April 2022 - Creating a Higher Purpose
Purpose-Driven consumers now represent the largest consumer segment in the United States
There is no doubt to any business owner that the world is changing at a rapid pace. Consumers no longer see online and offline shopping as distinct experiences. Consumers expect everything to be connected all the time with many options available to them on how they connect and interact with a business. Shopping must be fast and efficient, rich, and experiential, and always easy and intuitive. In addition, new research shows that conscious consumers are on the rise as the purpose-driven consumers takes over as the number one consumer segment in the United States. It is also important to note that this is the first time this has ever happened. Purpose-driven consumers expect companies to cater to their needs while providing a great service or product AND live up to their social and environmental responsibility claims. That’s a lot for any business to balance, but here is the research to support the shift.
In 2020, IBM partnered with the National Retail Federation (NRF) and found that the importance of brand Purpose surpasses cost and convenience for today’s shoppers. The study polled 19,000 consumers from 28 countries across all demographics and generations. For decades, the value-driven consumer has led the way as the largest consumer segment of the marketplace. The value-driven consumer was interested in the best quality product for the best price and in 2020, led the way at 41% of the market. However, the IBM study found that consumers are “prioritizing those (businesses) that are sustainable, transparent, and aligned with their core values when making these decisions. They’re willing to pay more, and even change their buying habits, for brands that get it right.” In essence, the purpose-driven consumer had 40% of the marketplace in 2020.
IBM states “With a proliferation of brands and products at shoppers’ disposal anywhere at any time, corporate values now outweigh product costs and convenience. Consumers of all ages and incomes pay much higher premiums for products aligned with their personal beliefs. On average, 70% of purpose-driven shoppers pay an added premium of 35% more per upfront cost for sustainable purchases, such as recycled or eco-friendly goods. 57% of them are even willing to change their purchasing habits to help reduce negative environmental impact. 79% of all consumers today state it is important for brands to provide guaranteed authenticity, like certifications, when they’re purchasing goods. Within this group, 71% are willing to pay an added premium – 37% more – for companies offering full transparency and traceability.”
In early 2022, IBM resurveyed consumers and found that Purpose-driven consumers, these are consumers who choose products and brands based on how well they align to their values, now represent the largest segment (44%) of consumers. This is HUGE news and is something every business owner should pay attention to. As the type of consumer changes in the United States and around the world, businesses need to make sure they have the right business strategies and the right marketing approach to take advantage of this growing consumer segment that puts purpose ahead of any other customer segment.
As business owners and leaders consider modifying their business models to adapt to an every-changing business environment, they need to consider how they are pursuing their digital transformation in an increasingly hybrid world, as well as what is their transparent and authentic strategy that supports their environmental and social impact initiatives. Businesses should consider a solid social impact strategy that not only reaches consumers, but also their employees.
According to Gallup, Gen Z and Millennials now make up nearly half (46%) of the full-time workforce in the US. These age groups want to work for trusted and ethical companies that have a track record of successfully implementing sustainability and providing value back to their communities through social impact. In addition, according to research from Price Waterhouse Coopers (PwC), 65% of people worldwide want to work for a company with a social conscience. Finally, in a labor market where finding employees is tough, having a strategy to attract top talent and retain it, through a successful social impact strategy is going to be key to building a successful team in 2022 and beyond. As business evolves, so must we. Your organization needs to determine what type of social impact strategy is right for them to ensure you are focusing on the purpose-driven consumer and hiring quality employees that believe in your business AND your purpose.
Disruptive innovations are creating new industries and business models, while destroying old ones at an increasingly rapid pace. With new technology, data analytics, and social media transforming how we communicate, a younger generation of consumers and workforce will heavily influence how businesses find success. The business environment continues to evolve. Is your business ready to embrace a higher purpose?
Jonathan Liebert, CEO/Co-Founder
April 27th, 2022