Sustainability Is a Customer Experience Issue
Companies have great power. They can create experiences that delight customers and even influence the way they consume. Designing for a better experience requires understanding not only where opportunities lie, but also the design constraints involved.
Take the growth in “green” consumer products. This trend suggests that customers desire to be more environmentally conscious. But companies can’t rely on consumers to make sustainable choices for altruistic reasons. As Kristin Heist notes: don’t assume “that people are going to choose a product…or choose to pay more for it because it’s good for the environment. You need to figure out what is that personal motivation that is going to make them say, ‘You know what? This is right for me, this is right for my family,’ and that’s what you need to design for.” We can’t expect customers to alter their behavior without the incentives to do so. Besides, companies have a responsibility to shareholders and employees to remain profitable. It can sometimes seem that sustainability is in conflict with this obligation.
In fact, it isn’t. Sustainable design is both the constraint and opportunity in developing a better customer experience, or CX. The key: create a great customer experience that naturally aligns with being more sustainable while still meeting financial goals.
Know Your Customer
Having an easy return policy is an important part of many e-commerce businesses. A strong return policy is like insurance: reassuring to know it’s there, but hopefully, never utilized. In 2014, e-commerce passed the $300 billion threshold for the first time. However, as much as a third of all Internet sales get returned. Returning items is inconvenient and disappointing, creating a poor CX. A returned item implies “something went wrong” in the decision-making process. It’s in the interest of a company to help customers make the right decisions for themselves. As Toby Bottorf points out, “one-size-fits-all solutions are a thing of the past. Customers’ expectations have changed with the growth of data collection. This applies both to the nuances of who customers are today, and also to how their needs change over time.”
Returns are not only bad for business, costing upwards of 4.2% in lost revenue each year, but also bad for the environment. Around 35.4 million tons of containerboard were produced in 2014 in the United States. E-commerce companies are among the fastest-growing purchasers. Along with additional cardboard, returned items create additional carbon emissions from freight services. For many returned items, the most significant impact may be that they are sent to a landfill rather than resold, effectively wasting all of the raw materials and energy that went into their production; up to two million tons of return items get tossed each year.
A company delivering on great CX not only knows its customers’ needs in the moment of a purchase, but also when the purchase makes its way into the home. Succeeding here reduces returns—improving the bottom line by reducing the production of goods that go straight to the landfill without ever being used and the additional cardboard and carbon emissions from return shipping.
Make It Easy to Trade It In
When goods become obsolete shortly after release, companies risk losing a customer to a competitor at the next purchasing decision. There is no greater example of this than the world of electronics. The average PC user replaces his computer every four-and-a-half years. The typical household used to replace their television every eight years, but with the growth of HDTV, that number has dropped to around every four to five years. Additionally, around half of Americans upgrade their smartphones every two years.
Many companies offer trade-in and/or upgrade programs to keep smartphone customers loyal. Studies have shown that increasing customer retention rates by 5% increases profits by 25% to 95%. However, similar trade-in and/or upgrade programs for larger electronics are not as ubiquitous and lack the same convenience. Trading in a smartphone is physically far easier than trading in a TV or computer. Since many of these programs require the customer to bring the item to the store or mail the items, they present a unique opportunity for companies to create services around removing and upgrading old, large electronics.
Returning electronics to a retailer helps ensure products are disposed of properly. The EPA reports 41.1 million computers and 20 million TVs are trashed in the U.S. every year. Only 13% of electronic waste is disposed of and recycled properly. Recycling raw materials from end-of-life electronics is the most effective solution to the growing e-waste problem. Most electronic devices contain a variety of materials, including metals that can be recovered for future uses. By dismantling and providing reuse possibilities, intact natural resources are conserved and air- and water pollution caused by hazardous disposal is avoided. Additionally, recycling reduces the amount of greenhouse gas emissions caused by the manufacturing of products from virgin raw materials. Lastly, such programs can incentivize companies to design programs that are easier to refurbish or recover valuable materials from during recycling, allowing companies to capture more value from the product when it is returned.
Offer Access to Products as Services
For customers, complex DIY projects require equally complex pieces of equipment, many of which are highly expensive. A little over a decade ago, Home Depot began renting equipment. With Home Depot rentals, customers don’t have to spend a small fortune on tools to complete projects. In addition, a Home Depot Rent Center offers constant assistance for customers who choose the store in their area, leading to positive reviews.
By 2010, Home Depot’s tool rental business brought in an estimated revenue of about $525 million. Soon after, Home Depot expanded to offer larger, towable equipment, broadening its appeal to small contractors and DIYers, leading to even greater revenues. Today, they have 16 different categories customers can choose from to rent tools and equipment.
We live in an age of built-in obsolescence, with consumers buying more and throwing out more. The result is approximately 220 million tons of waste generated each year in the United States. By offering access to a product as a service, companies can effectively reduce the number of items consumers purchase but seldom use. Such a move will surely help them become a bit greener, both to the planet and as businesses.
A Differentiating Lens
Companies innovate CX through the discovery of opportunities, an understanding of constraints, and by differentiating from the competition. By working to improve CX using the lens of sustainability, companies have the ability to find novel solutions that meet customer expectations, both what they experience and what they aspire to, achieve fiscal goals, and leapfrog the competition.
