Most businesses claim to be acting in their consumers’ best interests, typically in narrow cost or convenience terms. We make your money go further! Less time doing this awful chore means more time trying to catch that adorable puppy who’s—uh-oh—got hold of a live hosepipe again! The promotional techniques are so prolific they’ve become almost invisible in the daily lives of consumers: loyalty programmes, sales, discounts, BOGOFs, warranties, “free” add-ons, and (everyone’s favourite) the product-specific app.
Most of us know intellectually that these deals are not being offered out of the goodness of the provider’s corporate heart, but in service of turning single transactions into economic relationships. And yet they work on us, keeping us consuming. We pay the providers back in purchases we otherwise might not have made, and sometimes with our personal data that, guess what, allows them to target us again. It’s hard to resist. The other day I caught my mother browsing dozens of partner tie-in offers within her banking app—holidays, mortgages, clothing—so avidly you’d assume her son has not been telling her “It’s only a discount if you were going to pay full price for it before you saw the coupon” for 38 years already. Sigh.
Post-Growth Pioneers are not shy to make marketing claims for their products and services. But I noticed a distinctive pattern to their stakeholder engagement: an earnest desire to shift consumer behaviour towards larger desirable aims beyond cost or convenience. For example, to support the aim of its consumers to reduce their personal carbon footprint, the PGP energy supplier I interviewed goes so far as to enable reduced purchases of their core product, Kilowatt Hours of energy. Their logic runs like this: if consumers installed solar panels, they might be persuaded to add a storage battery in order to shift the availability of free solar power from when it’s produced during the daytime when they need it in the evenings. The consumer gets the first benefit by reducing her purchases of grid-generated energy.
Going further, some of these consumers might permit the supplier to discharge the battery at certain times. The supplier can then act as a broker, selling consumer-generated KWh back into the grid if the market price is favourable, splitting the revenue with the consumer. This is a mutual second benefit: revenue sharing with the consumer, and a degree of hedging against the fluctuating wholesale price of energy for the supplier. If enough households join such a programme, a third, system-level benefit is unlocked: the grid can become more robust at peak times, less reliant on grid-generated KWh when demand is high.
The supplier offers PV and battery installation services, and so can replace revenue lost to competition with the sun. Selling fewer KWh in grid-generated power yet maintaining viability. This requires an unusual degree of strategic foresight, but also a Post Growthy agnosticism towards the makeup of the firm’s revenue. Of course, any energy supplier can invest in renewable energy projects in order to contribute to grid resilience and reduced carbon in the energy mix, but it seems especially insightful to engage consumers directly in the reimagining of the production function.
This thinking seems to extend beyond conventional Lifetime Value of Customer metrics familiar in many firms; there is an ambition to prosper while the consumer achieves some (intrinsically or extrinsically) valuable personal ambition through working with the post growth company. The PGP bank takes a similar view of its role in helping investors build a portfolio of sustainable investments. In contrast with alternative crowdfunding platforms that maximise the potential for matching investors with projects by setting a low bar for participation on both demand and supply sides, the PGP bank closely curates the small number of projects it presents to customers:
‘The idea is you can build a portfolio yourself and you can choose what you have, and we probably only work with between six and ten organisations a year. So there’s not a massive amount to choose from. And that’s because we get very involved in those projects. We do a lot of the financial modeling and structuring…it’s quite a different crowdfunding approach compared to Seedrs or Crowdcube where there’s a very high flow of organisations’.
The bank almost certainly leaves revenue—in the form of transaction fees for matching investors with projects—on the proverbial table, but this is a post growthy sign of a hunt for quality outcomes over quantity.
Enlightened stakeholder thinking also embraces high levels of transparency in sales and marketing activities. The PGP engineering services firm, a specialist in residential renewable energy installation projects, takes the time to educate all prospective customers on the complexities of solar PV and battery installations. This effort feels like time well spent to the firm if it reduces surprises later on, especially the risk of specifying sub-optimal system components, as many of its competitors do with one-size-fits-none, standardised packages. For example, selecting a photovoltaic panel involves a tradeoff between conversion efficiency and cost: the most efficient panels cost disproportionately more than the next most efficient models, pushing out the payback for the customer, although it might return more margin on the project. The firm’s directors believe they will see the return on this commitment to transparency in referred and repeat business in years to come.
And in a final bold example, the PGP consumer goods company believes its living wage initiative, extending beyond employees to all suppliers working predominantly for the company, is simply the right thing to do. Nonetheless it anticipates the programme will bring benefits over the longer term:
‘We think that consumers will...prefer companies that are paying living wages over those that aren’t. If you look at consumer data, you see that huge swathes of younger consumers (support) that. And a lot of the people we’re (trying to help) are generally quite poorly paid. If they were paid more, they might start buying consumer goods’.
Not philanthropy then, but far sighted mutual interest that doesn’t smack of the growth dependent desperation of the consumer promotions described above. Now I must close; it seems my mother has purchased a ski boat at 0% interest for the first 12 months, and now she needs somewhere to moor it. Oh look, an ad for a new marina in her neighbourhood, how very timely…
Read all my posts about sustainable strategy at: world.hey.com/jeremy.clark/