How sustainability data helps bottom line metrics

Learn how accurate sustainability data can positively affect your bottom-line metrics and overall business health.
Updated on
September 27, 2023
Impact of Sustainability Data on Bottom Line
Table of Contents

In today's world of fast change, it is no longer an option to discuss whether or not to include sustainability data in your business strategy. Contrary to pre-established erroneous beliefs, sustainability does not require making monetary sacrifices or postponing accomplishment; instead, it has become integral to every successful organization's strategy. A business that disregards sustainability issues is less successful on several fronts, including profitability, growth, and employee retention.

As a company, harnessing sustainability data can present significant chances for development by putting its brand at the forefront of customers' minds. Environmental impact data also sets them apart in crowded marketplaces by showcasing their environmental consciousness.  Research shows that more than one-third of consumers are willing to pay more for sustainable products. By incorporating sustainability data on consumer-facing goods and services, many firms have experienced an improvement in bottom-line metrics such as an increase in conversion rates, retention rates, average order value, and a drop in the shopping cart abandonment rate.

Increase Conversion Rates

In addition, a robust sustainability strategy enables businesses to enter new markets and grow in current ones. According to research conducted by Cone Communications on corporate social responsibility, 63% of Americans want firms to promote social and environmental change without government action.

Nowadays, customers expect merchants and businesses they patronize to engage in ethical and sustainable business practices. Hence, they ask that businesses adopt environmental precautions, such as sustainably sourced materials and a waste-reduction manufacturing technique. According to a PSFK study, 3 out of 5 U.S. consumers are motivated to purchase items from businesses that generate a positive impact.

Adding a sustainable element to your business will differentiate it from its competitors. This can increase conversion rates if advertised well, as consumers desire sustainable brands. This covers organizations with a fundamental commitment to sustainability and those trying to become more environmentally conscious. According to Businesswire, 60% of U.S. customers consider sustainability an essential buying criterion.

Enhance Client Retention

It is common knowledge that building client loyalty is profitable: it costs five times more to acquire new customers than to keep existing ones. However, customers' values must align with your product offering to remain loyal. Supporting community causes, providing environmentally friendly goods, or having a robust sustainability strategy can increase consumer loyalty to your business. Such initiatives have been shown to affect brand loyalty throughout all generations, from Millennials (65%) to Baby Boomers (49%). In addition, Gen Z ranks ethical business/manufacturing as one of its top factors in making a purchasing decision.

By preserving current consumers, customer loyalty is increased. 68% of customers think that knowing a business aligns with their values motivates them to be loyal to it (CGS). In addition to enhancing company success and generating great word-of-mouth, cultivating positive word-of-mouth may have long-term benefits, including more profitability. In a study conducted by the Capgemini Research Institute, which examined 7,500 customers and 750 major organizations, 77% of businesses claim that their sustainability initiatives have enhanced customer loyalty. 63% also report a rise in revenue (Capgemini Research Institute).

Reduce Shopping Cart Abandonment

Almost 70% of online purchases are cancelled last minute, making shopping cart abandonment one of the most significant problems for online businesses. Seven out of ten clients who add an item to their shopping basket abandon it without making a purchase. This creates a significant financial blow for businesses: due to abandoned shopping carts, e-commerce retailers lose $18 billion in yearly sales income.

Overall, sellers that can react to customers' requirements at interruption points where they acquire information, such as reviews, pricing and product quality data, environmental problems, etc., have a significantly higher chance of reducing shopping cart abandonment rates. In this pursuit, adding sustainability data to products could be a great avenue to halt shopping cart abandonment. Arbor helps companies do this by allowing them to measure the environmental impact of their products, then showcase the environmental savings on their products. Read more about Arbor here.

Increase Average Order Value

McKinsey concluded that 70% of customers questioned, across numerous sectors, including automotive, construction, electronics, and packaging, stated they would pay an extra 5% for a green product that fulfilled the same performance requirements as a non-green option.

Additionally, displaying sustainability data on products reduces the fear of buyer’s remorse. Buyer’s remorse can result in consumers purchasing less or not at all. Giving customers a reason to feel good about their purchase, such as showcasing environmental savings on products, can reduce negative feelings that could otherwise occur. Arbor helps companies showcase the environmental savings of their products compared to the category average of that product. This creates positive feelings for consumers when making a purchase because they are partaking in sustainable decisions and know they are reducing their impact on the environment.

Bottom Line

Undoubtedly, the world is undergoing a rapid transformation in how we think about and approach sustainability. Businesses are responding to these requirements in various ways, sometimes by exhibiting leadership for others to emulate and other times by simply adhering to new legislation and industry standards.

Ultimately, sustainability is a tremendous opportunity to provide customers with what they want while having a positive impact on the environment and improving bottom-line metrics.

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How sustainability data helps bottom line metrics