The Science of Sustainable Change

How behavioral science can make it easier for customers to get to Net Zero

If you want to know how to change customer behavior for the better, here are two fascinating examples.

In 2021, two Swiss energy providers managed to increase customer uptake for renewable energy offerings from a meager 3% of their existing customers to a massive 85%. What made such a dramatic difference? They made one small adjustment to how they communicated the offering to their customers. Let’s come back to that later.

Now consider this: Last year, a study conducted on Nest Smart Thermostats (acquired by Google in 2014), a product that promised consumers over 16% savings on their energy bills, found that it had no overall effect on energy savings. Why did it come up so short?

Before we look at the individual answers, let’s take a look at what these two stories have in common: An insight — or lack of it — into human behavior when it comes to designing sustainable products.

It’s not just about losing the mission, it’s about missing a market

Recently, there has been a welcome shift in emphasis from what climate targets should be to how these will be delivered on schedule, as pressures rise on global leadership to fulfil their green promises. In efforts to lead on the issue, many top public and private companies are committed to ambitious net zero targets. The sad reality, however, is that 90% of these companies are currently off-track to achieve them.

This is much more than a missed opportunity. The addressable market for low carbon goods and services between now and 2030 is worth an estimated $4–$6 trillion. On top of that, 88% of people in the United Kingdom report that they want to act more sustainably, but point out that several barriers prevent them from doing so. So, how can companies lead in these largely untapped markets during uncertain economic times? By better understanding people.

This is where new innovation methods, built on the evidence-based foundations of human behavior, can help companies design for sustainable change — while gaining an edge in large-scale green markets.

Here’s how…

1. Connect your strategy to consumer needs for change

When it comes to sustainability, companies that rely on traditional measures of assessing the desirability of new sustainable products have been stumped by statistics. Namely, that’s a gap of up to 40% between the number who express a willingness-to-pay for greener products and those that actually follow through with a purchase.

Many rely on methods that assess customer attitudes, beliefs and values. Yet these approaches miss the fact that customers tend to overestimate the likelihood of acting, often unintentionally, because we rarely predict what might get in our way (this is the intention-action gap at work).

To avoid an ineffective strategy, built on flawed foundations, innovators need to integrate methods that shift the focus to mapping real behaviors. By drawing on the science of behavior change, this process enables a more concrete understanding of the contextual barriers to consumers following through on their intentions to make new, sustainable choices.

For example, many consumer behaviors are simply habitual. Habits are triggered by cues in our environment and tend to operate at a subconscious level. Lack of conscious deliberation can lead to consumers continuing with sub-optimal choices and can have important implications for new product lines. Roger Martin outlines the case of the washing detergent company Tide, which overlooked the role of habit as a driver for the purchase of their goods. This led to an expensive, large-scale, new product flop, before their go-to-market approach had to be reversed to re-instate habitual cues. Companies like Clorox have since leveraged similar techniques to successfully double their market share of green products in certain categories.

Similarly, by applying behavioral approaches to consumer segmentation, companies can better identify the segments most open to change and focus their first efforts on them to accelerate the uptake of new offerings. Remember the Swiss energy providers I mentioned earlier? When they recognized that forces of inertia were at play with their existing customer base, they responded to it with outstanding results. How? They simply made the green offering the default setting. Obeying the forces of inertia, very few people chose to opt out.

2. Robustly identify and prioritize features by impact

Once innovators have a concrete understanding of the barriers to change for consumers, value creation hypotheses can draw on models of behavior to enable a systematic approach toward prioritizing the product and service features that have the most impact.

For example, even though most people aim to plan for the future, in the moment of decision-making, we tend to over-weigh immediate benefits over future gains. Environmental benefits often seem distant and abstract, making us susceptible to more immediate benefits or pressures when making decisions. Take “big-ticket” sustainability decisions, such as purchasing an electric vehicle or making home-energy upgrades. These are often deferred when the upfront cost is overemphasized, and we fail to see the value they generate across a lifetime.

That’s also the reason Nest smart thermostats failed to save consumers money on energy costs. The efficiency gains the technology offers were offset by the fact that the device made it easier to make short-sighted decisions: essentially, customers kept hitting the “Boost button”. Nest are now working with the same team of behavioural economist’s that ran the original study, to include the necessary features that drive energy efficiency improvements.

It isn’t just happening in industries traditionally associated with sustainability. In financial services, for instance, while many banks’ “green” product and service offerings are still in their infancy, similar innovation is beginning to occur. Barclay’s green rewards program, which provides short-term financial rewards for home energy upgrades, is an example of a feature innovation designed to directly address our bias toward immediate returns. This way, it helps enable more sustainable choices.

Augmenting traditional design approaches with methods and models from the field of behavioral science, allows innovators to take a reality check to some of their assumptions and prioritize product features that are most likely to generate change, accelerating uptake progress towards net zero.

Colm Mulcahy is a Research Specialist at The Dock, Accenture’s flagship R&D hub and global innovation center.