Can being an environmentally conscious retailer dramatically improve your profitability?
For years we’ve been reading statistics like 87% of consumers have a more positive image of companies that support social or environmental issues. But what does “a more positive image” mean? More sales? More growth? Is sustainability just table stakes – a little greenwashing for the millennials? Or is sustainable business actually good business? Where are the numbers?
The numbers are here. Sustainability isn’t just good business; it’s great business.
Here’s how DTC brands are achieving impressive results by implementing best practices for sustainability within their organization and for their customers:
UNITED BY BLUE is a past Verbal+Visual client whose sustainable identity has fueled their impressive growth. Their core philosophy is short and sweet: “for every product purchased, United by Blue removes one pound of trash from oceans and waterways.” It’s a concise commitment that’s led to record sales and substantial growth for this omnichannel powerhouse.
And they’re not alone: sustainably-marketed products grew 7x faster than their non-sustainable counterparts, 55% of all recent CPG market growth in past years came from sustainable businesses, and sustainable market growth is rising – with an across the board increase of +2.4 points in recent years.
When it comes to expanding market share, sustainable brands have a considerable edge. And the advantage isn’t just limited to growth:
Sustainability isn’t always dry stats and crunchy-granola copy – sometimes it’s 55 sheep dangling from a helicopter high above the Montana scrub. That’s what sustainability looked like for Verbal+Visual client KUIU when it transplanted much needed sheep to important habitats in Montana and North Dakota. It was the perfect project for this outdoor outfitter and the adventurous customers who buy its rugged gear at premium prices. In fact, the project resulted in the kind of response that DTC brands dream of.
KUIU’s sustainability projects prompted enthusiastic comments from customers and fans.
That makes sense given that consumers of sustainable brands are less-price sensitive and more open to price premiums. Not to mention that sustainably-branded products have overall price premiums of 39% when compared to non-sustainable brands. Consumers of sustainable brands are proven to be less-price sensitive and more open to price premiums. price premiums.
Why are consumers spending more for mission-driven products? It might have something to do with the 73% of millennials that prioritize sustainability over lower cost. Or the fact that, the higher the household income, the more likely consumers are to buy sustainably marketed goods.
So sustainable business means more growth at higher prices, but what does it mean for marketing?
It seems that every brand has a marketing plan based on its commitment to the environment. Is it an approach that yields good returns?
This year, Verbal+Visual client Faherty is launching a sustainable fashion initiative that will include free repairs, recycling opportunities, and an upcycling program for pre-loved items of Faherty clothing. When Reformation launched a similar circular fashion program they saw an increase of 2,500 new shoppers with almost no additional marketing cost, a $0.1 million reduction in customer acquisition cost, and the benefit of unpaid earned media to the tune of $0.4 million.
Sustainably-minded campaigns drive real results.
But sustainable practice isn’t just good for sales and marketing, it can also mean substantial savings for production and distribution.
Past Verbal+Visual client Greats is the DTC sneaker pioneer that recently transformed its manufacturing process to become a better steward of the environment. Their new shoes made from upcycled, recycled, and eco-friendly materials gained them attention from customers and press. These kinds of changes have real results:
When Tom’s of Maine updated their factories’ clean-in-place technology they reduced production costs and environmental impact by saving 31,402,640 cubic meters of water.
When Eileen Fisher shifted their distribution away from air transportation in favor of sea and trucking they were able to save $1.6 million for themselves and another $150,000 in cumulative social benefit.
Sustainable business practices also come with substantial government incentives, including tax deductions like the 179D for environmentally friendly commercial buildings, tax credits of 10-30% for alternative energy use, and additional tax breaks for certain vehicles and qualified equipment recycling.
Who knew you could protect the earth and the bottom line at the same time?
Coca Cola faced public backlash after sustainability claims in its Little Drinks, Big Ideas campaign were found to be less than accurate.
The benefits of sustainability are clear, but the lynchpin of mission-driven success is messaging: the way businesses articulate their ethical commitments is the way they attract and retain their best customers.
That means being transparent and honest about what is sustainable/responsible, and what isn’t. A recent study found that as many as 40% of claims about sustainability were misleading or overstated – the practice otherwise known as “greenwashing."
What’s the harm of a little environmental flim-flam? Not only does it undermine consumer trust, it can also do real harm to essential climate initiatives – not to mention the fact that federal oversight is getting stronger every day, increasing the possibility that a greenwashing fib could lead to serious legal repercussions.
So how do sustainable brands show that they're doing the right thing? Some exciting verification tools and platforms have developed to help consumers build relationships with brands that share their values:
For example, Verbal+Visual is certified by Climate Neutral, a non-for-profit organization that lifts up brands with deep commitments to sustainability. B Corp is another widely-respected group that certifies brands meeting its high standards of ethical operation.
Sustainable products themselves can be distinguished with the Fairtrade label or other similar marks of sustainable production. Additional options for sustainable DTC brands are platforms like Wearwell and Good On You: one-stop shops that connect consumers with products whose environmental claims have been substantiated.
These tools are helping sustainable brands capitalize on customers’ ever-growing demand for ethical products.
Success stories like these prove that sustainable brands have a considerable edge over their conventional counterparts. We can even calculate this success to show an ROI that would excite even the least environmentally conscious CFO.
But the effectiveness of sustainability as a business strategy has a larger, more important meaning: not only is sustainable business good business– mission-driven business on the whole is good business. Consumers are excited by brands that are fundamentally motivated by a responsibility to their employees, their customers, and the environment.
That’s why Verbal+Visual endeavors to be the digital consultancy for sustainably focused merchants. And, that’s why we’ve worked tirelessly to source best practices from across the industry to create The Ultimate DTC Guide to Sustainability.
Ecommerce directors and CEOs of growing DTC brands are making decisions every day that don’t just help their businesses succeed– they’re defining the kind of world we want to live in.