Sustainability – influence customer behavior with your personalization platform
A 2020 survey by the research organization IBM Institute for Business Value and the world's largest retail trade association, the U.S. National Retail Federation, shows that for nearly eight in ten people, sustainability is important, and nearly six in ten are willing to change their shopping habits if it can help the climate.
In a survey from PriceRunner, 12% say that they have at least once opted out of an e-commerce store due to their lack of consideration for the environment and sustainability, and that number is expected to be rapidly increasing. If we look at the consumers of the future alone, the 18-29-year-olds, the figure is already almost double 22%.
However, PriceRunner's studies also show that it is difficult as a consumer to ensure that you act as sustainably as possible when shopping online. Only 20% respond that they agree with the statement "I get enough information from e-merchants to be able to make sustainable choices when shopping online".
Thus, there is an opportunity for e-commerce stores to communicate better about sustainability. And perhaps this is not only an opportunity but also a responsibility. This is the opinion of Lars Sørensen, CEO of Eventyrsport, who won the award PriceRunner’s Danish Store of the Year 2021. He states:
Danish stores, both online and physically, have a responsibility to make it easier for Danes, for example by making it easier for customers to find the products that are produced with an emphasis on sustainable materials and quality."
The fact that e-commerce stores have responsibility is further emphasized by the fact that almost half of the categories for the Danish E-commerce Award in 2022 have "Sustainable initiatives/initiatives" as one of the judging criteria.
It is not only within B2C that information on sustainability is in demand. Fresh figures from the Danish Chamber of Commerce Digital Handel show that 46% of Danish companies have purchasing strategies with sustainability requirements.
A personalization and recommendation platform is generally not seen as a tool to support this responsibility, but to a great extent offers the opportunity to do so. In this article, we will take a look at how this can be done.
The role of the personalization platform
As the name suggests, a personalization platform can help create a personalized customer journey, for example when customers shop online.
Based on a customer's behavior, it is predicted, for example, which products or articles the customer is most interested in. Frequently used ways to present these are by inserting product recommendation modules, such as on the front or product detail page, or by changing the sorting of product category listings.
In other words, the personalization platform learns what types of products the customer is interested in, and if you look primarily at organic products, for example, it will be able to detect this.
However, a modern personalization platform can also be used to influence customer behavior when they shop – and by influencing them in a more sustainable direction, we can really start to live up to the responsibility mentioned earlier.
The active substance: Merchandising
By setting up so-called merchandising rules, one can influence the relevance assessment of specific goods, and thus the likelihood of them being presented to users.
The more often a product is shown to a customer, the often it will naturally be purchased. However, it is important to use merchandising wisely, as it can also damage the conversion rate if the relevance is affected too much.
Often set use cases for merchandising are:
- Prioritising private label or high-margin products
- Supplier subsidized campaigns that prioritize products from these
- Optimization of inventory binding, e.g. by prioritizing items you would like to have cleared from the inventory
Just as you can prioritize products through merchandising, you can of course also deprioritize products. We have more information about the Relewise Merchandising Center.
Merchandising at all data points
Merchandising rules can be targeted all the data points you may have on your products and categories, and this is where it becomes interesting in terms of being able to support and influence sustainable choices.
Examples of data points that could be relevant to support sustainable choices could be:
- Ecology. A well-known and already widely used data point that is often also visualized with a small label. The presentation of organic alternatives could be prioritized through merchandising. Not only for people we know are interested in ecology, but for all customers.
- Return rate. Transport and freight are among the significant transgressors in terms of sustainability accounts and online shopping, and if the goods are both sent to the customer and subsequently returned, it counts double. Merchandising rules can deprioritize products with high return rates.
- Recycling. If all or part of the product is recycled, it is of course more sustainable than if it is a newly produced product. Presentation of fully or partially recycled products can be prioritized using merchandising rules
- CO2 emissions from production. It is becoming increasingly common to calculate how much CO2 is emitted during the production of various products. Merchandising rules can be used to either prioritize products with low CO2 emissions and/or deprioritize the presentation of products with high CO2 emissions.
- Distance to the production site. As mentioned, transport and freight are some of significant the transgressors related to sustainability. A data point you will often be able to fill in yourself is the distance to the product's production site. Subsequently, you can then make merchandising rules that prioritize low-distance products and/or deprioritize products that are produced far away.
- Various labelling and certification schemes. There is a wide range of certification schemes in various industries and for various products. Presentation of products that meet sustainability certifications can be prioritized through merchandising.
PIM (product information management) has increasingly become a key area for online success. The more and the better data you have about your products, the better a customer experience you can deliver, and as the list above shows, product data combined with a personalization platform can also help influence customer behavior in a more sustainable direction.
In addition to merchandising rules being able to target data points on products and categories, they can also be targeted data about the customer. For example, their behavior or how they entered your shop if a UTM code has been used.
Merchandising rules can of course also be targeted at combinations of product, category, and customer data.
Now let's try to look at some concrete examples of how data about product sustainability can be brought into play to influence customer behavior in a more sustainable direction using a personalization platform.
A large proportion of online shops today use product recommendations. The most common examples are recommendation modules titled "Others have also bought" that presents products that have often been bought together, or "Others have also seen" that presents alternatives to the product you are looking at.
With the necessary data points and merchandising, you could change your "Others have also seen" module to a module that promotes more sustainable product alternatives.
Depending on which data point(s) you use, the heading (and content) could be varied and targeted so that it was e.g. called "Alternatives with lower CO2 footprint", "Alternatives with improved animal welfare" or similar.
Be aware that the products presented must 100% live up to the title you choose. An obvious option that supports credibility is to provide documentation for this to the customer, e.g. using labels or icons.
There may also be regulatory issues to be aware of in relation to the choice of heading. In 2022, the Danish Chamber of Commerce has published a guide entitled "Green Marketing: Guide to e-commerce companies", where much more information and inspiration can be found (in Danish).
Sorting category pages
The default sorting of category pages on a lot of shops is "Most Popular". If one uses a personalization platform, this sorting can be personalized in relation to the current user, so that the first products are not only the most popular but also the products that the user is expected to be most interested in.
However, with the help of merchandising, the personalization platform can emphasize both popularity and possibly sustainability data points when sorting.
If you want to influence your customers' behavior even more, you can change the default sorting, so that it is primarily sorted by sustainability and secondary popularity.
Zalando currently offers a sustainability filter when browsing category listings, but there is no indication that it is included in any of the sorting options.
Automatic customer segmentation
We touched on this a bit earlier, and this feature is not so much intended to influence customer behavior, but rather to ensure that those customers who already care about sustainability are also primarily presented with sustainable products. When a customer moves around an online shop, the customer's preference is analyzed in real-time, and an automatic segmentation occurs.
The personalization platform e.g. detects customers that primarily care about organic products, and will then automatically start prioritizing other organic products in search results, product recommendations, or product category listings.
Of course, this could also apply to other sustainability data points.
Both companies and private individuals have an increasing desire to help ensure a sustainable future. The responsibility is shared, and many consumers would like to take on greater responsibility but feel they lack the information to make informed choices.
With the right data available, a personalization platform can help online shops both inform customers and influence their behavior in a sustainable direction when shopping online.
Studies show that a large part of customers requests it, and in this way, a sustainable focus can also become a competitive advantage for the online shop.
Already today, product information management (PIM) is a crucial factor in online success, and with the collection of new sustainability data points, it only becomes even more important to keep track of your product data.
As always when it comes to e-commerce, however, it's more important to get started than everything being perfect from the get-go. If you only have one or two data points that are relevant to sustainability, consider how they can be used and start experimenting. Try creating a recommendation module with sustainable alternatives or change the sorting of your category pages. Test the changes and then make ongoing adjustments or add new experiments.
As mentioned earlier, many consumers want information on how to shop more sustainably, so if you make initiatives in your shop, please do not hesitate to communicate it to your customers.