1. ESG

The New Retail Frontier: Where Sustainability Meets Customer Loyalty

Sustainability is an enormous social issue and it’s here to stay. That is why it’s no surprise that when surveyed, 71% of retail leaders indicated that they were prioritizing sustainability in their business. To keep up with this rising demand, brands need to align themselves with green practices, especially as more consumers today are basing their purchase decisions and brand loyalty on company values.

However, these changes aren’t occurring overnight. Slowly, retailers are beginning to incorporate environmentally friendly initiatives into their strategies and operational practices, and most importantly their loyalty programs, to ensure they are promoting sustainability across the board.

Loyalty Programs Go Green

A green loyalty program builds emotional loyalty and brand advocacy, which builds customer interest, all while helping the Earth at the same time.

With consumers demanding more green initiatives, retailers and brands must reframe their business goals and programs. However, due to varying pace levels adopting sustainable initiatives, there is a significant maturity curve throughout the retail industry.

In the realm of sustainability, big-name retail companies have taken the lead in marketing their eco-friendly endeavors, capitalizing on these opportunities to expand their green loyalty program initiatives. However, industries such as hotels and casinos, which are not traditionally considered core retail businesses, find themselves on a different maturity curve, just beginning to grasp the potential of leveraging sustainability. Consequently, these sectors lag behind and grapple with incorporating loyalty programs into their overarching sustainability strategies.

There are many great examples of companies taking accountability for their environmental impact and using their loyal customer base to get involved. For example, a well-known U.S. retailer encourages its members to take part in a denim recycling program, with the goal of using its jeans to make housing insulation. All customers have to do is donate their old jeans instead of throwing them away and, in return, the retailer will offer the customer a discount on a new pair.

Recently, a financial services company announced plans to introduce new digital solutions to allow its corporate clients to better understand and manage their carbon footprint, including digital carbon tracking and offset solutions, and the expansion of its recycled plastic cards. Also, to celebrate Earth Month in April, the company rewarded eligible customers for shopping with purpose from select stores committed to making a difference.

But there is more to sustainability than enticing customers to engage with the brand’s products and services. When a retailer seriously commits to going green, there are additional benefits that present themselves to take the business to a new level while appreciating the loyal customer foundation.

Jumping Over the Hurdles

When a retailer decides to move forward with launching or updating its loyalty program to embed eco-friendly offerings, there are three challenges that businesses might face. These include:

  1. Digital enablement: As digitization becomes more widespread, retailers should ensure they have the proper digital tools to anticipate and understand their customers’ needs. Do we have the right user experience? Do we have the right customer experience? Do our physical and digital platforms match? These are all questions that a retailer should ask itself when they’re thinking of starting a sustainable loyalty program. If they haven’t fixed the digital enablement basics, they won’t have much success moving forward with a green loyalty program. 
  2. Data and privacy: Once you’ve guaranteed your digital approach is on the right track, businesses should confirm their data and privacy policy is transparent. While most consumers are aligned with how their information is being used, it’s important to be as clear as possible about what detail is being collected, how it’s being used, and especially the value of the information being used. Utilizing data-driven insights the correct way will allow companies to create a more effective loyalty program, which in turn will drive a higher level of member engagement.
  3. Measurement: Measuring the health of your sustainable loyalty program is also crucial. Businesses need to figure out how they will measure the success of their initiative so they can make meaningful value out of it and generate informative and impactful decisions for their customers.

A Path to a Greener Solution

There are many different ways brands can incorporate sustainability in their loyalty programs, but by following these four steps, retailers will already be one step ahead toward building a successful and green loyalty program and at the same time creating a following of dedicated customers.

  1. Hold yourself accountable:Accountability is key. Enterprises that stay true to their values and goals and share their entire sustainability journey will be able to better attract and retain customers. By helping consumers understand the company story – and how this story has evolved to prioritize both the customer and the environment – leaders will set their sustainability strategy up for success. Retailers should also measure the sustainability impact of their existing products and services to educate their consumer base on what already is available. This is to showcase to customers that they’ve already taken the initiative from the very beginning.
  2. Stay consistent: Retailers should be consistent and take time to plan and kick off the right type of program. Sometimes, the program doesn’t create the intended results, so the organization might have to change course. However, if consistency still appears through change, a positive customer experience can still happen.
  3. Be bold: A retailer should state a clear set of goals and principles, but also take the leap, get creative and not be afraid of making mistakes.
  4. Connect to purpose-driven consumers: In today’s evolving retail landscape, social selling has emerged as a crucial strategy to connect with purpose-driven consumers. As traditional channels take a back seat, social media and online platforms provide an opportunity for retailers to showcase their commitment to sustainability and ethics, fostering authentic connections and personalized experiences. By leveraging targeted advertising and influencer collaborations, social selling transcends geographical boundaries, reaching a global audience and cultivating a loyal customer base that actively seeks out sustainable products. This integration of sustainability and social selling is the key to unlocking the full potential of the new retail frontier, securing a sustainable future for both retailers and consumers.

All in all, incorporating sustainability into the business plan and ultimately in a loyalty program will be the cornerstone of customer loyalty and will ensure that your program is as successful as it can be to strategically outshine your competition.

Tausif Khiani leads Capgemini’s Hospitality Industry Portfolio. He is a business and technology transformation thought leader and subject matter expert with extensive experience working with Fortune 500 companies and leading industry players across the cruise lines, casinos, hotels, travel and entertainment segments. Through his experience working with the industry’s top innovators and disruptors, and his approach to enable connected experiences through all lenses of the business, he and Capgemini offer a unique understanding of how to build solutions adapted for the challenges, trends and nuances in hospitality businesses and for their consumers.

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