Ep 213: How to measure marketing success in a circular economy

[00:00:00.160] - Emily Hill Often in the context of marketing, we think a lot about the very initial purchase or subscription moment, that conversion moment. But actually, in the context of the circular economy, you need to think much further and beyond this. You need to think about what this means post-sale. What we've essentially done is create a new measurement framework that should help marketers reimagine how we can measure the success of circular business models. It's really that question of how do you actually demonstrate that what you're building will deliver value both in the short term and the long term.

[00:00:35.670] - Finley Phillips Can measurement help marketers gain a better understanding of their consumer?

[00:00:40.830] - Finley Phillips Hello, and welcome to the Circular Economy Show. I'm your host, Finn, and in today's episode, we'll evaluate how marketers can use measurement tactics to support the shift to circular business models, all while delivering on their key priorities as a business. To help me do that, I'm delighted to be joined by Emily Hill, Director of Sustainable Transformation Practice at Kantar. I started by asking Emily to introduce the work on measuring marketing success for the circular economy.

[00:01:11.320] - Emily Hill For the past couple of years, I've had the pleasure of leading the research that we've been doing with the foundation. Excited to share a few snippets of what we've learned today.

[00:01:23.320] - Emily Hill Wind back a couple of years, our collaboration began with the Mark Marketing Playbook. Within this research, we essentially realised that marketing measurement was an area that marketers were finding really difficult with when they were trying to get circular economy more embedded in the business, or trying to get circular economy initiatives really off the ground from pilot phase upwards.

[00:01:49.180] - Emily Hill What we heard from that group of people was that traditional metrics that they were accustomed to in the context of their usual business as usual in the linear, whether that's volume or impressions, don't always get them to the outcomes that they're seeking in the context of a circular economy, nor do they capture the full value of what circular business models can bring. That was the context as to why this year we knew it was a topic that we needed to tackle. What we've essentially done is create a new measurement framework that should help marketers reimagine how we can measure the success of circular business models.

[00:02:30.650] - Emily Hill There are four areas that we identified where marketing can take the lead in many cases, perhaps not all, but take the lead in essentially redefining how we think about measuring marketing success in the context of a circular economy. We'll walk through each of these areas as we continue this conversation.

[00:02:50.330] - Finley Phillips We've heard over the last three episodes of this series actually that marketers obviously play a pivotal role in scaling circular solutions. You mentioned the four key areas. Let's get straight into them now. Could you start by introducing the first one, which is commercial?

[00:03:04.380] - Emily Hill Yeah, absolutely. The first area is all about demonstrating how circular business models contribute to commercial success. In this topic, we explore what are the actual metrics that can help marketers demonstrate that circular business models contribute positively to commercial performance or they deliver a return on investment that is substantial and worthy of pursuing so that they can both identify new growth opportunities, but also think about how they build compelling business cases, particularly from pilot phase onwards.

[00:03:41.750] - Emily Hill I think what's really interesting in this space is that often marketers are up against having to deliver against short-term targets, and it's really that question of how do you actually demonstrate that what you're building will deliver value both in the short term and the long term.

[00:04:03.190] - Emily Hill Within the measurement guidance, we give some examples of what indicators can help you do that. Whether it's about showing the absolute revenue generated from circular business models or whether it's about demonstrating to what extent circular business models can increase the percentage of your market share or open your brand to a totally new cohort of buyers, there are lots of different ways that people can think about how to build a business case that is compelling through the lens of commerciality, which for many businesses is still the strongest narrative to essentially unlock the resources that you need to get things off the ground initially.

[00:04:46.480] - Finley Phillips You mentioned a few performance indicators there, total revenue growth, and those are all really helpful to build those compelling business cases, as you say, which is absolutely critical to build the scale that we need to get these circular business models, these pilots, off the ground and into the economy. This is obviously a massively important part of any marketer's role.

[00:05:09.760] - Finley Phillips We're going to move on to the second topic now, which is brand. But before we go deeper on this, let's take a step back, and I'm just going to ask, can circular initiatives strengthen your brand? What evidence do we have from the research?

[00:05:22.360] - Emily Hill I mean, absolutely. I think we've done a lot of research into this topic at Kantar and through what we've been doing on brand sustainability. We know that acting on both circularity or sustainability can deliver huge benefits from a brand perspective. It can be a point of differentiation, which in itself can deliver returns, but it can also help retain existing buyers who might be at risk of rejecting your brand if you don't act on circularity as well, as I mentioned previously, as bringing in a new audience of buyers, so there's lots of opportunities for growth when thinking about circularity.

[00:06:02.580] - Emily Hill I suppose I would just caveat though that I think although there's a lot of impetus on action. I think people also just need to be aware that you offer circular solutions and that they exist before you can start to build meaningful brand equity and differentiation through that lens. I think that's first and foremost the step that you might want to think about taking before expecting the dividends to come from an equity perspective. But from a growth perspective, it can be quite tangible.

[00:06:39.210] - Finley Phillips Okay, so as you say, awareness is a key part. Before actually implementing any change on the business, consumers need to be aware that you are actually entering the circular economy space. What case studies, examples do we have from the research that speak to that? Around awareness, around making the consumers aware of what you're doing?

[00:07:00.570] - Emily Hill I mean, I think there are lots of great examples, but I think one that comes to mind is from Reformation. They're an American clothing brand. They essentially partnered with a resale platform, which is called ThredUp, to offer credit in exchange for customers' unwanted clothing from a particular subset of brands. This was back in 2019, but the partnership with ThredUp generated over $0.4 million in unpaid earned media.

[00:07:32.150] - Emily Hill What this did was essentially reduce the need for any further upfront marketing spend on the topic. It was organic exposure that increased brand awareness, as I've been talking about, but also helped inform their future partnership strategy. I think from an awareness PR marketing perspective, there are many opportunities to bolster your brand by leaning into the opportunities that the circular economy presents.

[00:08:01.970] - Finley Phillips Yeah, as you say, partnerships can be a real benefit to operationalise a new circular business model. That's more on the external side. What about partnerships internally? We know that internal buy-in is a crucial part of… Gaining internal buy-in is a crucial part of a marketeer's role. When I spoke to Deb Caldow from Diageo, she said it almost took a leap of faith from the operational side to get the business model off the ground.

[00:08:29.670] - Finley Phillips How do we ease that tension around the new circular business model? As we are asking businesses to do something that is different, it's a different style of operating. How important are partnerships internally, too?

[00:08:42.670] - Emily Hill I think hugely important. I mean, in the playbook, we talk about the value of really connecting between the supply side of an organisation and the demand side. I think there is often a disconnect, particularly when you see marketing as the very forefront front line, I suppose, with the consumer and suppliers the back end. But the closer that you can bring those two divisions together, the better the outcome, because you'll both understand more about the challenges, but also the opportunities.

[00:09:18.560] - Emily Hill I would say internal partnerships from that perspective are hugely important, and ways in which you can, I suppose, bring them together is all about understanding what the other party wants and needs and being able to communicate what you want and need in a way that resonates with their objectives as well.

[00:09:35.920] - Emily Hill From a measurement perspective, it's about thinking about how do you build a continued narrative that has benefits for both parties, and both can understand their role within that, and then together you can reach the outcomes that you're looking for.

[00:09:53.690] - Finley Phillips Yeah, a narrative is obviously such a key part of a marketer's role. The third area of the research is creative, measuring what really changes behaviour. What are some of the examples of campaigns that have shifted perceptions around circularity?

[00:10:09.690] - Emily Hill Again, lots of great examples, but I think a standout one for me is the Philips' Better than New campaign. They set out essentially to challenge the idea that refurbished means lower quality, and they wanted to show that their refurbished products were as good, if not better than the new products that they launch onto market.

[00:10:37.020] - Emily Hill What they did was essentially give the same two -year warranty as new products. They also underwent rigorous testing. But in order to actually market this to the public, they needed to come up with a really creative campaign that not only demonstrated, or I suppose, challenged perceptions around the quality of refurbished goods, but also was aspirational, desirable, trustworthy, and so they developed this campaign that really helped consumers see reuse as a right choice, as a smart choice, I suppose.

[00:11:13.630] - Emily Hill I think their results from a measurement perspective really show the opportunity. They saw a 14% year-on-year sales increase, that's from the Benelux region, but also an increase of nearly 10% in terms of the sustainability perceptions of Philips as a brand compared with the same period last year.

[00:11:35.280] - Emily Hill That's a really interesting and exciting way that you can see how creative can not only influence perceptions, it can influence behaviours, and it can also have a really positive impact on your brand and how it's perceived in the marketplace.

[00:11:52.080] - Finley Phillips Yeah, and I guess going back to that point around awareness, picking the right moment to enter that market, it was taking advantage of the Black Friday initiatives and coming in with really bold, provocative marketing, and then from there, using their success to really build credibility in the space. I guess that was quite important as well.

[00:12:12.580] - Emily Hill Yeah, exactly. Yeah.

[00:12:14.580] - Finley Phillips Amazing. Yeah. I guess moving on to the fourth and final area where marketers can take the lead. We heard from Jonathan on a previous podcast that consumers actually may not see things as circular themselves, but they're actually buying into the benefits of just what the circularity represents. Considering this, can measurement help marketers gain a better understanding of their consumer?

[00:12:40.090] - Emily Hill Yeah, absolutely. I think often in the context of marketing, we think a lot about the very initial purchase or subscription moment, that conversion moment. But actually, in the context of a circular economy, you need to think much further and beyond this. You need to think about what this means post-sale, how do you keep your customers engaged, what works for them, and how do you make sure that people stay within that closed loop in the context of a CBM.

[00:13:13.700] - Emily Hill I think when you think about not just measuring that initial conversion moment in terms of number of people that purchase something, for example, but when you actually start to think about what does measurement look like on the other side of that loop, that's when you can start to get real-time insight as to what is working for people. Because we have to remind ourselves that not everyone is used to living within… or not everyone feels quite ready to embrace the circular economy. We need to help them as much as possible as brands, and the more that we can understand what those friction points are, the more that we can do to help overcome them and incentivise people.

[00:13:54.040] - Emily Hill I would say the more that you understand how people behave or interact with your brand after you've sold them a circular service, the more opportunities you have to optimise. Whether that's building a more efficient loyalty system, or whether it's maximising lifetime value, or even just keeping people engaged with your brand or the behaviour that you want them to adopt or exhibit.

[00:14:22.350] - Emily Hill Through that lens, then you can keep those products in use for as long as…Well, keep them in use at their highest value for as long as possible. I think insight is a really key part of us, a really important part of the marketing function when you're trying to develop and land something that is fundamentally new for many people.

[00:14:43.310] - Finley Phillips There's benefits on both the consumer and the business side. You get more information about your consumer so you can tailor your products to them. But also on the business side, you can prioritise what the right business model is to implement. Then, once you've got the right data, you can prioritise, really align strategically, and really target the right areas so that you're not just going off recent trends. It's the right product for the right business.

[00:15:10.820] - Emily Hill Yeah, exactly.

[00:15:12.900] - Finley Phillips Then, so to conclude, there are lots of different ways you can measure progress. We've spoken about a few. We've spoken about percentage of revenue growth, we've spoken about new customer bases. Is it a one-size-fits-all approach?

[00:15:27.550] - Emily Hill I'm going to say no. I think every organisation really needs to be guided by their own context and their own strategic priorities to make the decision as to what measurement protocols work best for them. I think what we've heard from talking to many marketers across different businesses is that it is a balancing act.

[00:15:51.830] - Emily Hill I think it's thinking about how can you work amongst the constraints of… From a measurement perspective, what is familiar, what's already established within the business, what language are people speaking, and how do you think about evolving the measures that already exists, whilst at the same time also thinking, how can you bring in the reimagined side, how can you bring in new indicators that are actually going to demonstrate what it is that you're driving with your circular business model to the full, I guess, degree of the value that it can bring to an organisation, not just commercially, but also from an impact perspective.

[00:16:35.930] - Emily Hill I think once you have a balance between what's familiar inside your organisation, but what's really leading edge from a measurement perspective, I think that's where it gets really exciting, and you can rally your stakeholders to collectively work on achieving outcomes through both of those lenses.

[00:16:54.290] - Finley Phillips Yeah, definitely. I mean, as you said, we've spoken a lot about perhaps commercial benefits and commercial measurement tactics, but as you say, there's also that impact perspective as well, those secondary drivers of growth that perhaps don't get captured: thinking about securing supply chains, reduced material costs, all of those things that perhaps aren't considered in the primary measurement tactics.

[00:17:18.330] - Finley Phillips Well, Emily, I think that's it for today. Thanks for joining us. If there's anything else you'd like to add around the measurement. I know that we've covered four areas where marketers can take the lead today, but there is other research out there that the audience can interact with if they want to learn more?

[00:17:35.370] - Emily Hill No, I think my closing suggestion would just be please go and have a look at the framework if you haven't read it already. Then I just encourage people who are in positions where you can influence measurement approaches, techniques, methodologies to try to strike that balance between finding what works for your organisation now, but also thinking about how you can change mindsets in terms of creating value through circular business models more long term so that we can make sure that all the hard work that we're doing is delivering the returns that you want it to.

[00:18:16.320] - Finley Phillips Of course, definitely. It's a key point to consider. Well, thank you very much for joining us, and we'll see you next time. Thank you for listening to this episode of the Circular Economy Show. Over the last four episodes on the Marketing Playbook, we've heard actionable guidance, insights and real-world examples on how marketers can navigate the transition to a circular economy.

[00:18:36.560] - Finley Phillips We hope you enjoyed this episode, and if you did, be sure to check out our other episodes on the Marketing Playbook if you haven't already. As always, don't forget to hit that subscribe button, leave a comment, or share it with your colleagues and friends. We'll see you next time.