BYOMSPM

This post briefly discusses two general, recent trends in consumer behavior: consumer demand for products from companies whose values align with their own personal values, and personalization.

Social & Environmental Responsibility

In the past decade or so, there has been a marked increase in the number of claims by companies and on products that they are upholding various environmental and social (ESG) responsibility standards, seemingly in attempts to grow sales by aligning corporate actions with consumers’ personal values.

I found that “in a 2020 McKinsey US consumer sentiment survey, more than 60 percent of respondents said they’d pay more for a product with sustainable packaging” (McKinsey, 2023), displaying a consumer preference for products from companies with aligning values. That said, there is often a difference between what consumers say they want and what they actually end up buying.

In response to that, McKinsey dove into sales data to determine if consumers actually exhibited a preference for ESG-marketed products. They found that “products making ESG-related claims averaged 28 percent cumulative growth over the past five-year period [2017-2022], versus 20 percent for products that made no such claims” (McKinsey). There were two limitations to this claim: first, that there is a difference between claiming environmental or social responsibility and actually having the impact that consumers are assuming; and second, that such a broad analysis doesn’t actually prove any sort of causation. So they dove deeper.

After doing a more extensive and controlled analysis on the sales growth of products that did or did not make ESG claims, McKinsey found that “not every brand that made a claim saw a positive effect on sales, and the data indicate a plethora of nuance at the product level. But this study did broadly reveal, in many categories, a clear and material link between ESG-related claims and consumer spending” (McKinsey, 2023).

Personalization

I also turned to a McKinsey report to understand the importance of companies creating a personalized product experience for customers.

There were some key statistics:

“71 percent of consumers expect companies to deliver personalized interactions. And 76 percent get frustrated when this doesn’t happen.”

McKinsey, 2021

I found it particularly interesting that such a large portion of consumers get frustrated when product experiences are not personalized. I assumed that inefficient product experiences would cause more frustration that irrelevant, non-personalized aspects of an experience, but I realized after thinking about it more that products that fail to effectively tailor an experience to individual customers will actually overall produce more inefficient, unpleasant experiences.

Another statistic from the McKinsey report:

“Personalization drives performance and better customer outcomes. Companies that grow faster drive 40 percent more of their revenue from personalization than their slower-growing counterparts”

McKinsey, 2021

Moreover, the McKinsey report argued that it is actually risky in certain environments for companies to use non-personalized experiences. From my experience, though, creating truly personalized digital experiences, and doing it well, can prove to take a fair amount of effort. Based on the fact that consumers are actually starting to expect experiences to be personalized, though, I guess most companies won’t really have a choice either way.

Thanks for reading.

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Works Cited

Bar Am, Jordan, Doshi, Vinit, Malik, Anandi, Noble, Steve, and Frey, Sherry. “Consumers care about sustainability—and back it up with their wallets.” McKinsey & Company. 6 February 2023. https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/consumers-care-about-sustainability-and-back-it-up-with-their-wallets.

Arora, Nidhi, Liu, Wei Wei, Robinson, Kelsey, Stein, Eli, Ensslen, Daniel, Fielder, Lars, and Schuler, Gustavo. “The value of getting personalization right—or wrong—is multiplying.” McKinsey & Company. 12 November 2021.