Abstract geometric composition illustrating will consumers actually pay more for sustainable brands?

July 2019 ยท Brand Strategy

Will Consumers Actually Pay More for Sustainable Brands?

Research says yes. Behavior says mostly no. The gap is the opportunity.

A client sent me their brand tracker in June. On slide thirty-one was the number everybody gets: seventy-one percent of their customers said they would pay more for a sustainably made version of the product. On slide forty-four, unhighlighted, buried under a header about SKU performance, was the sales split for the sustainably made version they had actually launched in March. Nine percent.

Nobody in the room mentioned that both slides were about the same people.

This happens in every category I have worked in. The survey number is enormous, the register number is small, and the gap gets written off as consumers being hypocrites. I have watched this from inside brand strategy rooms, and that reading is lazy.

The willingness-to-pay gap is not consumers lying to researchers, it is consumers answering a question about who they are while your P&L asks a question about what they will trade.

Three things are happening at once. One, the survey has no opportunity cost. Saying yes to a better version of yourself is free in a conference room and costs four dollars at the shelf, standing next to a competitor that works fine. Two, the sustainable option almost always ships with a hidden tax attached. It cleans worse, it looks cheaper, it stocks in fewer stores, it arrives in packaging that announces its own virtue. People are not refusing to pay for sustainability. They are refusing to pay for inconvenience and calling it the same thing. Three, most brands price the claim instead of the benefit, then act wounded when the claim does not move units.

The brands that close the gap do it by making sustainability the reason the product is better, not the reason it costs more. Patagonia sells a jacket you will not have to replace, which is durability first and footprint second. Tesla sold a car faster than the one you were going to buy anyway. Impossible spent its money making the burger taste like a burger, and the emissions math arrived afterward as a bonus rather than a condition of purchase. In every case the premium attaches to something the buyer already wanted.

The brands that close the gap do it by making sustainability the reason the product is better, not the reason it costs more.

At karaoke on Thursday the host, who calls everyone baby, spent a whole song break trying to talk eleven people into the good tequila instead of the well. Nobody moved. Then he mentioned the good stuff would not make anyone feel terrible in the morning, and half the bar switched. He was not selling virtue. He was selling Friday. Put that on slide thirty-one.