In today’s business landscape, sustainability and customer loyalty have become critical components of a company’s success. As a result, various businesses are experiencing increased pressure to involve sustainability efforts in their practices (e.g., via a loyalty program). Not only can this benefit businesses by building a positive reputation, but it can also foster positive relationships with customers by making a collaborative effort towards significant environmental, economic, and social initiatives.
What is the relationship between sustainability and loyalty programs?
Consumers today are more conscious than ever of the lasting impact of everyday purchases. In fact, research shows that over 63% of respondents maintain that sustainability is crucial when determining whether to stay loyal to a brand (Zinrelo, 2023).
Furthermore, there is evidence to suggest that growing environmental concerns have significant impacts on customer spending patterns. For example, a 2020 Mickensey report found that “57 per cent [of customers] have made significant changes to their lifestyles to lessen their environmental impact, and more than 60 per cent report going out of their way to recycle and purchase products in environmentally friendly packaging” (Granskog et al., 2020).
Based on the studies referenced within this article and more, it is evident that businesses which prioritise sustainability and customer loyalty are more likely to succeed in the long run.
Which industries are experiencing the most pressure?
Two sectors that have showcased rapid acceleration towards the convergence of sustainability and loyalty are the fashion and beauty industries.
The global fashion landscape alone is recognised as one of the most significant contributors to the climate crisis, accounting for approximately 10 per cent of carbon emissions output i.e., 1.2 billion tonnes per annum (Shukla, 2022).
Consumers have begun to consider their role in this impact, with research pointing towards a decrease in concerns surrounding ‘newness’. In fact, studies reveal that ‘newness’ is ranked as the least important attribute when consumers (across all age groups) make a purchase decision, with 50 per cent of Generation Z and Millenials stating that they expect to purchase more second-hand items in the future (Granskog et al., 2020).
The beauty and cosmetics industries also pose a significant threat to the environment, with businesses contributing to over 120 billion units of plastic waste annually (Elle Canada, n.d.). In retaliation, consumer desire for eco-friendly packaging options has increased exponentially, with over 60 per cent of customers stating that they are willing to spend more for products with sustainable packaging (Feber et al., 2020).
How can sustainability efforts increase customer loyalty?
By offering rewards and bonuses for sustainable behaviour, loyalty programs can drive acquisition, growth and retention, all whilst encouraging customers to choose more eco-friendly options. Great strides have already been made by businesses to incorporate sustainability into loyalty as a way of cutting manufacturing costs and by way of creating additional revenue sources (e.g., online second-hand marketplaces).
Many studies also allude to clear profit potential for businesses that choose to introduce sustainability efforts into their loyalty programs. For example, one study suggests that customers are willing to spend up to 20 per cent more on sustainable products (Clark, 2021). When split by demographic, it was revealed that 90 per cent of Gen X consumers were willing to spend an extra 10 per cent or more (Petro, n.d.).
Examples of successful loyalty programs that encourage sustainable behaviours
There are many global examples that showcase how businesses within the fashion and beauty landscape are making an effort to match customer sentiment towards sustainability. The following loyalty programs demonstrate successful attempts at creating an engaging, rewarding and communal effort towards tackling social and environmental initiatives.
Eileen Fisher – Renew Rewards (USA)
US brand Eileen Fisher has seen great success through the Renew Rewards program. Members of the loyalty program will earn $5 credit for each piece of pre-loved clothing that is returned to the store, no matter its condition. Garments that are in great condition are resold, and others are recycled or transformed into one-of-a-kind works of art. Each item is professionally cleaned and reuploaded on the Eileen Fisher online marketplace for customers to purchase. Since its launch in 2009, the business has received over 2 million articles of clothing, with more than 600,000 items resold on the online marketplace.
The Reformation (USA)
The Reformation is a sustainable fashion brand that calculates how the impact of producing Ref products compares with most clothes bought in the US. Customers can visualize RefScale rankings for each product on the website as they purchase. Members can access a personalised RefScale via their account to chart their environmental savings for every purchase. The company then rewards members based on their individual RefScale savings i.e., how much water, CO2/waste they reduced through their purchases.
Levi’s Second Hand (USA)
Customers can book a “trade-in” appointment to donate second-hand Levi’s denim and clothing items. Customers can trade in up to 5 items in one appointment. Customers will receive a Levi’s gift voucher if the item’s condition qualifies for re-sale. Items that do not qualify will not be rewarded but can be donated on behalf of the customer. Levi’s also enables customers to access a blog that includes DIY workshops and crafty posts to teach shoppers how to repurpose old denim at home.
Mara Hoffman – Full Circle (USA)
The Full Circle program allows members to sell their second-hand Mara Hoffman items on the Full Circle online marketplace. Members must first create an account and submit a resale request followed by current images, desired price and provide a brief description. A prepaid USPS shipping label can be printed and attached to the item, which will then be shipped once a customer has purchased the item. Members receive 100% of the resale amount in Mara Hoffman store credit.
Note: In 2021, it was revealed that the global market value of secondhand and resale fashion was estimated to be worth $96 billion U.S. dollars (Wertz, n.d.).
The Body Shop – Refill program (UK)
The Body Shop has introduced reusable, aluminium bottles and containers across 720 stores globally. Customers can advise staff which product they would like to refill at the counter. Members of The Body Shop Club loyalty program will be able to unlock double points on all refills for ongoing eligible purchases.
Sephora Beauty Pass (AU)
Sephora (AU) has partnered with recycling company, Teracycle, to reward members for returning their cosmetic containers back to Sephora Stores. All Sephora Beauty Pass members will earn points based on the number of containers they return for recycling (e.g., 1-5 units = 50 points, 5-10 units = 100 points, 10+ units = 150). The returned containers are processed and broken down into raw materials that can be recycled as opposed to being thrown into landfill.
In today’s business landscape, sustainability and customer loyalty have become essential components of a company’s success. By prioritising these concepts, businesses can drive growth, mitigate risk, and create long-term economic, environmental, and social value. By aligning their values and practices with those of their customers, companies can develop stronger relationships and foster loyalty, which can help to maintain a competitive edge in today’s marketplace.
- Zinrelo (2023). Is sustainability in loyalty programs crucial to retain customers in 2023? [online] Available at: https://www.zinrelo.com/is-sustainability-in-loyalty-programs-crucial-to-retain-customers-in-2023.html#:~:text=More%20than%2063%25%20of%20respondents [Accessed 28 Apr. 2023].
- Granskog, A., Lee, L., Magnus, K.-H. and Sawers, C. (2020). Survey: Consumer Sentiment on Sustainability in Fashion. [online] McKinsey & Company. Available at: https://www.mckinsey.com/industries/retail/our-insights/survey-consumer-sentiment-on-sustainability-in-fashion.
- Shukla, N. (2022). Fast Fashion Pollution and Climate Change. [online] Earth.org – Past | Present | Future. Available at: https://earth.org/fast-fashion-pollution-and-climate-change/#:~:text=Fashion%20and%20its%20supply%20chain.
- Feber, D., Granskog, A., Lingqvist, O. and Nordigården, D. (2020). How US consumers view sustainability in packaging | McKinsey. [online] www.mckinsey.com. Available at: https://www.mckinsey.com/industries/paper-forest-products-and-packaging/our-insights/sustainability-in-packaging-inside-the-minds-of-us-consumers.
- Elle Canada. (n.d.). How Do We Solve The Beauty Industry’s Plastic Problem? [online] Available at: https://www.ellecanada.com/beauty/skincare/beauty-industry-plastic-pollution#:~:text=future%20is%20now.-.
- Clark, T. (2021). Are consumers really willing to pay more for eco-friendly products? [online] Retail Focus – Retail Design. Available at: https://retail-focus.co.uk/are-consumers-really-willing-to-pay-more-for-eco-friendly-products/.
- Petro, G. (n.d.). Consumers Demand Sustainable Products And Shopping Formats. [online] Forbes. Available at: https://www.forbes.com/sites/gregpetro/2022/03/11/consumers-demand-sustainable-products-and-shopping-formats/?sh=740e400e6a06 [Accessed 28 Apr. 2023].
- Wertz, J. (n.d.). Rise Of The Resale Business In The Retail World. [online] Forbes. Available at: https://www.forbes.com/sites/jiawertz/2022/10/31/rise-of-the-resale-business-in-the-retail-world/?sh=5c18a8e47796 [Accessed 28 Apr. 2023].