The GCP Blog
The past few weeks we’ve been busy recruiting local merchants. GreenCampusPoints’ beta site is up and running and now open to Boston University students. And while we have more than 40 online retailers available, we needed to complement these with a variety of on campus alternatives where students can shop and earn more Points.
We started by surveying students about where and what they buy, and then used the results to develop a list of initial places to target. The value of a program like ours increases the more locations where members can earn and redeem Points. Recruiting local merchants also reinforces our link to the university and helps embed us in the local student community.
Our conversations with merchants revealed a number of observations that you might find helpful when trying to appeal to local businesses.
1. Environmentally-Friendliness is the Norm
The vast majority of local merchants we approached are in favor of helping the environment and found our program compelling (using a Points-based reward system to link consumer shopping behavior with CO2 reduction). A few were so excited that they even offered to help sell GreenCampusPoints to other merchants.
2. Delivering More Customers is Still King
While business owner interest in the environment is a plus, merchants are still primarily driven by an interest in things that interest and motivate their customers.
3. Daily Deal Overload
We found that a significant number of merchants have tried some form of daily deal promotion, but many were left with mixed emotions. Daily deal sites drive revenue, but they also take a significant percentage of margin and tend to be mostly seen as one-offs. Merchants were eager to find a lower-cost program that provide an ongoing promotional platform they can use to incent and rewards customers in a ways that matter to them.
4. Being a Good Neighbor is Good Business
Most local businesses see themselves as part of a larger university community. They are constantly on the lookout for ways to support issues that are important to the institution (in our case this is Boston University) and its students, faculty and alumni.
5. No Cost, No Problem
We removed the initial financial risk associated with trying our program by giving merchants their first 2205 Points (the equivalent of one metric tonne of CO2) for free. Because it won’t cost them anything, they have nothing to lose. Merchants only start paying after we’ve already demonstrated that our promotional program is driving sales.
6. Don’t Impact Existing Processes
Merchants are very conscious of cashier productivity - especially during busy times of the day. We tried to make it as simple as possible for their employees by having students use their phones to snap photos of their receipts and submit them to us for verification.
Another big lesson (which should come as no surprise) is that local businesses vary widely in terms of how they evaluate opportunities and make decisions. Some local managers are empowered. Other definitely are not. We got “yes” most often when we were able to speak with a store manager who had the ability make decisions locally.
We’ve used these lessons to not only refine our approach, but also tailor both our offer and our messaging. This has enabled us to become more effective at selling prospective merchants on the benefits of GreenCampusPoints and signing them up for our initial pilot.
Another major trend supporting GCP’s approach and business model is the continued growth of customer loyalty programs. The 2011 COLLOQUY Loyalty Census reveals that the number of loyalty memberships in the U.S. more than doubled, from 973 million to 2.09 billion over the past decade. Since 2006, the number of loyalty programs per household rose by more than 50% from 12 to more than 18. With that many memberships, I guess it shouldn’t be surprising that each household reports being active in only 8.4 (or 46%) of the loyalty programs in which they are enrolled.
Digging deeper into the numbers reveals some interesting trends. Because frequent flier miles and credit card-based programs have been around for such a long time, Travel and Financial Services represent the bulk of both memberships and rewards. However, growth in these mature sectors has been relatively flat over the past few years.
U.S. Loyalty Program Memberships by Sector, 2010
Industry Sector Memberships ’08-’10 Growth
Financial Service 428.8 2%
Airline 324.9 17%
Specialty Retail 286.8 50%
Hotel 176.8 9%
Grocery 173.7 13%
Gaming 133.0 26%
Mass Merchant 129.7 4%
Department Store 113.9 23%
Drug Store 98.1 33%
Fuel & Convenience 31.9 -21%
Car Rental & Cruise 17.8 32%
Restaurant 9.7 17%
Other 164.1 n/a
The real growth in loyalty enrollment is taking place in the Specialty Retail sector which rose 50% since 2008, and 109% since 2006. This growth is driven not only by an increase in the number of loyalty programs available, but also by an increased focus on using loyalty programs as a competitive edge and differentiator. Toys ‘R’ Us and Best Buy are great examples of companies that use their rewards programs to add value to their in-store shopping experiences. The more competitive and fragmented Restaurant industry, meanwhile, saw a more modest 17% increase in memberships, to 9.8 million, as chains including Panera Bread and Starbucks followed the example set by the airlines and credit card issuers.
We believe that emerging mobile shopping and payment technologies will accelerate growth in these sectors by enabling even small, single location merchants and restaurants to provide full-featured loyalty programs. The challenge for smaller establishments will be finding ways to offer compelling rewards that allow them to differentiate themselves from other local businesses. Offering a unique reward or benefit is a great way to differentiate.
Airline miles emerged as a popular loyalty currency more than a decade ago targeting consumers who were motivated by accumulating travel-related benefits. Our carbon-based Points allow loyalty programs to appeal to environmentally-conscious consumers in a meaningful and compelling way.
It also turns out that there is strength in numbers. COLLOQUY’s study found that “multi-partner” loyalty programs have higher perceived value to consumers and achieve better results than stand-alone category programs. That means more partners equals more value to customers because they provide greater opportunities for members to both earn and redeem rewards.
In our last post about The Growth of Green, we described the recent rise in environmentally-oriented marketing and advertising activity and talked about how many consumers have become somewhat skeptical of marketer’s green claims. Findings from TerraChoice’s Greenwashing Report 2010 suggest consumers may have good reason to have some doubt.
For those not familiar with the term, “Greenwashing” refers to any false or misleading environmental claims made by marketers. TerraChoice examined 5,296 unique home and family products that made a combined total of 12,061 “green” claims. While there is some evidence things have been getting better, the report found that greenwashing is a significant problem with over 95% of “green” products committing one or more of the seven “Sins of Greenwashing”.
Without getting into a critique of the sins themselves and how they’re defined, it’s interesting to note that the mix of sins has evolved over the past several years. While there’s been a sharp decline in brands making claims including “Hidden Trade-Offs”, the sins of making “No Proof” and “Worshiping False Labels” claims have increased.
In my opinion, the vast majority of green marketing and advertising sins are not being committed intentionally. The majority of sins are related to “Vagueness” and “No Proof”, not making misleading or false claims. But whatever your opinion regarding intent, it seems pretty clear that marketers still have a long way to go in terms of making green claims that are both accurate and meaningful to consumers.
It’s a shame because many companies have been working hard to make real progress. They’re developing and promoting greener products that use less packaging. They’ve reduced overall energy consumption in their manufacturing processes. But while important, these improvements are often difficult to translate into tangible benefits and even harder to communicate via product labels or advertising.
Helping combat the issue of greenwashing was one of the key reasons we created GreenCampusPoints. GCP’s carbon-based Points represent an additional green benefit that marketers in virtually any category can use to promote their products and services. While we encourage companies to continue pursuing their existing sustainability efforts, we believe there is a clear need for a new kind of green marketing program that can be applied universally across different industries and products. One that provides customers with a simple way to make a dent in a difficult global problem. As long as buying “green” products matters to consumers, being “green” is going to continue to matter to marketers.
According to a recent Pew Research Center study, nearly two-thirds (63%) of Americans say there is solid evidence that the earth’s average temperature has been getting warmer over the past few decades. A clear majority (65%) say that global warming is either a very serious (38%) or somewhat serious (27%) problem.
Green considerations already impact purchase decisions for millions of people. Almost 3 out of 4 (73%) of US consumers say it’s very or somewhat important to buy from green companies. This number has remained about the same over the past three years.
Unfortunately, intentions and actions are two different things. The reality is that most consumers are still “aspirationally green” meaning that, while they want to do the right thing, other considerations such as cost or convenience often outweigh their desire to act green.
Green Ads on the Rise
The increasing impact of green on purchase decisions has not gone unnoticed by marketers. They have responded by producing more eco-friendly products and increasing the volume of green advertising. Consumer recall of advertising with “green” messaging is high with more than two-thirds recalling green messaging either frequently or occasionally. However, consumers are still somewhat skeptical and do not automatically accept green claims made in ads. Seven in ten either ‘strongly’ (12%) or ‘somewhat’ agree (58%) that ‘when companies call a product ‘green’ (better for the environment), it is usually just a marketing tactic’ companies use as a way to sell more products without making a meaningful impact on the environment.
In some ways, “green” suffers from the same challenges associated with marketing claims made for such attributes as “natural” and “light”. The benefits are often measured relative to other products and may be difficult to quantify or communicate.
We see the need for a new approach that’s easy to understand and simple to use. One that matters to consumers and makes green marketing claims more meaningful, believable and accountable.
That’s why we’ve created GreenCampusPoints. We don’t require consumers to pay more or make compromises. GCP enables merchants to attach Points to any product or service and deliver measurable environmental benefits to their customers. Our approach represents a new way to tackle global warming and we’re looking forward to telling you more about our plans in upcoming posts.
