Innovative Business Models to Incentivize Consumers

For the last several years there has been a significant shift in consumers’ purchasing habits toward buying greener products.

But the one thing we continue to see in study after study is that most mainstream consumers are not willing to sacrifice price, performance and/or quality to buy more sustainable products.

This has become a chicken-and-the-egg conundrum for businesses. How can product manufacturers develop greener products that are also competitive on the other legs of product positioning with low adoption from mainstream customers? After all, costs, and therefore prices, will only come down when production increases.

But what if we could provide an incentive to consumers to buy greener products without directly dealing with the manufacturing supply chain? What if at the same time we could also provide an incentive to companies to develop and sell greener products as a result? Or what if we could completely shift consumer’s environmental habits by providing monetary rewards for doing the right thing? Luckily, we are seeing a new era of innovative business models that are accomplishing this.

You may be familiar with TerraCycle, one of the first successful models that offers an incentive for consumers who recycle their trash by sending it in to the company, which then repurposes the garbage into new materials and makes a donation to the charity or school of the consumers’ choice. To date, TerraCycle has engaged more than 10 million people who have collected over 1.8 billion waste units to make into new products.

RecycleBank is a different take on incentivizing consumers do the right thing, focusing not only on recycling, but also on other human behaviors such as energy use. RecycleBank, which started in 2005, awards points when its customers do certain activities, such as sending in old electronics or even recycling at home. These points can then be used to obtain rewards through the RecycleBank program from mainstream CPG companies, retailers and restaurants. Industry goliath, Waste Management, has taken notice and in 2008 started its own program called Greenopolis. Greenopolis has a similar reward system from national chains and uses local kiosks for users to keep track of their recycling activity.

Moreover, other business models are looking to have a direct impact on consumer purchasing habits by rewarding consumers for making more environmentally preferable purchases. Take EcoBonus™, a program being developed by BI Worldwide; a company that has been successful in the customer loyalty and rewards industry for decades. EcoBonus™ will reward consumers when they make a green purchase, having a direct impact in influencing behavior of tens of millions of mainstream consumers.

“We all appreciate a little encouragement turning good intentions into actions,” says Tiger Beaudoin, Founder & VP, Marketing of EcoBonus™. “The EcoBonus™ incentive program is like a personal coach – it helps you make better choices and rewards you with coupons, samples and points. Our goal is to turn unconscious choices into eco-conscious choices by making them rewarding every day.”

The financial industry has also taken notice of the consumer segment that wants to be rewarded for purchasing green. UMB Financial, a large Midwest regional bank with 135 banking centers in seven states, has an Eco Rewards VISA® Platinum credit card. What’s most surprising is that this is the flagship card the bank offers. Using the card will earn double reward points on green purchases, like Energy Star appliances and electronics. Buying that new 40” LED Energy Star TV will not only save you a lot of money on energy costs, but also offer other rewards from your bank. Major card issuer American Express also has its own version, the ZYNC card with the Eco package which offers double points at green merchants.

Here at GoodGuide, we provide millions of consumers with health, environmental and social responsibility information on the products they buy every day. While we provide product and company-level information with the hopes of influencing consumer purchasing behavior, we aren’t directly rewarding consumers who do make greener purchases. Last year we launched an iPhone barcode scanning app so that consumers can get sustainability information quickly and easily at point of purchase and the app is quickly approaching a half million users. Perhaps there is a future in using this platform as an innovative way of delivering incentives to consumers.

What do you think? What innovative ideas do you have that can impact mainstream consumption of green products?

About Josh Saunders

Joshua is a nationally recognized expert on sustainable products, green business strategy, and environmental marketing. As Senior Director of Business Development for GoodGuide, Joshua is responsible for partnerships, alliances and commercial sales and marketing operations. Joshua has worked closely with a variety of environmental standard setting, eco-labeling, and certification programs across a wide range of industries from electronics to building products. Prior to his current role, Joshua held several positions within the sustainability and certification industry. As Global Operations Manager, Joshua helped start and establish UL Environment, a subsidiary of Underwriters Laboratories that focused on sustainable product certification. He has been heavily involved in many sustainability initiatives, including participating in roundtables with the National Academies of Science and the Keystone Center. Joshua holds a Bachelors degree in Electrical and Computer Engineering and a Master of Business Administration in Finance and Entrepreneurship.
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One Response to Innovative Business Models to Incentivize Consumers

  1. Nicole says:

    Great article and study of what’s happening in the space.

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