Consumer Engagement: Gaining Customers or Mitigating Risk?

by | Apr 2, 2012

I’m ashamed to say that there is one phrase in particular that makes me lose all measure of diplomacy and tactful behavior suitable to business meetings. When I hear “consumer engagement,” aka “customer engagement,” it makes my blood rise. It has become a trend in the sustainability field for consumer products companies. It’s not that I’m particularly against these activities; on the contrary, I think they’re a vital part of a successful sustainable business. And, if done correctly, engagement can build long-term relationships to alleviate a number of wasteful and unsustainable business practices. However, I do not believe that consumer engagement should be the primary motivation for a sustainability strategy. And many companies that claim consumer engagement as their reason for implementing sustainability are being coy about their real reasons. If it really is their primary motivation then I venture to say they have been misguided, possibly wasting valuable resources, and more importantly, could be driving the debate in the wrong direction. Luckily, more often than not, they are benefitting much more from backend work, such as sustainable product innovation and creating supply chain efficiencies, than they’re admitting publically.

Less than 5 Percent of Consumers Really Care

Research varies depending on who you ask (and what story they want to tell you), however the common wisdom is that less than 5 percent of consumers change their purchasing behavior based on labels or the ethics of the manufacturing company. On average, a consumer takes two seconds to read what’s on the pack – including the logo, the nutrition information, the labels, the price, the smiling children, etc. So, when the person in charge of sustainability (or CSR) at a manufacturing company tells me that they’re focused on consumer engagement as the primary goal of their sustainability strategy, I try to react calmly and push them to explain the real reasons for saying this is indeed their top sustainability priority.

Of course, I understand what they’re trying to say: “Consumer engagement” is the new way of saying “public relations.” Companies are engaging with consumers to spread the word about all the good they are doing in an effort to get on the green bandwagon and be seen as a forward-thinking and caring company. The term “consumer engagement” emerged as the phrase “greenwashing” was at its height and companies had to try and find a way to market their businesses and products without seeming like they were just pulling the wool over the consumer’s eyes. Engagement implies give and take, listening to feedback, open to suggestions, and other great ways to make consumers feel like they’re doing their part by buying these products.

It’s About Mitigating Risks

The problem with all of this is that it masks the truth. The true objective driving consumer engagement (that many companies will admit to, if pressed) is “risk mitigation.”

Risks to a business are everywhere. Many companies have managers and directors whose entire jobs and departments are dedicated to mitigating their business risks. Up until recently, those risks have been things like compliance with standards and regulation, health and safety, and quality control. Also implied in among the financial risks are risks to the brand’s reputation, which can affect everything from the long term financial health of the business to customer loyalty and employee productivity.

And now sustainability has become part of the risk reduction focus. The risks that are being mitigated are the possibility that competitors are genuinely greener, consumers not believing green claims, losing customers because they don’t believe your claims or for lack thereof, and risks to the brand’s reputation. By engaging with consumers whether in reality or in words alone, companies are attempting to reduce these real risks to their business and brand. And there is nothing wrong with that – let’s just be clear about it.

Real Stories to Tell

There are many leading companies who are taking a quieter approach. Some could argue that they’re not getting the appropriate kudos and boost to their sales and reputations. However, it’s likely that the boost to their bottom line is thanks enough; at least until their programs are fully mature. This more conservative approach, in my mind, is much more legitimate and profitable. Not only do these companies enjoy the financial rewards that their internal work brings, but they also will have very real stories to tell when they are ready to start spreading the word. The risks are not growing by choosing to not communicate widely. In fact, the real risks are being mitigated because they’re taking out waste and cost in their supply chain, building more sustainable relationships with their suppliers, and likely with their employees, too.

Sara Pax is the president of Bluehorse Associates, a developer of environmental sustainability metrics solutions specialized in the food and beverages industry that includes the web-based, lifecycle assessment and product carbon footprinting tool Carbonostics.

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