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.

As we’ve continued to evolve the model, I’ve developed another dimension for evaluating sustainability infrastructure: the outside-in perspective. This refers to the level of competitive differentiation and advantage that’s desired by the leadership team. On the scale of laggard to leader, how is your business perceived in the minds of customers, and is it where you want to be? This market-facing aspirational consideration can drive both the internal infrastructure required for a market leadership position, as well as external initiatives to improve marketing, customer experience and ultimately competitive differentiation.

The goal of the market-facing aspiration is to drive top-line revenue through increased purchase and loyalty among sustainability-minded buyers. You can accomplish that goal by strategically managing the following five external considerations:

• Understand your Total Addressable Sustainability Market (TASM). Most businesses have a solid understanding of their total addressable market (TAM.) Yet to drive top-line revenue through sustainability, you need to measure your total addressable sustainability market (TASM): the percentage of buyers in your category that make purchase decisions based on sustainability and CSR factors. You should be asking: how large is this group, how fast is it growing, what revenue does the group represent, and what share of this market do you currently enjoy?

• Understand your brand credibility. You’ll want to know how much permission the market gives your brand related to sustainability before making claims that could be perceived as greenwashing. Among values-driven buyers, how does your brand credibility compare against your competitors on the issues that are directly linked to driving their purchase and loyalty?

• Determine the most effective integration of sustainability and brand strategy. A brand strategy is, in essence, a focused strategic platform that guides every aspect of the business. It should incorporate the 4Ds: Desirable by customers, Deliverable by the company, Distinctive from the competition, and Durable over time. It’s a blueprint for how you do business, as well as for the entire customer experience. How should sustainability be integrated into your brand(s): as a supporting pillar, a new sub-brand or product brand, an ingredient brand or a redefined master brand? You can read more here on this subject.

• Redefine your customer experience. Essential for avoiding greenwashing claims, the customer experience incorporates all of the proof points necessary to build credibility for your sustainable brand. What good is it to put out a press release on your energy savings when you’re not demonstrating sustainability in your day-to-day interactions with customers? If you’re a product manufacturer, you should also consider how to work with retail or channel partners on critical areas like awareness and education. These partners impact your customer experience, and can enhance or detract from the credibility of your efforts.

• Lastly, marketing. If you skip the previous four steps, you put your brand at risk and neglect to build a strong foundation for your sustainably minded customer segment. Assuming you’ve tackled the foundational work, you’ll have the right data to create communications that are highly relevant and desirable to customers. Your insights will guide you in speaking their language and framing sustainability in a simple way that they understand and embrace. Your positioning should be unique from all the green- and eco- messaging that’s currently overwhelming the airwaves, and stand out in a way that supports and drives your brand. Bottom line, your marketing should make it easy for prospective buyers to find, learn about and purchase products and services that support your sustainability goals. And when it’s truly effective, customers should be motivated to integrate sustainability more deeply into their lives.

Many executives are hesitant to actively create a market-facing image related to sustainability for fear of greenwashing claims or uncertainty due to the newness of the field. But assuming you’re taking care of the operational issues that could either support or sabotage your efforts, this five-step process can safely build your outside-in approach to driving competitive advantage and top-line revenue through sustainability.

Sustainability is bigger than using harm-free materials or using less energy. It requires a fundamental shift in thinking, a long-term view and an exploration of new business models. It means redefining what success looks like, such as measuring the number of PCs leased and recycled instead of millions of units shipped per quarter. It’s the difference between GM and ZipCar. In the not-too-distant future we’ll be building products to last, reversing the trend of consumerism and disposable thinking.

This vision of the world is quite threatening to the status quo. We’re facing a tidal wave of change in the coming years, and companies can choose to disrupt their own businesses or be disrupted by an innovative niche player with less to lose and a willingness to skate to where the puck will be rather than where it is right now.

And that puck is speeding towards the future fairly quickly. A recent study by A.T. Kearney showed firms with true commitment to sustainability outperformed industry peers by 15% in the financial markets in the economic downturn. Another study by Aberdeen Group found that top sustainability performers realized 16% higher customer retention rate and an 8% decrease in sustainability-related costs.

It’s time to start asking what the sustainable version of your category could look like in five to ten years, and if you’re positioned today to be a leader or laggard in that world. Perhaps capitalism will never be truly sustainable but, as in horseshoes, getting close counts. Let’s all take a good hard look at the elephant under the table — what we sell and how we do business — and ask ourselves if there’s a better and more efficient way to solve customers’ needs.

This issue kicks off a series on connecting sustainability with top-line revenue, a topic of interest to many sustainability pros who want to move beyond cost-savings initiatives and build reputation and revenue. I’ll also be posting the articles here on my blog, and I’d love comments and questions so that I can address key concerns and questions throughout the series.

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“42 percent still find it difficult to demonstrate quantified business value and return on investment (ROI) in order to make a business case for sustainability.” Coincidentally, that’s the subject of a new article series I’ll kick off next week.

“Top performers experienced a 16 percent increase in customer retention rates while driving sustainability-related costs down by an average of almost 8 percent across the board.” A key component of driving top-line revenue is creating products, services and experiences for sustainably minded buyers to boost purchase and loyalty; more on that topic in the coming series as well.

People in corporate responsibility are acutely aware of the need to integrate their work into core business development. 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.

I’m developing a series of articles on how to do exactly that: creating the business case and connecting sustainability to customer purchase and loyalty. I’ll be interviewing industry pros to make sure the articles address the challenges you’re facing, so if you’re interested in a dialogue on the topic please let me know.

• laggards & leaders swap places
• gains & losses show up early
• gains or losses made in a recession tend to endure

Is your team taking this time to strategize and plan so that you can leap forward as the economy begins to improve?

But it doesn’t have to be either-or. Companies that consider social and environmental initiatives as potential innovation platforms and brand builders — not expenses — will come out ahead.

The Opportunity Audit helps prioritize and inspire

To aid businesses in evaluating initiatives, (re)allocating resources and exploring white-space opportunities, we’ve developed the Fruitful Opportunity Audit. This tool maps what a company does, not what it says. That means you won’t see cause marketing programs on this audit, mainly because the Brand/Customer quadrant could hypothetically be filled with greenwash. (click to enlarge)

The columns represent the locus of initiative; whether it primarily resides with your suppliers, employees or internal operations, community or customers.

The bottom row shows tablestakes initiatives that most businesses are undertaking regardless of industry. These include basic blocking and tackling like sustainability initiatives in energy, water, waste, IT, supply chain, employee volunteerism, fair labor practices, and so on. Note that it also includes philanthropy efforts that are not directly aligned with the category or brand.

The middle row represents activities that are industry-specific. Now we’re getting into actions that are more strategically in line with your business and therefore could be more effective in reputation-building. Electronics recycling (Community/Customer), industry-related training and job creation (Employee/Community) or Fair Trade efforts among coffee and tea manufacturers (Suppliers) are a few examples.

The top row is where it gets really interesting… this is where you’ll see social-impact initiatives that directly support the brand promise. The most effective initiatives often span most, if not all columns in this row; think Plan A from Marks & Spencer, GE’s Ecomagination, Timberland, Clorox GreenWorks, and specialized ethical brands like Whole Foods and Seventh Generation. Other examples might include Best Buy’s Geek Squad Summer Academy (Community) or Fairmont Hotel’s Green Cuisine (Supplier/Community/Consumer) that aligns with their authentically local brand pillar.

Now is the time to kill sacred cows

If you plot your CSR initiatives on this chart using bubble size to approximate relative spending, you’ll see where most of your dollars are going. Is your chart weighted more heavily at the bottom or the top? If the former, how much could be  shifted to brand-building without compromising on the essentials? If the latter, good job; just make sure you’re covering your bases at the bottom to eliminate risk of goodwashing claims.

This process will inevitably generate some controversial discussion around cutting philanthropic programs that aren’t aligned with your brand.  NCR, a former client of mine that I helped reposition their brand around self-service technology, supports a wide variety of charities completely unrelated to their business through the NCR Foundation; buried on the last page of their Citizenship Report is a brief mention of how they are improving access to technology for disabled and areas with low literacy. That’s a fantastic example of triple-bottom line innovation driving the brand, but it’s being communicated like an afterthought. Imagine what a powerful ethical brand NCR could build if it reallocated its CSR investments in favor of value creation at the intersection of self-serve technology and social needs.

Please note that this is not intended to decrease the amount of funding that any particular non-profit should receive from corporations. Rather, if all corporations were thoughtful about which non-profits to support, then everybody wins. The non-profit could benefit from their corporate partner’s lobbying power and investment in ethical brand-building; the corporation benefits from the strategic alignment with the right non-profits. 1+1=3. The recession is a good opportunity to justify such shifts.

Finding competitive opportunities – a retail example

When you plot your top competitors on the same chart, you’ll start seeing patterns that give insights into opportunity areas for the brand. You might also want to plot related but non-competitive companies on the same chart to bring new ideas to the table. Below is an illustrative example from the retail space; you’ll see that Marks & Spencer in the UK has done a great job creating ethical brand drivers across all columns. Retailers in the US can borrow ideas like branding internal initiatives similar to Plan A. Likewise, M&S could borrow an idea or two from Best Buys’ branded Employee/Community initiatives. (BTW, don’t get hung up on circle size; I don’t have enough info to map to investment levels. Just take it for the illustrative example that it is.)

You can push the innovation potential even further by mapping completely unrelated companies or industries for inspiration. For example, what could micro-finance teach the retail industry? If I’m Target, perhaps I combine “enabling individual potential”  of Kiva.org with my “design/value” brand promise to create a program that gives design students (or employees!) an opportunity to be discovered, promoted and funded for their product design ideas. That’s a program that spans all four columns of Brand-Builders.

I’m interested in your feedback. Is this a useful framework? What are the roadblocks to adopting this approach in your company? Who would actually drive this… CRO or CMO? CEO? And of course, if you see anything big that I missed in the retail audit, let me know.

Specifically, while 63% rate brand strength and reputation as critical to success, CSR falls to the bottom of the pack with only 20% perceiving it as critical.

These findings suggest that business leaders are not seeing CSR as a strategic way to strengthen their brand and reputation. Interesting.

As I talk to people about Fruitful’s mission to align business strategy with social impact, most people immediately think of philanthropy. Few see social impact as a strategic growth platform integral to the brand and business. I believe that will change given consumers’ lack of trust in “business as usual” and the increase of businesses that perceive no conflict between the desires of shareholders and society at large.

GE is a great example of a company that has so tightly aligned CSR with their brand that it’s hard to tease the two apart. “Ecomagination is a business initiative to help meet customer demand for more energy-efficient products and to drive reliable growth for GE; growth that delivers for investors long-term.”

Eventually, the 80% of business will follow the 20% of leaders like Immelt who value the business-critical role of CSR (or as I’ve redefined it, corporate social opportunity.) As Immelt once said, We’re not in the business of hobbies. We’re in the business of making things that are economically justifiable.”

Are you relegating social impact to philanthropy or feel-good programs? Then it’s time to shift your thinking about social impact from hobby to win-win competitive advantage. Yes, you may have to cut some pet projects to reallocate CSR resources to better support and align with your brand and business goals. You’ll find that it will pay off.