5 Key Considerations to Meet Your Consumer's Needs in the Circular Economy
Interface is a renowned commercial flooring company that was established in 1973 by founder Ray Anderson. Inspired by a carpet tile he discovered in Europe, Anderson introduced it to America, sparking a revolution in the commercial flooring industry. Remaining dedicated to staying ahead of the curve, Anderson envisioned Interface as a pioneering circular business, aiming to become “the first sustainable corporation in the world.”
In the 1990s, as part of their commitment to sustainability, Interface made a strategic decision to transition from selling carpet tiles to adopting a leasing model. Under this model, Interface took on the responsibility of tile installation, maintenance, and removal, thus ensuring that old tiles would not end up in landfills and could be effectively reused and recycled.
At first glance, it might appear to be a solution that customers would love, but that was not the case.
After seven years of dedicated efforts, the new business model struggled to gain traction, with only a handful of lessees coming on board.
The three pillars of an innovation process
To successfully design a new product or service, companies must prioritize three key factors: desirability, feasibility and viability. The new offering should be appealing to their consumers (desirability), the company should have the human, financial, and technology capabilities to develop and sustain the innovation (feasibility) and it should be profitable (if they are a for-profit business) while positively impacting the society and community (viability).
The same rules apply to building a circular business model. In Interface’s case, it focused on making its solution feasible by developing a network of carpet distributors to service clients across the U.S. The new leasing model was also viable because it would generate recurring monthly revenues and reduce raw material costs by reusing tiles while keeping the old tiles out of landfills and having a positive impact on the planet.
The innovation pillar that was missing here was desirability.
Carpet maintenance was not a service desired by Interface’s consumers. Typically, such maintenance was already bundled within their customer’s janitorial expenses, rendering the idea of paying a separate monthly fee for it impractical.
This is a classic example of developing a circular business model where consumer behavior takes a backseat.
Companies must understand consumer behavior before designing circular products and services
While building a circular business model, one of the things that tends to get overlooked is consumer expectations. It’s not surprising that within the circular economy, only around 10% of peer-reviewed papers focus on consumer experience.
Research indicates that simply transitioning from a linear model (take-make-waste) to a circular one is insufficient. To truly succeed with a circular business model, companies must delve into consumers’ purchasing intentions and behaviors, making their circular products more appealing and desirable. Several factors contribute to enhancing product desirability, including quality, price, convenience, identity, and trust.
For example, renowned outdoor clothing company Patagonia enhances the desirability of its products by offering durable, repairable options. To support it, Patagonia provides services such as warranties, repairs, and maintenance, effectively aligning with the principles of a circular business. However, if Patagonia’s consumers were primarily seeking novelty and desired new clothing items more frequently, a take-back or recovery model would have been more suitable.
In order to achieve their sustainability objectives, businesses cannot simply impose circular solutions onto consumers. Instead, these solutions must prioritize delivering value to the consumer and meeting their expectations.
How can we meet consumer expectations while building a circular business model?
If you are planning to offer new products or services as part of your circular business model, here are 5 key questions to keep in mind when designing for desirability:
- Quality: How can you ensure that the new product matches or exceeds the quality of existing options? For example, if you are using upcycled raw materials, consider addressing any consumer concerns about quality perception.
- Price: When pricing the new product or service, how does it compare to existing alternatives? If the price is higher, be sure to explain how it is a better deal when considering the full life-cycle of the product.
- Convenience: How will this new product or service enhance the convenience of consumers’ lives? If you are implementing a renting, leasing, or take-back program, ensure that consumers can easily access information and follow through with the process.
- Trust: What steps can you take to build consumer trust in the reliability of the new product or service, ensuring it is as trustworthy as existing options? Consider sharing relevant information that would make consumers feel more comfortable.
- Communication and education: What storytelling techniques can you use to weave together the other 4 aspects and convey your message to the target audience? Tell the story of how your products or services contribute to the circular economy while also meeting consumer needs and desires.
By addressing these questions, businesses can effectively communicate the value of their new circular products or services to consumers, meeting their expectations while also advancing sustainability goals.
Closing Thoughts
If you’re wondering what happened to Interface, well, they didn’t let the setback discourage them. They went back to the drawing board and developed a new, sustainable circular strategy called the Fair-Works™ program. As part of this program, they offered a variety of eco-friendly floor tiles made from grass and bamboo, which were sourced from skilled weavers in India. These tiles replaced the tiles made from nylon fibers, that are made from fossil fuels.
Although it was a more sustainable option, it proved to be disappointing as consumers were concerned that the carpets were of inferior quality and saw them more as decorative items rather than functional flooring devices (failure to account for consumer desirability, once again)
After the discontinuation of the Fair-Works™ program in 2012, Interface introduced a collaboration called Net-Works™ with The Aquafil Group and the Zoological Society of London. Net-Works™ focuses on partnering with coastal villages in the Philippines and Cameroon to collect and recycle old fishing nets, which are made from nylon. Aquafil’s technology converts these nets into recycled nylon known as ECONYL®, which is then used in Interface’s products.
Net-Works™ instantly became popular with Interface’s customers. According to a survey of Interface’s sales team, 83% said that Net-Works™ had helped initiate or strengthen their relationship with customers. It also generated significant environmental and financial savings.
In 2013, 12,600 tons of waste were eliminated, 70,000 barrels of oil were saved, 42,000 tons of CO2 were avoided, and 865,000 GJoules of energy were saved. In 2015, Interface was able to directly connect Net-Works™ to over $23.5 million of their sales. This impressive result was achieved with an investment of less than $1 million.
Interface’s journey showcases the importance of continuously iterating and adapting, learning from setbacks, and developing innovative solutions that align with consumer desires.
Larissa Scherrer de Quadros
Marketing
