What Your Bank Can Learn from Composting
To attract more customers & sell more products & services, banks must persuade customers to change behavior. FIs can learn how a solid waste organization did just that around food waste composting.
Photo by Nareeta Martin on Unsplash
I have planned to start composting many times. I have done it before; I once lived in a house where the homeowners had a compost pile and a small covered bucket next to the sink. I have researched all the different types of composts. I’ve even found a company that will collect your food waste and deliver dirt in return a couple of times a year. One of my neighbors uses this service and likes it a lot. But I have to admit, I have yet to either sign up or buy a composter.
On New Year’s Day, I read an article about how the Solid Waste Authority of Central Ohio tried new techniques to change consumer habits around food waste and to increase composting.
After I read this article, I thought not of compost but of PFM.
In a previous life, I gathered survey data that revealed a good portion of customers weren’t even aware of that their bank offered PFM (personal financial management) capabilities. I’ve seen vendors with solutions that enable banks to give customers hints or nudges to customers about spending and how much they have left to spend. Some – a lot? – of banks have implemented these capabilities – especially as they became standard functionality in PFM solutions. Newer solutions like Cogo enable people and businesses track their carbon footprint as part of their financial services.
It’s not just about PFM. For the most part, banks stop innovation with siloed capabilities - nudges, account aggregation, offers, new products, faster account opening - that don’t act on or reflect the customer’s complete financial situation. As the solid waste people in Ohio found out, though, there’s more data available that can help you change behavior. But you have to get in with the garbage to get it.
Complex problems are not unique to solid waste management or financial services. And financial services has unique challenges: regulations, data privacy and security are just some of those. What I took away from this article, however, is that the approach this solid waste organization in Ohio took to successfully change behavior is useful for banks, credit unions and community banks. Financial institutions are faced with related challenges: how to to target and retain customers, how to help people improve their financial situations, how to target niche groups of customers with new products, how to get customers to use new products and services. And, by the way, solving some or all of these challenges will also improve the bank’s profitability.
So what can banks and digital banking vendors learn from the efforts to change composting behavior in Ohio?
People are complex. But that means the data we use to “analyze” their behavior must also reflect that complexity. It’s not enough to know how much garbage they throw out. You need to know what percentage of that is food waste.
In the Columbus, Ohio, area where the Savage family lives, nearly a million pounds of food is thrown out every day, making it the single biggest item entering the landfill. (The same is true nationwide.) Households account for 39 percent of food waste in the United States, more than restaurants, grocery stores or farms. Change, then, means tackling the hard-wired habits of hundreds of millions of individuals, community by community, home by home.
This is no easy feat. Despite decades of haranguing, Americans are still terrible at recycling. And the reasons people waste food are much more complex than the reasons they throw water bottles in the wrong bin: They forget the spinach in the fridge and get more; they buy avocados that go bad before they get eaten; they cook a huge holiday spread to show love to friends and family and then can’t finish it all. As Dana Gunders, executive director of the nonprofit ReFED, points out, one-third of the food in this country goes unsold or uneaten — evidence of a culture that takes abundance for granted.
“Nobody wakes up wanting to waste food,” Ms. Gunders said. “It’s just that we’re not thinking about it. We’ve become really accustomed to it in our culture, and quite numb.”
Gather more data – especially data that is not standard data. To find out what people were throwing out and thus into landfills and how those patterns changed, xx had to leave their traditional data notions behind. It wasn’t how much garbage but what was in that garbage. The consequences of contents individual garbage cans flowed upward, impacting landfills and the larger environment.
Now as much as I like the vision of bankers in suits getting dirty, they are pretty lucky. FIs, bankers, IT groups don’t have to leave their offices – but they might consider it.
I have been beating this particular idea for a couple of years now. While failure to change how they use data might not have as dire consequences as enabling more methane gas into the atmosphere, FIs that refuse to get out of their traditional data and into the real lives of their customers and potential customers are setting themselves up for failure. The failure to identify the hidden tribes or niche customer groups and their needs. The failure to innovate, especially at a small scale. The failure to pivot to adjust to changing business environments.
Asking your customers is a good start. But it’s also not enough.
Several months after introducing its campaign, SWACO enlisted researchers from the Ohio State University to send surveys to residents of Upper Arlington, a wealthy Columbus suburb, asking how much food they had wasted in the past week. However, self-reported surveys aren’t always reliable, so the agency also hired GT Environmental, a local consulting company, to follow up with hard data. Very messy data.
Your FI can use this data not only to understand niche groups & create products and services for them but also to target marketing and messaging.
Once SWACO knew how much food Upper Arlington’s residents threw out, it began blanketing the city of 36,000 with targeted social media posts, email newsletters and postcards. The production and transportation of food that never gets eaten is a major piece of food waste’s carbon footprint, so the messaging had to go beyond composting, and also urged people to buy less in the first place. But to get the message across to the households the agency served, the hook couldn’t be as abstract as avoiding climate change.
Persuasion over tips. One-way marketing or “tips” on social media don’t persuade, change or influence people. More importantly, persuasion is not the same as tips. Persuasion can move people to action. Tips – well, people can scroll right past tips.
So, in an attempt to extend its landfill’s life span, the Solid Waste Authority of Central Ohio, or SWACO, has had to try a different tactic: persuasion. While it is not the only agency in the country nudging people to waste less food, it is one of the few that has measured the effectiveness of its public awareness campaign. An early study shows promise, as does the fact that, in 2021, 51 percent of the region’s waste was diverted from the landfill through recycling and composting. It is a record for the agency and much better than the national diversion rate of 32 percent.
But Mr. O’Keefe looked at the amount of food being dumped and knew it couldn’t be ignored. He also knew that just creating a composting system wouldn’t do the trick; people had to understand why buying and wasting less food was important.
“You’ve got to have the support of everyday folks, of your families, your residents,” Mr. O’Keefe said. “You’ve got to have them pulling from the bottom up.”
Persuasion is more work. To persuade people to change their behavior, even behavior they want to change, the bank must tie behavioral change to real people’s personal financial lives.
“The way to really get people’s attention in the Midwest and Ohio is through pocketbook issues,” said Ty Marsh, who served as the agency’s executive director until last April. “We’ve got to convince people that this is good for them.” So the campaign emphasized hard costs: the $1,500 the average family in central Ohio spends each year on food they don’t eat, the 22 million gallons of gas used annually to transport food that’s thrown away
In fact, persuasion can be tied to action. (I moderated a panel discussion on how marketers can use text messaging to move customers to take action.) For example, if a customer uses your personal financial management tools, how much money in credit card interest fees can they save each year? Yes, that’s data you’re not used to using. But if your customers use your credit cards, you do know how much interest your FI earns from each one of them. The next step is to help them figure out how to pay off their credit card balance - what kind of alerts, usage blocks, information and education do they need to achieve this goal?
Measure results — but don’t rely on them to extrapolate how to persuade all customers. The qualities and values of niche groups and hidden tribes must drive how you approach, target, market to and persuade customers.
Brian Roe, the study’s lead author, is a professor of agricultural, environmental and development economics and head of the Ohio State Food Waste Collaborative. He called the results of the study, which is undergoing peer review, an “encouraging first step” — though avoided drawing too many conclusions. “We know this campaign works, and works for this community,” he said, noting that the town’s residents tended to be affluent and highly educated, “but we don’t necessarily know how that’s going to translate to other communities.”
Apparently, this article did not motivate me in the way that perhaps that it did others. I ended up thinking more about banking rather than composting - I still haven’t bought a compost bin or signed up to have that company take away our food waste. Yet.
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