Deposits, Rewards, and Encouraging Consumers to Reuse
For reuse to succeed from both an environmental and economic perspective, a mass return of items needs to take place. Through many use cycles, the cost and emissions created from the production of reusable packaging are reduced to a much lower point that reuse champions. Although, Circulr has seen that consumers are willing to participate solely out of the goodness of their hearts and their love for the environment, to get more everyday consumers involved an incentive is needed.
The Power of an Incentive
At Circulr we know that for the maximum number of containers to be returned there needs to be a deposit on product packaging. We realized looking at the suite of companies we work with and at outside case studies – that the companies that used deposits had a much higher percentage of return. For obvious reasons, when customers can gain a monetary reward or deposit for returns, they are more likely to participate.
If you are the owner of a product/brand you may be asking right now: “How will my customers feel about deposits and rewards?”. This is a great question. One which The Ellen MacArthur Foundation answers by referencing RePack which used discount vouchers for online shopping as an incentive to return packaging, which led to increased customer loyalty. The Harvard Business Review also posted a great article about how a reward can boost loyalty. This same methodology can be used on deposits when they are framed as a reward or “bounty” for a package return. The reason is simple, under a traditional linear model when a customer is finished enjoying a product, they will throw the used piece of packaging into the landfill or recycling. When the packaging is reusable the consumer holds onto the item longer which forms a longer touchpoint with the consumer. When they eventually return it they are rewarded which creates a positive feeling, and with a system like Circulr, they get this positive feeling in a retail store where they can purchase another item.
Many customers also look at deposits as a way to subsidize their next purchase. When they receive money back before they shop, they consider it “found money” which can be used on their next purchase.
Where Circulr Comes into the Deposit Conversation
As Circulr is a full-service reuse company, we don’t only help with the sourcing, collection and washing of reusable packaging, but we also help brands manage deposits. We do this currently through a mobile app.
We set out to develop the Circulr app because we realized a few things:
- Brands often don’t have much clarity about how the reuse system is operating. This is especially seen when it comes to data about return rates and inventory tracking.
- It can be cumbersome for retailers to manage deposits for so many different brands at different amounts. This can be a large drain on the store staff’s time.
- Brands don’t have a way to easily reward or put deposits on their product to ensure the packaging is returned.
- Circulr had no way to manage deposits for partner brands who were asking for this service.
We’ve developed a mobile app that can satisfy these needs. The Circulr app allows brands to offer a deposit to their customer to ensure packaging can easily be returned through any bin in the Circulr collection network.
There are many forms for deposits that vary based on how it is framed to the consumer and when money changes hands:
- Ingrained: your product price on the shelf doesn’t change – customers are rewarded a set amount for each return
- Example: Circulr partners like Beck’s Broth
- “Normal” deposit: the overall product price is incremented by the deposit amount or a separate deposit receipt item is charged – the customer receives this amount back on return.
- Example: Harmony Organic Milk – milk bottle programs
- Delayed deposit: The customer tracks when they purchase an item through a brand-linked system. Since the deposit is tied to the customer, they don’t pay the deposit amount unless the item is not returned within a certain amount of time. If this happens they are invoiced for the deposit amount. They can either pay the amount to keep the packaging or return the item to clear the invoice.
- Note: This is great at making sure deposits don’t hold people back from participating in reuse, especially if many deposits stack upon one another. This type is best suited for retailers who can manage the full sales process.
- Example: Late fee at the library
- Automatic delayed deposit: the same as above, except instead of an invoice the consumer’s account is charged automatically. The consumer can get the money back by returning the packaging.
From our experience, we have found that an ingrained deposit is often the most effective. This is because it is simple to implement, it is the easiest to understand by the consumer and it is perceived as a reward vs. an additional cost. As shown by TOMRA, a reverse vending solution provider that manages billions of items with a deposit a year, a minimum deposit value is also necessary to ensure high participation rates.
This can be done in any number of ways but includes providing a coupon or discount upon the return of an item, or through the distribution of points that can later be used for other perks.
Why a reuse system is better when everyone is involved
TOMRA has shown that when a reuse system has widespread participation among brands it is easier for the consumer to understand, and therefore makes it a more effective system. It has also shown that getting to this widespread level of customer return requires a deposit system.
That is why at Circulr we are looking to make deposits the standard across all of our partner brands as this will make it easier for consumers to understand and, therefore, also boost overall participation for all brands. For reuse to work from an environmental standpoint, the more reuses the better, as this brings down the overall footprint. Even though in many instances one reuse of a glass jar is better than none, we are aiming for as many reuses of a single item as possible.
Implementing widespread deposits will give consumers another reason to reuse, it will give brands added benefits and more jars returned, and most importantly it will help improve the overall sustainability and efficiency of Circulr’s reuse system, improving outcomes for all stakeholders.