TREND: How customer experience impacts the 'Triple Bottom Line'
First, a quick reminder of what the triple bottom line (3BL) is all about. The phrase was coined over twenty years ago by John Elkington, and essentially describes that social and ethical, as well as environmental responsibility are as important as financial performance. In so doing, 3BL implies that each facet should be measured and reported with equal rigour and transparency.
An easy way of remembering these three aspects of 3BL is to think People, Planet, Profit.
But how important is 3BL to customer experience (CX)? In the last decade, CX has been steadily gaining acceptance from organisations as an indicator of commercial profitability over a customers lifetime. In simple terms, the happier a customer is with the overall experience of your product, service or brand, the more likely they will buy again and stay loyal vs. competitors. In addition, the concept of Net Promoter Score (NPS) suggests that happy customers will tell others about their positive experiences and so further drive profitability by bringing in new customers at a low acquisition cost.
So far so relevant, at least from a commercial bottom line standpoint.
But what about these other two bottom lines?
Does a customer actually include a company's ethical behaviour in their assessment of personal experience? For example, in the case of the Deepwater BP oil spill off the Florida coastline, has this affected how motorists experience the brand? Has it changed their personal behaviour when it comes to filling up their car with petrol?
This is an area where documented evidence is limited, but what little there is suggests it is short-lived. My own hypothesis is that 3BL impact upon customer experience will depend on how an organisation positions itself in the first place.
For example, iconic UK retailer Marks & Spencer has a long standing reputation for high ethical standards. It was once well known for treating its suppliers as partners, for championing quibble-free product returns for its customers, and more recently, for its ambitious Plan A environmental policy.
However, M&S ran into a firestorm for its policy of premium prices for plus size lingerie. In summary, a group of M&S customers (and non customers) from a Facebook group called Busts 4 Justice had judged its policy as socially unacceptable, perceiving it as unfairly discriminating against a customer segment. Whilst publicly defending its policy, M&S came to accept that it was neither ethical nor in-keeping with their brand values. (M&S may be right that, financially speaking, larger sizes have higher manufacturing costs, due to shorter production runs and marginally greater materials, but the impact of applying the policy was dwarfed by the reputational costs. By that logic of course, the most popular smaller sizes should be sold at a discount - not something I'm aware of M&S ever doing). As a result, today's M&S no longer charges a premium.
Yet, I wonder whether such a public judgment would have been made similarly on a deep discounter, who chose not to sell plus size garments at all, simply because demand was insufficient? Does Matalan or Poundland place the procurement of their products or their environmental policies high up in its customer experience? I don't believe so. Instead, their discount proposition is far more focused on low prices than people or planet, and so their customer experience reflects that. As a result, their customers don't expect to see Fairtrade goods, or receive premium customer service. Indeed, any attempt to do so might even be viewed by customers as activities which reduce the availability of lower prices. Supermarket discounters Aldi and Lidl provide far less information about environmental or provenance data on their products than their rivals, and yet they continue to grow and take share in the grocery sector.
This is not to say that such brands can opt out of 3BL thinking altogether. In an age of rising social media, customers have an unprecedented amount of power to wield, in bringing pressure to bear on companies. The Twitter and Facebook generations can both reward and/or punish organisations that they feel are behaving wrongly.
But outside of those businesses that seek to focus on environmental or ethical factors, I believe that customers set only the legal requirement as their benchmark. Few customers would find child labour an acceptable way of keeping product prices down. But the limited growth of Fairtrade suggests that only niche propositions have made ethical sourcing a primary component of the customer experience.
So, is 3BL an important factor for shoppers as they assess their overall customer experience? For now, I believe it's still a feel-good factor, rather than a must-have. If all else is equal, the average shopper may well pick organic tomatoes over regular ones, but not if they are premium priced. But in an specialist organic food store, where their standards are preset to a higher level, organic becomes a requirement, not a luxury.
One other factor to add in. Visibility. If a 3BL feature can be converted into a visible, tangible badge that marks a consumer out as discerning or über responsible, that might sway some mainstream customers. Think Greentomato cars in London. Or Anya Hindmarch recycled carrier bags (remember "I'm not a plastic bag"?) Since that campaigning message, plastic bags are now chargeable in UK retail stores and have resulted in an 80 per cent drop in uptake.
Visibility has another angle too. Many consumers praise Apple for trailblazing the reduction in countless paper how-to manuals that accompany its products. And certainly Apple did lead the way. But the incentive to do so was as much about promoting its 'works-straight-out-of-the-box' mantra as any environmental goal. Far less visible to the consumer is the Apple's chequered history of being kind to the environment, which lingers even today. Many of its latest products are glued together, making recycling and reuse of its components very difficult.
In the future, I do think the fit between 3BL and CX will grow. I expect a slow and steady trend towards larger organisations placing a greater importance on 3BL issues. This will rarely be driven by higher principles though. More often than not, it will simply be because, as products become ever more accessible and comparable, so firms need to look beyond their traditional offer. The customer experience is now recognised as an important way to distinguish between brands, and so companies will consider where ethical or environmental issues could play a role.