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Understanding the Circular Economy Customer Experience Connection

4-minute read

As brands seek to understand more about customer behavior, it’s becoming increasingly apparent that many influencing factors are interrelated. In the past, in order to position a product or determine its optimal price point, it was enough to know how, where, when, and what purchases customers were making. But now with customer experience (CX) becoming the key differentiator instead of product or price, brands also need to delve into why customers choose one product, one brand or one retailer over any others. In short, answering what influences CX and what do customers value?

The Importance of Social and Environmental Responsibility

Consumer awareness and genuine caring about environmental and social causes is growing exponentially and it is impacting how they shop and what they choose to buy. An interesting statistic emerging in recent years is the increased interest in watching documentaries. People are curious about the world around them and documentaries have done a fantastic job of highlighting causes often ignored by mainstream media.

As facts emerge about how little plastic is actually recycled (only 9% globally), how pollution is impacting food insecurities, and the massive volumes of waste generated by fashion, food, and technology industries, there’s an uncomfortable realization of the extent to which modern consumer lifestyles have contributed to the problem.

Putting packaging in recycling bins is not enough to stem the tide of plastic pollution. But more conscious buying can. There’s no lack of innovation when it comes to recycling and repurposing materials, but the success of these innovations depends on broader public awareness and adoption to stimulate industry demand. And that is where change is happening. Conscious consumers are realizing the power they have to shift demand towards more sustainable business practices and hold brands accountable. The challenge for brands is how to achieve this and meet customer expectations at the same time.

Circular Economy Complexities

The circular economy is a complete departure from traditional linear business models. Instead of using raw materials to make a product that has a limited lifespan, and is then discarded, the circular economy seeks to use materials already in circulation. The primary aim is to preserve what limited natural resources are left and repurpose the tonnes of waste materials that have already been generated into something useful. Worldwide it is stimulating innovation across industries, helping to reduce carbon emissions and waste, and creating new business opportunities that consumers are only too happy to be a part of.

The complexity comes into the circular economy because it impacts every aspect of the product, from sourcing materials, the supply chain, manufacturing processes, distribution, retailing, product life cycle, repairs, recycling, and repurposing. Every detail has to be carefully thought out, successfully integrated, and tested to ensure it aligns with circular economy ideals.

In the past, a common obstacle was the cost to recycle materials and the fact that fuel and water usage, as well as carbon emissions were often higher than the original manufacturing process. This defeated the objectives of the circular economy. But now, thanks to continued innovation, along with research and development, processes are becoming more streamlined and more efficient. This together with consumer demand is helping to tip the economies of scale and there are far greater incentives for companies to invest in circular economy initiatives.

The CX Tie-In

The circular economy may seem idealistic, but it’s exactly that idealism that appeals strongly to younger, more conscious generations of consumers. Fully aware of the impact of their buying decisions, shoppers are choosing to buy second-hand rather than new, or support brands that use recycled materials in their products and packaging. They’re also choosing to avoid brands that don’t, or that have been reported to have zero interest in sustainable business practices.

The influence on CX is an emotional one. Customers want to feel good about the purchases they make and demonstrate with their spending that they care. On a human level, once there is that consciousness about what benefits or harms the environment, it’s a natural reaction to avoid what could be harmful. This creates a barrier which isn’t easily overcome even by pricing tactics. Recent reports reflect that customers are quite willing to pay more for products that are sustainably sourced or make use of recycled materials. This has been proven by brands such as Adidas and Nike that have been leading the way, innovating with ways to use recycled plastics in their footwear. These products currently sell at premium rates and their adoption is still high. The exponential growth in the second-hand resale market is another example of consumer trends aligning with circular economy ideals.

CX Takeaway

Brands may feel that they already have their hands full trying to navigate the complexities of customer experience. Adding complex circular economy ideals makes being able to deliver on expectations even more challenging. The takeaway is to understand that the two cannot be separated. For conscious consumers, buying decisions are influenced by what they value. If they value sustainability and social causes, they won’t easily be swayed by pricing incentives or product features.

More importantly, consumers understand their buying power and influence and don’t hesitate to leverage it. They’re more willing to support and promote brands whose values align with their own. The key for brands is to look for ways to connect with customers on those mutual values. Digital channels offer an ideal opportunity to do this.

For example: many flight booking websites display carbon emissions for different routes and airlines. This creates awareness about carbon emissions and gives customers the choice of buying according to their values. Online health stores allow customers to choose minimal, recyclable packing options. Other brands like Speedo - a UK swimwear brand - detail how they use yarns from recycled fabrics to recreate new swimming costumes. These are all important elements that get the attention of conscious consumers and make the buying decision easier.

While trends toward environmental and social consciousness are growing fast, every customer is different. How information is displayed on a webpage is key to being able to connect with individual website visitors on values that matter to them. This is where experimentation and personalization of CX plays an important role. Having the ability to serve multiple ideas in thousands of combinations helps brands understand what visitors are responding to and confirm if they’re on the right track to delivering on customer expectations.

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