By 2025, millennials will make up 75% of the global workforce and bring with them trillions of dollars in buying power in years to come. This is important for emerging startup founders and entrepreneurs. It’s a consumer group to look out for and it heralds a fundamental market shift: to conscious consumption.
Giant Leap Fund managing partner Will Richardson says, “over the next three decades, millennials in the United States alone will come into $59 trillion of wealth transferred from their parents”.
“A conscious consumer is someone that’s making a purchasing decision beyond simply price and quality — they’re looking at the factors around the materials that go in to the production, the labour and transport for instance — it’s how the good is produced not just what it is” says Richardson.
Deloitte’s global 2017 millennial survey found that nearly 90% of respondents believe the success of a business should be measured in terms of more than just its financial performance.
Two thirds of consumers around the world would pay more for a product from a sustainable brand, according to Nielson’s 2015 Global Corporate Sustainability Report. That figure rises to almost three quarters for millennials.
Savvy entrepreneurs today are responding to this demand and looking at ways to embed positive social or environmental impact into the core of their businesses.
“I’d really encourage founders who are thinking about starting a new business to think about how they can create positive change, and about everyone who is touched by their business,” says Richardson.
“That loyalty, authenticity and generosity comes back to you in spades.”
But beware of taking this route for superficial reasons.
“Millennials can sniff out inauthenticity from a mile away,” Richardson says.
According to Car Next Door co-founder and chief executive Will Davies, entrepreneurs who try to deceive conscious consumers by green-coating their business are unlikely to succeed.
“People like this fail because their heart’s not in the right place,” says Davies.
Hunting for change
Davies believes the rising tide of conscious consumers has been a powerful force for his startup, which provides a marketplace for car owners to share their vehicles with other people.
“I think that more and more people are thinking about this stuff every year and that’s really having a positive impact on the growth of our business,” he says.
“It took us just over three-and-a-half years to get the first 500 cars on the platform and 11 months to get the next 500.”
Now, Car Next Door boasts a fleet of 1200 cars, shared by 44,000 registered users on a platform that facilitates about 1000 bookings a week.
“Every car that’s car-shared takes ten cars off the road which then reduces the overall demand for cars,” he says.
Davies says his journey into building Car Next Door came when he realised his entrepreneurial talent could be used to not only address the dangerous amount of carbon emissions people were releasing into the planet but to give customers a way of saving money simultaneously.
“I had a mortgage broking business and it was going really well,” he says.
“I made the decision that I only wanted to be doing a business that is making a serious dent on the amount of carbon humans are spewing into the world.
“We’re doing a whole heap of environmental damage to the world — excess carbon seems like the biggest issue to me.”
Looking back at whether it was the right move, Davies says it’s a hell of a lot “easier to get out of bed” when you know all your effort is going towards making a real impact on the world.
“When you’re having a bad day or week or month and the business might not be going that well, you’ve got a much bigger reason to keep going than just hunting for money,” he says.
How to engage conscious consumers
To successfully engage conscious consumers with a brand, both Richardson and Davies believe it boils down to authenticity and value.
Brands like Car Next Door, Sendle, GlamCorner and Who Gives a Crap are just a few examples of impact-driven ventures that have found an authentic and compelling way to engage the conscious consumer market.
According to Richardson, these brands are making the sustainable movement “mainstream” by creating brands that shout “fun” and “convenience”. However he does caution that entrepreneurs need to always lift the bar, as “consumers are spoiled for choice so your product or service has to deliver on quality and price”; a purpose driven brand is not an excuse to fail to deliver “value for money” for your customers.
In example, Davies says Car Next Door not only gives customers the satisfaction of reducing their carbon footprint but it also “makes a lot of economic sense as well”.
People who car share can do so for an average of $6 per hour or $30 a day on Car Next Door and it means they skip thousands of dollars in annual registration, insurance and maintenance fees.
“Often when you’re reducing carbon emissions, you’re saving money as well,” he says.
Instead of guilt-tripping customers into purchasing their products, Richardson says successful impact-driven brands aspire to “make people feel good”, which drives a high level of customer advocacy.
“The customers are proud to be associated with these brands and products,” he says.
Davies’ advice to up-and-coming impact entrepreneurs working to engage conscious consumers is to clearly define and communicate the brand’s core purpose.
“The best thing to do is to be really clear about what you’re trying to do on your website,” he says.
“Whenever you speak to people, make sure you have a really clear message about the positive effects.
“Talk about it all the time, everywhere you go — forever.”
This article was first published on the Impact Investment Group Medium page. This article is general information and not investment advice.