Increase brand loyalty and competitive advantage with sustainability innovations

Sustainability is reshaping how brands can strategize to attract and retain customers. This shift reflects a broader recognition that sustainability innovations not only contribute to environmental preservation but also deliver substantial value to consumers.

Read on to explore five ways in which sustainability practices are reshaping consumer value and enhancing brand loyalty.

1. Meeting a new hierarchy of needs

Recent research by SKIM underscores how brands that innovate by integrating functional, emotional, and social benefits—without compromising foundational needs—significantly influence brand choice. This strategy aligns with a new hierarchy of customer needs, suggesting that sustainability becomes a potent differentiator in markets where consumers’ primary needs are already met.

For instance, in the automotive industry, electric vehicle companies like Tesla have successfully positioned themselves at the forefront by meeting both functional and sustainability needs effectively.

SKIM's hierarchy of customer needs

2. Boosting brand loyalty through sustainability commitments

A joint study by McKinsey & Company and NielsenIQ revealed that brands focusing on sustainability-marketed products enjoy a higher repeat purchase rate. This trend indicates that consumers are more loyal to brands with strong sustainability commitments.

For instance, companies like Nudie Jeans have introduced “forever jeans” that are made with fairtrade organic cotton and include free repairs, forever. When the customer is done with their pair of jeans, the company will take them back to repair, resell, reuse or recycle, and the customer gets a discount towards another pair of new or vintage jeans.

3. Enhancing consumer trust

According to the Edelman Global Trust Barometer, consumers are 67% more likely to stay loyal to brands they trust highly. This factor is particularly significant among younger consumers, who are poised to surpass Boomers in economic influence by 2030.

Brands that transparently communicate their sustainability achievements, like Allbirds with their eco-friendly footwear, are enhancing trust amongst consumers. Allbirds are doubling down on sustainability-inspired innovation and carbon labeling as a differentiator and leadership opportunity.

4. Creating market differentiation

Sustainability innovations offer brands a chance to stand out in crowded markets. By addressing environmental concerns and demonstrating commitment to sustainable practices, brands attract consumers who prioritize eco-friendly products and services. This differentiation goes beyond the products themselves and includes the brand’s values, resonating deeply with consumers who seek brands that mirror their own ethical standards.

Lush Cosmetics, for example, differentiates itself through its strong stance against animal testing and its use of organic ingredients.

5. Driving financial performance

The link between sustainability and financial performance is increasingly quantitatively evident. Brands that effectively communicate their sustainability efforts and align them with consumer expectations tend to see improved financial results. This success stems from increased consumer loyalty, the ability to command premium prices for eco-conscious products, and the growing market demand for sustainable options.

According to Thompson Reuters ESG score of companies in the S&P 500 Index, sustainability initiatives have a statistically significant positive impact on share prices over time.

Empowering business success through sustainability

Sustainability is more than an ethical choice; it’s a strategic imperative that drives tangible benefits for both consumers and brands. By aligning operations with the evolving preferences for environmental responsibility, brands enhance trust, achieve market differentiation, and boost financial performance.

Learn more about SKIM’s capabilities in sustainability research & insights or reach out to us for a consultation with a SKIM expert.