Understand your customer
The popularity of fair trade goods, eco-friendly products and buy-one-give-one apparel implies that consumers are willing to spend more for a good cause. Companies like Patagonia and TOMS Shoes are hailed as success stories — and are worn as a badge of honor by socially-conscious millennials worldwide. Research shows that customers overwhelmingly prefer to support responsible, sustainable and local companies. In surveys, a vast majority of shoppers say they would choose fair trade coffee over non-fair trade and recycled paper towels over conventional ones. But in studies of actual consumer behavior, we find that only a small percentage of shoppers truly seek out ethical alternatives. And even fewer are willing to pay more for them. This market share has grown over time, but not as much as we might hope. In surveys, consumers are activists. At the checkout counter, not so much.
How can we take consumers’ desire to shop more responsibly and turn it into behavior? By tapping into your target audience, you can increase the likelihood that customers will follow through and purchase your product. This is a two-step process. First, tell customers your story. What social or environmental problems does your product address? Make a clear and compelling case for your mission. This can be as simple as putting your story on your product’s packaging or including it in your sales pitch. Second, and just as important, you need to tailor your messaging to your target customer. That’s where things get tricky, because my research suggests that different narratives appeal to different customers.
In a series of experiments, I divided my subjects into six groups of “online shoppers.” Everyone saw the same product for sale but each group read a different description of that item. The descriptions included good working conditions, environmental sustainability, made in the USA, buy-one-give-one, donations to charity and a control group (where there was no story attached to the product). The initial experiment featured a pair of athletic socks, a consumer object that is gender-neutral and relatively homogenous, something that nearly everyone might need and that is not subject to fashion or individual taste. Finally, I asked subjects to bid on the pair of socks, to indicate how much they would be willing to pay for them. Because the same photo of socks was used in all experimental conditions, I was able to isolate the value of the story from any tangible qualities of the item. In subsequent surveys, I used household goods, like paper towels, and more visible items, like a t-shirt. This allowed me to test whether the findings hold for other types of consumer goods, and they do.
Ultimately, I found that different stories appeal to different kinds of shoppers — even when the product itself is the same. For example, women tend to respond best to messaging about working conditions, sustainability and charitable partnerships. Men are more likely to value products made in the USA. Wealthier customers tend to value sustainable products, while middle-class shoppers like ethically made goods. The younger the shopper, the more they are willing to pay for fair trade or ethically made goods.
But consumers do share some common areas of interest. Overall, the subjects in my experiments were willing to pay the highest premium for products made under good working conditions. But while this messaging drew the highest price premium, it appealed to a narrow group of shoppers: young, highly educated women. Conversely, narratives about donating money to charity and the buy-one-give-one model had the broadest popularity among my subjects, garnering support from every demographic group. And finally, customers seemed the least excited by green products. Sustainability was the least valuable narrative and appealed only to a small segment of shoppers: upper-class, highly-educated women.
Below is a full list of product characteristics along with the groups that value them the most.
- Ethically made or Fair Trade: Women, highly-educated, younger
- Made in the USA: Men, middle- and upper-class
- Green or Sustainable: Women, upper-class, highly educated
- Donate to charity: All demographic groups
- Buy-one-give-one: All demographic groups
Don’t let this discourage you. Instead, establish parallel positioning of your product based on each consumer segment you hope to reach. Simple tweaks to your primary message will help you appeal to multiple audiences. For instance, if your clothing line is made by female artisans in the United States, you can tailor your messaging based on your customer’s gender. When you Instagram a picture of your women’s jeans, include a few sentences about how they create jobs for low-income artisans. Shift your messaging ever so slightly when you post a photo of your men’s jeans by promoting that they’re made in the USA.
The good news is that the diversity among socially conscious consumers should not be limiting to your business. Instead, by clearly defining and fully understanding your individual consumer segments, you can actually grow your customer base. Parallel positioning allows you to deliver a value proposition that will more effectively appeal to the ethical mindset of each customer demographic you target.