The transition towards a more circular economy has already begun and customers are eager to experiment with more sustainable experiences. We’re calling it Circular CX and it has the potential to extend your relationship with your customers while you support them to repair, resell, and refurbish the goods they purchase or hire from you. Even if you don’t sell physical products, the circular economy is creating new ecosystems for participation. And it’s really great for the environment.
INTRODUCTION
The Australian elections in 2022 made it abundantly clear that climate change is a hot topic for a vast majority of Australians. And consumers are experimenting with ways to reduce their impact on the planet. In the UK, 55% of consumers purchased a sustainable product or service in the last week—nearly a third were willing to pay more for it.1
Globally, customers are going to great lengths to avoid products (fresh produce in particular) that is packaged in plastic 1. But, this represents a miniscule portion of the changes organisations and consumers will need to make in the decades ahead. Ultimately, only a shift towards a circular model of consumption is compatible with planetary limits and the time has finally come to replace the incumbent linear model.
A Patagonia jacket being patched and repaired as part of the brands circular economy practice Image Source: WWD.com
THE CIRCULAR ECONOMY
The transition towards a more circular economy has already begun and customers are eager to experiment with more sustainable experiences. We’re calling it Circular CX and it has the potential to extend your relationship with customers while you support them to repair, resell, and refurbish the goods they purchase or hire from you. Even if you don’t sell physical products, the circular economy is creating new ecosystems for participation. And it’s really great for the environment.
The circular economy challenges the incumbent, take-make-dispose, linear economy by extending the lifecycle of products to include repair, refurbishment, and re-selling of goods. It’s hardly a new idea; our collective grandparents owned products that were built to last and that meant relatively frequent repairs or services over the course of decades. Today, we purchase a new iPhone every two years (even if the old one was still perfectly fine), replace our cars every five, and redecorate our loungeroom when the sofa shows the first signs of wear.
This type of consumer culture needs to change for obvious environmental reasons. But it also makes a good deal of sense from a business and customer experience perspective. Circular CX aims to extend customer relationships beyond the traditional linear lifecycle by replacing it with a series of looping journeys. Ultimately, this keeps customers engaged with your business and ecosystem partners as they seek to repair, re-sell, or refurbish their purchases.
Circular experiences can also improve your sustainability credentials to build trust with customers who are currently struggling to decide which organisations they can trust to act in the planet’s best interest. Getting this right will increase customer loyalty and the stickiness of your brand through increased interactions across new touch points required for circular journeys.
Adopting a circular economy could reduce Greenhouse Gas (GHG) emissions by 22–44 percent in 2050 compared to the current linear model and would contribute towards achieving the Paris Agreement targets. Transitioning to a circular economy supports the achievement of 12 of the 17 UN Sustainable Development Goals (SDGs) and makes economic sense—according to the World Business Council for Sustainable Development it can unlock global GDP growth of up to $4.5 trillion by 20301.
Major retail players are already capitalising on this exciting new space. IKEA has recently launched their Circular hub (As-is) online marketplace in Australia that lets customers sell their furniture back to the business before it’s touched up and sold again. Again, not a particularly new idea — car dealerships have been doing this for decades—but it’s great CX because IKEA’s furniture has always had great resale value; it was just inconvenient to sell it yourself. It's a win-win for IKEA who get two sales on a single item, and they keep customers engaged in their ecosystem where they’re likely to purchase again. Officeworks is likely embarking on a similar strategy with their purchase of a major stake in Brisbane social-enterprise World’s Greatest Garage Sale in 2021.
THE RIGHT TO REPAIR MOVEMENT
Much of this is underpinned by the right-to-repair movement that is accelerating in Europe and starting to gain steam at home too. Belong, for example, have just launched their Second Life Shop where customers can purchase refurbished iPhones and Samsung Galaxy devices that come with a 12-month warranty. The telco also provides an electronic-waste recycling service as part of their new circular ecosystem.
Facing ongoing scrutiny for their use of proprietary ports for device chargers, Apple announced in late 2021 that they would start selling original parts to repair shops and ordinary consumers alike. While this might look like regulatory capitulation on the surface, there’s also the chance that Apple is embracing right-to-repair as another dimension of their experience ecosystem. The tech giant is rumoured to announce an AR headset this year. Providing access to guided repair tutorials overlayed via augmented reality and using original parts sourced directly from Apple would thus unlock multiple new revenue streams.
Brands like Patagonia are using this trend to build deeper relationships with clients and other brands. In July 2022, they launched the United Repair Centre in Amsterdam—a shared repair facility that’s open to other brands exploring circular experiences. They also plan on training 300 tailors specialising in repairs each year. By embracing circularity, Patagonia has established itself as the early governor of the emerging garment-repair ecosystem opening new opportunities to create customer value and collaborate with others.
Ultimately, circularity asks businesses to consider a world where the customer journey never ends. The trick will be designing these prolonged experiences so that they feel like virtuous not vicious cycles—customers certainly don’t want to spend most of their time maintaining or repairing a product instead of using it.
That’s why we’re looking at Circular CX as a new way of considering how you govern experience ecosystems. Adding the option to repair, re-sell, or refurbish creates new touch points to engage customers and partners. But it also means you’ll be welcoming them backstage to see the inner workings of your products and processes. Transparency and trust will be critical to ensure customers like what they see behind the curtain.
Moving forward, businesses will need to fuse their sustainability ambitions and customer strategies as they begin to transition towards a lower-emission future. Circular CX aims to look beyond decarbonisation and towards new ways of building relationships with customers that last lifetimes, not mere moments.
Customer Experience or CX is the accumulation of perceptions and feelings customers have towards an organisation caused by the various interactions between the two (e.g. interactions with employees, systems, channels or products).2
The Circular Economy is best described by the Ellen Macarthur Foundation as defined by the principles of:
1. Eliminating waste and pollution through design;
2. Circulate materials and products by designing them to be kept in use, and at their highest value, for as long as possible; and
3. Regenerate nature by designing to improve local biodiversity, air, and water quality.3
The intent of the circular economy is expressed in this diagram, showing how materials are kept in circulation longer through the ‘restore’ loop while resource value is sought to nourish natural systems through the ‘regeneration loop’.4
[1] The rise of circular economy in corporate waste disclosures
[2] See Garner
[3] The Circular economy or podcast
[4] This diagram is from Kate Raworth’s book “Doughnut Economics” and inspired by the original diagram from the Ellen McArthur Foundation.
