The impact of 'Green' on the loyalty scheme

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By: Wise Marketer Staff |

Posted on June 7, 2007

The impact of 'Green' on the loyalty scheme

The Wise Marketer recently attended the recent Green Marketing conference in London to better understand the implications of some very high profile environmental initiatives from major UK retailers in the past few months, and their potential impact on customer loyalty across the board.

The event was held to help marketers understand the trends behind and influence of 'Green Marketing' efforts. The major retailers present were Marks & Spencer and Argos, which was perhaps surprising given the media attention that Tesco, Sainsbury, Asda and a host of other major UK retailers have recently attracted with environmental statements.

Financial services leading What was immediately noticeable was the number of UK banks and credit card companies present at the event (including HSBC, Co-Operative Bank, American Express, Halifax plc, Egg, Royal Bank of Scotland, and MBNA). Thus, if the planet is going to saved from its own excesses of consumption, the revolution is apparently going to start with the money lenders.

Jonathan Shopley, CEO for the Carbon Neutral Company (a carbon offset and climate consulting company) set the scene: "Change is real, and caring for the environment makes good business sense". Shopley also made specific reference to internal employee loyalty and external customer loyalty as additional benefits of a Green approach to business.

Keep it simple for the customer Kelvin Collins, head of brand management for Co-Operative Financial Services, observed: "Ethical consumerism is now a £30 billion market, but it is very thinly spread. Convenience is the key, and environmentalism must not be hard work for the consumer".

BP defended its own impact on the planet with a presentation on its TargetNeutral programme. The presentation by programme director Kerryn Schrank detailed the internal battle fought to gain traction and funding for the project. The usual mantra among environmentalists is "Reduce, replace, then offset" - but TargetNeutral is a serious programme that seeks to engage with BP customers to raise environmental awareness and offer some conscious salvation as consumers fill the tank of their 4x4's to take the kids to school.

Chris Clark, head of market planning and brand strategy for HSBC Holdings, gave a polished presentation entitled "Reputation is not built on what we are going to do", explaining the challenge of engaging with consumers who want to understand what the answers to climate change look like and hear about solutions rather than just being show the problem. Presentations from the WWF and various agencies involved in the business of green marketing made up the rest of the conference agenda.

Star performers The star performers of the conference were Matthew Anderson from BSkyB, and Susan Aubrey-Cound from Marks & Spencer.

The presentation from BSkyB showed that the company has taken a proactive stance and is genuinely seeking to steer subscribers toward greater environmental awareness and modified behaviour. An example of how small things can make a big difference is the pack of three long-life light bulbs that the company's engineers leave with each household after every installation visit. It may be a small step for each household but, scaled up, this may have more impact than many of the plans proposed by the UK's Department for the Environment.

Marks & Spencer has also moved toward being carbon neutral in the next five years. The company has taken its initiative right down the supply chain and is making efforts that are far removed from the "greenwash" superficiality of some other companies. Its 100-point campaign is called "Plan A, because there is no Plan B". The company apparently concluded that selling more and more for less and less is not a sustainable business model for the future, and that the key challenge is to deliver change cost effectively while responding to customers who are ready and willing to change but who also want to take small and convenient steps rather than huge efforts to change their lifestyle.

The impact on customer loyalty So what has this got to do with customer loyalty and customer insight? Sadly it has a major impact, but perhaps for the wrong reasons. None of the organisations who presented at the conference are in the front line of large scale customer loyalty schemes. BP is an established partner in the Nectar coalition in the UK, but no significant linkage from its genuine external and internal environmental programmes seems to be reflecting in Nectar yet. And this trend is equally true across the board, not only in the UK but also in the US and other developed markets.

There are a lot of choices to be made by consumers over the next few years, and green issues will definitely be part of the equation. At the moment, very few loyalty programmes are attempting to drive or even encourage green behaviour and awareness. But loyalty marketers - both in the B2B and B2C arenas - will need to take a positive stand. For example, Barclaycard is one of eight British firms (including Marks & Spencer and BSkyB) that have joined forces for a "We're in it together" green campaign. This consortium plans to launch a green credit card that will donate 50% of its profits to environmental projects dedicated to reducing carbon emissions around the world. The difficulty for consumers, as always, is knowing who to trust and who to treat with cynicism.

The lesson for loyalty marketers The important loyalty lesson from this conference was that consumer loyalty programmes have been instrumental over the past two decades in changing consumer behaviour, from the early impact of Air Miles in the late 1980's to the recent growth of Nectar (which penetrates nearly 60% of the UK's households). But, despite frequent surveys, critical analysis, and many put-downs in the media, these programmes have endured, and consistently delivered results for their sponsoring brands, and provided vastly improved customer insight. The members of these schemes have not been forced to join, but have responded because they enjoy added value from them.

So, if loyalty programmes have changed consumer behaviour and driven purchase patterns toward specific brands, one has to ask why these techniques are not yet being used to promote and encourage greater environmental awareness and green spending behaviour? Green isn't a bandwagon. It's a model for genuine customer engagement.

The concepts and best practices involved in green loyalty marketing initiatives are also covered in The Wise Marketer's 950-page loyalty marketing bible, The Loyalty Guide.

The Wise Marketer would like to thank contributing editor Peter Wray, of UK-based loyalty consultancy Loyalty Matters, for contributing this analysis.

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