Building the business case

Your company has been progressing nicely up the sustainability curve from compliance to cost savings. The next logical step is reputation and revenue generation, and it’s here that many sustainability pros hit a roadblock.

Without a CEO mandate, business units usually have little incentive to deviate from what’s been working in the past. Sustainability and CSR initiatives have safely been tucked away behind the scenes, dealing with internal and supply chain issues that reduce risk and cost to the business. Objections to customer-facing sustainability initiatives range from “Why put our neck out and risk greenwashing charges?” to “It’s still a niche market” and “Why would we promote our values for commercial ends? We’re doing this because it’s right, not to make money from it.”

Perhaps they do see that sustainability is beginning to go mainstream, but it hasn’t become a burning platform for action. And this is the big opportunity for sustainability pros. It’s time for you to change the conversation.

As pointed out in a recent EthicalCorp article, “Corporate responsibility teams could do more to articulate a clear business strategy for their company that will grow sales…. Social and environmental issues are increasingly seen as new business opportunities, rather than risks to be managed. But translating this knowledge into practical business plans is easier said than done.”

You’ll need to craft a compelling story and business case for taking sustainability to the next level within the organization. And that story must to be told using the language of numbers, making a clear connection between sustainability and top line revenue.

How you do that is the subject of a new series of articles that will cover:

  • identifying your total addressable sustainability market and your share of that pie
  • learning what you can do to protect your current base and attract new customers
  • enabling customers to experience your company as a sustainable brand through key touchpoints
  • engaging customers to boost loyalty and grow the sustainability market
  • communicating in a simple, relevant and credible way with customers

Let’s tackle the first one now. TAM, or total addressable market, is the sum of all of the potential sales that your company could make if it didn’t have any competition. In the sustainability world, we need to identify your TASM, or total addressable sustainability market, to begin building the business case.

TASM is based on an understanding of how many buyers are motivated by sustainability-related attributes when they purchase or recommend a product. It’s crucial to your strategy, and yet secondary data on this information is slim. LOHAS is a wellknown segmentation model originally designed for health & wellness, but it may or may not apply to your category. I would question whether the same segmentation model holds true across all categories including food, electronics, personal care and energy.

Without knowing exactly how many buyers in your market care enough to adjust their purchase and loyalty behavior, it will be hard to justify any customer facing initiatives. Even if the market is small for your category, it may be growing at a rapid enough pace to make a dedicated effort worthwhile. Side note: don’t believe what consumers tell you; TASM should be based on behavioral data, not a poll.

Step two is knowing what share of this market you currently own versus your competitors. Are you leading or lagging? If you increased share by one percentage point, what is the resulting revenue that you could use to fund additional projects? If you cede competitive advantage among this group to a competitor, what percent of your customer base is put at risk?

The next post will address the customer insights needed to move the needle and increase your share of this rapidly growing market.

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