Last week I had the pleasure to drive the Chevy Volt for the first time (and let me tell you, it’s fun to drive). The owner was an early adopter, but doesn’t have the psychographic profile that you would assume: he’s not an environmentalist, he’s not particularly concerned with escalating gas prices, and he’s not typically an early adopter. He simply hates the convenience of going to the gas station. In fact, he hasn’t been to the gas station in eight weeks, or 1,500 miles. Not bad considering that the Volt (MSRP $37,780 before rebates) battery can only take you 50 miles on battery-only range or 375-miles with the gas generator. In contrast, the Toyota Prius (MSRP $23,050 before rebates), the most fuel-efficient sedan available, can take you 571 miles on a tank of gas, but you eventually have to go to a gas station.

This scenario offers insight into what marketers have known forever but that businesses have generally failed to convey when selling green products and services: that consumers but things that benefit them directly, such as cost effectiveness, convenience, health and safety. 

Even further, it demonstrates that offered the right benefits, consumers are willing to pay a price premium, but that without such benefits, consumers aren’t williung to pay more for products are services that are “good for the environment.”

 

My argument is that entrepreneurs and businesses can utilize the consumer benefit of convenience to differentiate products and services that also deliver benefits such as increased energy efficiency and reduced reliance on foreign oil.

 

There is a great deal of empirical evidence that consumers value intangibles such as convenience as much if not more than cost effectiveness across a number of categories. Joel Makower, in his provocative article “Green Marketing is Dead,” reinforces this claim: “There are only so many changes or sacrifices most people are willing to make for the greater good. And if others aren’t doing these things, why should we? … Based on what I’ve seen so far, I’m skeptical consumers will do their part.” He goes on to show that the single biggest reason that green products and services have failed to gain market share is the premium price coupled with a lack of compelling benefits. The only products or services that have managed to gain market share are those that offer a direct, measurable financial payment, such as compact fluorescent lamps, and only then after quality improvements and price reductions.

 

Another body of research indicates that consumers will not sacrifice convenience for sustainability. According to an article on Eco Evaluator, “It is [SC Johnson's] assessment that saving a few pennies is not enough incentive to make American consumers worry about the added inconvenience. The company believes that the U.S. population as a whole will not make this small change even if it brings with it great environmental benefits.” SC Johnson, like many multinationals, are seeing growth in environmentally-friendly products in places such as Europe and Japan but limiting exposure of such products in the US.

This data provides another way to think about competitive differentiation for green products and services that previously failed to meet sales or revenue targets by being promoted simply as “good for the environment.” In my opinion, it’s a no-brainer. I shop for convenience all the time. What unique about my arguemnt is that clean energy advocates can use this point to rethink their sales and marketing strategy and gain mainstream market share that they couldn’t otherwise. I can easily envision a day when such products and services will render the inconveniences of trips to the gas station, finding outlets to charge devices, traveling to the office for short meetings, going through the hard work of a home energy retrofit, irrelevant, thereby reducing cost and energy consumption.

 

Now, you may be thinking, this is all well and good for consumers, but how does this apply on a commercial level? Excellent question! In fact, because the majority of corporations are driven by maximizing shareholder profit, cost is almost always the biggest driver of decisions. In addition, even in cases when businesses make decisions to pay a premium for the convenience of saving time, because they can price time, convenience is simply another way that cost manifests itself. According to Makower, “Over the past few months, GreenBiz has written stories about significant [environmental sustainability] commitments and achievements made by some of the biggest consumer companies and brands. [These decisions are] not being done to sell more stuff. They’re being done for sound business reasons.” So you can see that the convenience advantage is generally less of a value-add for businesses than for consumers.

 

Increasing the market share of green products and services from less than 1% to 10% or more will require businesses to offer products and services that offer both functional benefits and added benefits such as convenience. Being “good for the environment” ranks least on the priority list of benefits of 95% of Americans.

 

What green products and services offer a convenience benefit? Where are there obvious gaps that innovation could fill? What other core values do consumers have that will enable them to overcome initial price premiums?