Circular economy and commerce: a novel approach to customer loyalty through product lifecycle management

As companies recognize the importance of environmental and social responsibility, the circular economy has emerged as a crucial model. This approach opens up new avenues for enhancing customer loyalty. 

By providing services like product take-back, repair, and resale, brands build trust and deepen consumer engagement over time. Embracing the circular economy is a strategic win for fostering loyalty.

Circular commerce and loyalty

Understanding circular commerce and its core principles

Circular commerce adapts the principles of the circular economy to business practices. Although the circular economy provides a comprehensive model for resource and waste management, circular commerce emphasizes sustainable practices throughout the product lifecycle. 

This approach optimizes resources by minimizing reliance on new raw materials and maximizing the value of existing products. It also complies with increasingly stringent regulations promoting waste reduction and prudent material usage. 

Unlike the traditional Produce–Consume–Discard model, circular commerce utilizes cycles in which products are resold, repaired, or recycled. This strategy not only benefits the environment but also reshapes value creation, focusing on services related to usage instead of ownership — known as the economy of use. 

Key principles include:

• Designing products for durability and reparability;
• Sharing and pooling resources;
• Facilitating product take-back and refurbishment;
• ReCommerce for second-hand resale;
• Integrating recycling into the purchasing process.

Connecting the circular economy to customer experience

The circular economy significantly enhances the customer experience by leveraging trust and responsibility to drive loyalty. This model extends the post-purchase relationship through services like product take-back, repair, second-hand resale, and rental. 

This ongoing engagement fosters a unique form of loyalty, where consumers actively participate in the product lifecycle, deepening their bond with the brand and its meaningful mission. In turn, brands gain valuable insights into their customers, creating a more personalized and less transactional experience. 

The connection between the circular economy and customer experience hinges on shared values like sustainability, transparency, and practicality. If you aim to boost your environmental commitment while providing an enriched customer experience, discover how our Orisha Commerce platform can help integrate circular economy principles into your loyalty strategies.

Advantages of the circular economy for businesses

Reducing costs and optimizing logistics

Adopting the circular economy model offers significant savings for businesses and streamlines supply chain management. By reintroducing used products into their cycle, brands decrease reliance on new raw materials. Refurbishment, resale, and rental enable businesses to monetize the same products multiple times while minimizing production costs. 

Implementing a circular economy requires reevaluating logistics processes — including collection, sorting, storage, refurbishment, and redistribution — promoting efficient return management and accurate demand forecasting. 

By integrating refurbished or repaired products into their offerings, brands maximize the use of resources and minimize waste production. Regulatory requirements for recycling and product take-back are prompting retail businesses to adopt practices that better conserve resources.

Driving value through personalization

Designing products for longevity or reparability fosters ongoing relationships between brands and customers. Personalization seamlessly integrates into this cycle through customized refurbished products, component selection during repairs, and subscription or rental options. This approach deepens customer engagement and solidifies the brand’s position as a long-term partner.

This is where our Repair & Workshop module excels: it organizes, simplifies, and enriches the repair process, fully embedding it within the customer journey.

This strategy fosters a deeper emotional connection as consumers actively participate in product reuse, strengthening their loyalty to the brand. Meanwhile, the brand gathers data on preferences, behaviors, and expectations to create high-value services. Personalization not only drives logistical efficiency but also helps brands anticipate needs more accurately. Enhance your logistics and control costs related to returns and end-of-life products with our comprehensive inventory management platform.

Strategies for integrating the circular economy

Creating innovative loyalty programs

Instead of just rewarding purchases, brands should recognize consumer participation in the product lifecycle: returning items, using repair services, buying second-hand, and engaging in recycling. These new programs are based on contributions. Customers earn points or benefits, not for purchasing more, but for adopting responsible behaviors. 

This approach enriches the omnichannel experience; in-store returns become opportunities for interaction, collection and refurbishment areas evolve into touchpoints, and digital channels offer maintenance tips, tutorials, and personalized offers. Several brands are rethinking loyalty strategies with a unified, sustainable commerce approach, embedding values of responsibility into the customer experience.

Leveraging communication channels to enhance customer connections

Brands can use communication channels to outline their sustainable approach and engage customers. Social media, newsletters, mobile notifications, smart labeling, and QR codes in-store can inform customers about take-back options and the benefits of refurbished products. Additionally, regulatory measures aimed at waste reduction, like restrictions on plastic packaging, drive brands to better communicate product sustainability. 

Orisha Commerce facilitates this transition with centralized return management, product lifecycle tracking, and the integration of second-hand marketplaces, making it easier to execute a circular economy strategy. Seeking a solution to automate returns and ensure optimal product traceability?

Impact on the future of customer relations

Shifting purchasing behaviors towards sustainability

The growth of the circular economy reflects changes in consumer purchasing behavior, with more buyers opting for products that prioritize sustainability, transparency, and responsibility. 

According to a Kantar study, 22% of buyers were concerned with sustainable development in 2023, up from 18% in 2022. This trend is especially strong among younger generations, with 32% of 15-27-year-olds prioritizing sustainable consumption. In this climate, customer relationships evolve into trust-based connections rooted in brand commitments. 

Implementing the circular economy model with the Orisha Commerce platform allows brands to quickly benefit economically by reintroducing products into circulation, thereby reducing costs associated with raw materials and waste management while achieving better profitability per product. 

In terms of brand image, products associated with take-back or repair services are perceived as more reliable and responsible, leading to controlled pricing and lower promotional pressure. The Kidkanaï case exemplifies how a second-hand offering can enhance brand positioning and commitment to families focused on sustainability.

Amplifying the circular economy through ambassadors

Ambassadors play a crucial role in making the circular economy more visible and credible to consumers. They could be loyal customers, employees, or partners who share their genuine experiences and create social proof of the brand’s commitment. Their power lies in their capacity to embody the circular economy values concretely: demonstrating product repairs, sharing purchasing journeys, and emphasizing usage over ownership.

The Orisha Commerce platform seamlessly integrates these initiatives into purchase journeys by showcasing customer reviews, executing targeted engagement campaigns, offering personalized benefit programs, and sharing experiences through optimal channels. Looking to build a dedicated community and reinforce customer trust?

The circular economy is more than a passing trend; it’s a sustainable model transforming business-consumer interactions. By adopting these practices, brands respond to the increasing call for responsibility and transparency, enhancing loyalty through high-value products and services. Companies that incorporate the circular economy into their strategies bolster profitability and establish themselves as committed leaders. With the right solutions, firms can provide an enriched experience and actively contribute to a more circular economy. Ready to embrace this revolution in your strategy?