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A bird in the hand is worth 2.48 in the bush
The research that shaped the Verdn MVP
Photo: Razvan Narcis Ticu
As we are quickly ramping up to release Verdn on the Shopify App Store, a million curiosities and questions are quickly distilling down to just one: will companies like this? Or, when I don’t really feel like sleeping anyway: will companies like this enough to pay for it?
As an attempted remedy, I thought I would explicitly review the ‘why’s behind some of our key product features at launch. Like Simon Sinek, just without the flair. Partly to take my mind off it, but partly also to put it at ease. If nothing else, it does happen to be a rather esoteric combination of research into business theory, social psychology, and consumer behaviour, one which I currently don’t have written down anywhere else (Siri, remind me to write a business plan).
Hell, maybe one day this will be part of the company’s historical documents, in a Galaxy Quest kinda way.
Verdn, put simply
Let’s start by summarising the software itself. Verdn is a service for e-commerce businesses. With Verdn installed, an e-commerce merchant is able to effortlessly attach environmental impacts onto the products they sell. These impacts are offered through vetted partners of ours, and are trackable by consumers post-purchase.
An example: A business sells t-shirts online. With Verdn installed, they can make it so that every time they sell a BlueWave t-shirt they also finance 5 kilos of ocean plastic cleanup – the same as 400 plastic bottles. When a prospective customer explores the web-page for the t-shirt in question, it will look something like this:
Three key decisions / features
Already from the short description above, you can extract several defining attributes that shape what we offer, and I’ll review how each came to be in turn:
Impact is attached directly to individual products
Impact is included / embedded in the product price
Impact is unique and trackable in a post-purchase journey
Impact is attached directly to individual products.
Verdn, while engaged in B2B sales, was created out of changing consumer trends. Conscious consumerism is inexorably on the rise. Millennials were consistently found to be the most environmentally aware generation ever… until they weren’t. They have now been usurped by the even more radical Generation Z.
If you’re a company, how can you best tap into this increasing demand for sustainability? As it turns out, the answer is to integrate impact directly into your products, as opposed to making generic commitments as a brand: 70% of consumers say they prefer it.
This is quite a profound finding. And on some levels, it’s counter-intuitive. It means that the average consumer on Nike.com would be more convinced by a smaller, specific impact (“10 trees are planted if you buy these”) over a general, much larger commitment (“Nike will plant 100,000 trees this year”). The difference is the sense of responsibility, and the consumer feeling like they made a difference. We have designed Verdn to facilitate that feeling, and to empower consumers in this way.
Impact is included in the product price
There are a lot of services out there that let consumers donate to a charity or cause at the point of sale. For example, airlines let ticket buyers offset their flight emissions.
We did not want to do that. We want impact to be imbedded in the offering — essentially a product feature. In our model, if the company wants consumers to pay, they have to tweak the price (and we do let them, in the software).
The main reason for this approach is a concept known as ‘loss aversion’. Loss aversion is humans’ tendency to value losses more than gains. Losing $5 makes us a lot more unhappy than finding $5 makes us happy. It’s considered illogical, but hardwired into our biology nonetheless. The inverse of this observation is that humans value what they already have way more than what they could have. We are risk averse. And it’s quantifiable exactly how much so. By reviewing experiments conducted by Novemsky and Kahneman, Julian Baggini derived that ‘one bird in the hand is worth 2.48 in the bush’: approximately half a bird more than the saying originally goes.
What does this all mean for impact? Well essentially, if a consumer is buying a t-shirt and is then suddenly prompted to spend additional cash on an environmental impact, we are fighting against their evolutionary wiring. And what we are offering has to be worth a whole lot more than the money we ask for. Instead, we remove that dissonance, letting the impact be a positive bonus, not an unforeseen test of altruism.
Impact is unique and trackable in a post-purchase journey
A customer interacts with a product in three discrete phases: pre-purchase, purchase, and post-purchase. According to NYU Professor Scott Galloway these are also the three main categories in which a company can build a brand.
Galloway argues that pre-purchase, the category that includes advertising and PR (activities most commonly associated with brand-building), has been over-invested in and now faces structural decline. Smart companies — and we believe good services by extension — should pivot their focus over to purchase and post-purchase activities to increase sales, engagement and customer loyalty.
This is what Verdn does. We don product pages with clear, unambiguous impact badges (purchase), and we invite consumers to track their impact afterwards (post-purchase). When a consumer checks in on their impact, they’re exposed to the brand they purchased from. Also, the mere existence of a unique tracking dashboard for each end-consumer is a boon to the company’s transparency, and a brand-benefit that extends far beyond the actual click-through rate.
By Grabthar's hammer, until next time.