Creating Competitive Advantage through Sustainability

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I just published a post on Triple Pundit that fleshes out the market-facing aspects of a model I’ve been working on with The FairRidge Group. Called the Sustainability Management Maturity Model (SM3), it’s a tool to help businesses assess their readiness to address business sustainability challenges and opportunities. The internal management components were outlined last month on Triple Pundit – Strategy, Organization, Process, Measurement and People – which all relate to an inside-out perspective of the business.

As we’ve continued to evolve the model, I’ve developed another dimension for evaluating sustainability infrastructure: the outside-in perspective. This refers to the level of competitive differentiation and advantage that’s desired by the leadership team. On the scale of laggard to leader, how is your business perceived in the minds of customers, and is it where you want to be? This market-facing aspirational consideration can drive both the internal infrastructure required for a market leadership position, as well as external initiatives to improve marketing, customer experience and ultimately competitive differentiation.

The goal of the market-facing aspiration is to drive top-line revenue through increased purchase and loyalty among sustainability-minded buyers. You can accomplish that goal by strategically managing the following five external considerations:

  • Understand your Total Addressable Sustainability Market (TASM). Most businesses have a solid understanding of their total addressable market (TAM.) Yet to drive top-line revenue through sustainability, you need to measure your total addressable sustainability market (TASM): the percentage of buyers in your category that make purchase decisions based on sustainability and CSR factors. You should be asking: how large is this group, how fast is it growing, what revenue does the group represent, and what share of this market do you currently enjoy?
  • Understand your brand credibility. You’ll want to know how much permission the market gives your brand related to sustainability before making claims that could be perceived as greenwashing. Among values-driven buyers, how does your brand credibility compare against your competitors on the issues that are directly linked to driving their purchase and loyalty?
  • Determine the most effective integration of sustainability and brand strategy. A brand strategy is, in essence, a focused strategic platform that guides every aspect of the business. It should incorporate the 4Ds: Desirable by customers, Deliverable by the company, Distinctive from the competition, and Durable over time. It’s a blueprint for how you do business, as well as for the entire customer experience. How should sustainability be integrated into your brand(s): as a supporting pillar, a new sub-brand or product brand, an ingredient brand or a redefined master brand? You can read more here on this subject.
  • Redefine your customer experience. Essential for avoiding greenwashing claims, the customer experience incorporates all of the proof points necessary to build credibility for your sustainable brand. What good is it to put out a press release on your energy savings when you’re not demonstrating sustainability in your day-to-day interactions with customers? If you’re a product manufacturer, you should also consider how to work with retail or channel partners on critical areas like awareness and education. These partners impact your customer experience, and can enhance or detract from the credibility of your efforts.
  • Lastly, marketing. If you skip the previous four steps, you put your brand at risk and neglect to build a strong foundation for your sustainably minded customer segment. Assuming you’ve tackled the foundational work, you’ll have the right data to create communications that are highly relevant and desirable to customers. Your insights will guide you in speaking their language and framing sustainability in a simple way that they understand and embrace. Your positioning should be unique from all the green- and eco- messaging that’s currently overwhelming the airwaves, and stand out in a way that supports and drives your brand. Bottom line, your marketing should make it easy for prospective buyers to find, learn about and purchase products and services that support your sustainability goals. And when it’s truly effective, customers should be motivated to integrate sustainability more deeply into their lives.

Many executives are hesitant to actively create a market-facing image related to sustainability for fear of greenwashing claims or uncertainty due to the newness of the field. But assuming you’re taking care of the operational issues that could either support or sabotage your efforts, this five-step process can safely build your outside-in approach to driving competitive advantage and top-line revenue through sustainability.

Image source: xotoko

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