed this into core business function so we can meet the challenges that science is telling us we will continue to face.
Interestingly, a recent YouGov poll showed that only 9% of the UK population actually want to return to ‘normal’ after the lockdown ends. Instead, 85% want to see some of the personal and social changes they’ve experienced continue.
This poll identifies significant changes to our relationship with food, family and the environment, something which marketers should take note.
A green shift? Paul Polman
Well, we already are seeing signs that many customers are likely to leave this crisis asking more questions of the brands they invest their time in. There’s been a lot of public critique of big brands (and billionaires) who are genuinely not ‘in this together’. And in marketing circles there are endless chats and evaluations on which brands are getting this right and which are not. Brands like Coca-Cola are being celebrated for getting the right empathetic tone and using social media to spread happiness (one of its core values). Then there are the pros and cons of socially distanced logos. But these marketing debates do not touch the fundamentals that marketing could engage with at this time to really transform the business.
Marketing needs to be at the table playing a key role in the strategic (re-)positioning of the business and gathering data on the increasing customer desire for authenticity and community that will support this transition. If a brand is built on fundamental values of protecting and serving society, that will help the brand survive and make marketing’s job far easier. Plus it will also be good for the planet. According to LinkedIn demand for green jobs has tripled in 2019, which also shows there is a growing body of employees who want the business they work for to also match their values support. So finding a more authentic purpose will also help employee retention as businesses build back to something both its customers and employees will find meaning in. Marketing can also use its skills to create sustainable growth, authenticity and longevity.
Brands like Patagonia and Unilever make bold claims that sustainability makes their entire business more sustainable (and resilient) over the long term. Patagonia’s loyal community and innovative ideas have helped their business weather many storms over the past 40 years. And recent results from Unilever’s Sustainability Living Plan - Ten Years On has proved that sustainability can also drive profitability. Brands in their Sustainable Living group grew 69% faster in 2018 than the rest of the business. Some might claim it’s easier for B2C companies to do this. So let’s look at two brands from two different sectors not traditionally known for sustainability who are embedding it as core business function. One is a bank, the other is a B2B carpet manufacturer…
After the last financial crisis, the reputation of banks (and bankers) took a nosedive. Marketing has played a key role in re-establishing a version of normal for this sector. Faith in banks is a little higher today, but it remains low on the list of trust. Perhaps it’s not surprising to find out that 250,000 people in the UK have switched banks in the first three months of this year, thanks to a switching service which lets you change banks as easily as you can change energy suppliers. According to figures from the Current Account Switching Service, some banks like Bank of Ireland are losing customers at a rate of 30 to 1, whereas lesser known banks like Triodos Bank are winning customers at a rate of 13 to 1.
Triodos: Change your bank, change the world - Lily Cole
Triodos Bank however isn’t a new kid on the block like some of the others in this league table. It has been growing steadily and is celebrating its 25th anniversary in the UK this year. It has built a solid reputation on customer loyalty, investing in communities and sustainable growth, and they are seeing an increasing number of customers who share these values - their overall customer numbers grew by 14% in the past year. Added to this, it has scooped up a rare Queen’s Award for Enterprise for Sustainable Development which is awarded to an organisation that offers products, services and management that ensure a better quality of life for everyone, now and for generations to come.
Awards like this show that both the business and the brand purpose are to serve society – which makes its marketing automatically more authentic. So while other banks are creating expensive new TV ads with socially distanced staff, or increasing the placements of ads crooning “I will look after you,” Triodos is running an awareness campaign to help transform the sector. Their campaign ‘Change your bank. Change the world’ taps into customer demand for more environmentally responsible products and draws attention to the flaws in the current banking system, which has seen UK banks invest £150 million fossil fuels since the Paris Agreement was signed. In contrast, Triodos is 100% transparent who they lend to – companies who deliver positive social, cultural and environmental change. This also means that in times of crisis, they don’t have to dial up the emotion or the empathy, they just dial up their reach. Remember 20 years ago, when many big brands didn’t take those ‘dot-coms’ seriously? If I was a big bank with a very glossy ‘I’ll be there for you’ marketing brochure, I’d be very worried by Triodos right about now.
Another brand who is working hard to change ‘business-as-usual’ is Interface carpets. Interface is a commercial flooring company who has built the foundations of their business on long-term value and have embedded sustainability into core business strategy. Very early on they noticed this was also great for business, because sustainability was an issue that their customers cared about. Their company mission #climatetakeback is to have positive impact on the planet and they consider the planet a vital stakeholder in the business. Their marketing department fully supports this mission and, as a result, doesn’t have to work as hard to win customers (or to keep them). Their mission is also good for employee retention with a proud inter-generational workforce in their US factories. But more than that, the solutions and issues they are tackling within their business – like how to eliminate damaging chemicals from their products, how to create an alternative fuel source to natural gas, or how to develop products that actually store carbon and combat climate change – are ones their competitors can learn from.
The knowledge they are gaining from their R&D is designed to be open source so that their competitors can accelerate change within their businesses too.
Their 25th anniversary report Lessons for the Future is inspiring reading. It is designed to help other brands accelerate change and build business (and planetary) resilience in the process.
The Business Case for Sustainability - Ray Anderson, Interface
Tony Milikin on why AB InBev is a leader in sustainability
The covid-19 crisis looks likely to be with us for some time, so the marketing community will need to ask itself some tough questions. Socially distanced logos and TV commercials will soon lose their charm. Can marketing help the business build long-term resilience and re-imagine business-as-usual to fit within planetary boundaries? Can it use its expertise to support a more sustainable form of growth? Can it help to create new offerings which customers are demanding? Are there other metrics it can use to measure success? I believe the answer to all of these is yes. Businesses like AB InBev, Dell and M&S and are doing great things behind-the-scenes on sustainability, smashing through their targets and making their businesses more efficient in the process. For years they have invested in practices that support our natural world and our communities, but they aren’t yet shouting from the rooftops about the good work they’ve been doing.
But when they do, brands like this will be able to withstand fears of greenwashing, because their long-term track record of doing what’s right for our global community will shine through.
Marketing can definitely help us #buildbackbetter – if it wants to.
