Retail World 2011


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Critical issues when going to market with an environmental offering

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Retail World 2011

  1. 1. Helping Customers to Reduce their Environmental Impacts – Lessons from Enterprise and Government Customers<br />Turlough F. Guerin<br />Chairman Access Melbourne, Board Advisor Climate Alliance & Former Group Manager Environment, Telstra.<br />There are critical issues to be aware of and to manage if you are planning to go to market with an environmentally friendly product or service: ensure there is customer pull, be transparent and ensure you have evidence. Examples from oil and gas, mining and the telecommunications sector are discussed.<br />It is argued by many commentators and analysts, and not surprisingly, sustainability advocates, that if retail organisations are to maintain a competitive edge with their products and services, then they should minimise the environmental impacts of their offerings. But it is far from being that simple. I am going share with you my own experience with incorporating environmental benefits into offerings for the enterprise and government customer. It is my intent that you’ll be able to glean lessons from this when doing the same with consumers. I’ll use some examples from the petroleum, mining and telco sectors. <br />Customers must first want a greener (or more sustainable) offering, they may need to be willing to pay more, and they have to be open to take the risk and make the switch to the new, greener offering. If the product or service translates to tangible benefits – for example reduced usage costs, less rubbish to dispose of, a safe means of returning and recycling, saves them time etc) – then consumers are more likely to buy. They are less likely to make a switch to an environmentally-friendly offer based on a personal commitment to the environment on its own. Although, that was once the case. But for now, it is largely about costs. Tangible benefit is the critical issue. In a climate where consumers are shopping less and more frugally, any competitive advantage (at the same time not delivering a significantly increased cost) should be a welcome relief for ailing sales. So if green products or services are a competitive advantage, then it stands to reason to embrace the opportunity.<br />Enterprise and government customers have, for some time, been requiring that the products and services that they buy from their suppliers are, in fact, an improvement on the existing product or service (with respect to environmental performance). For example, over the past 10 years I have seen a move in RFIs/RFPs from simple requests of “show me your environmental policy” or better still, “provide all your HSE procedures and work instructions” [yes I have been asked for that before] to very specific requests targeting, for example, energy usage (by the customer) as a result of the provision of a particular offering. <br />There are three points or preconditions that I am going to share with you this morning for those organisations contemplating “greening” their service or product suite:<br />There needs to be a customer pull.<br />There needs to be transparent dialogue between supplier and the customer.<br />There needs to be credible evidence to underpin any environmental claims.<br />Customer Pull: Without interest from customers, it is difficult to know where to start. If you are offering multiple products, which one is modified or redesigned first? How much more (if any) would they be willing to pay for a green product or service? Will the launching of a particular green product or service cause cynicism in the market? The key point here is ask and listen. As you know, you can help generate the pull by creating options. Or do what we developed at Shell with a customer engagement approach which revealed issues faced by the customer when they purchased and used fuels and lubes. So if there is no customer interest, you are going to have to create it. I suggest that being inventive in this regard, will serve you well. The point is to be able to answer this question: “How can this offering or perhaps, other better ones, actually help the customer meet their needs?”<br />Transparency: You may need to persist with your supply chain partners or even your procurement team to ensure you can get a line-of-sight through your supply chain to the origin of your offering. Transparent dialogue between suppliers and the customer is critical. There should be a willingness to allow the customer to see right through the supply chain so they can have confidence in what is being offered to them. What this yields, again, can be surprising and positive.<br />Evidence: Finally, claims must be underpinned with evidence. Don’t settle for the minimal required to tell the story of an environmentally-preferred product or service. Strong, comprehensive evidence will help sell the offer internally before going to market. Once it hits the market, you then have material to fall back on if the veracity of the your claims are challenged. And you should expect them to be challenged and even encourage this kind of dialogue. Also, once you have made the claims, be prepared to get these verified by a third party before going to customers. Don’t produce the new product or service then look for the evidence. Better to be generous and “under” claim if necessary. <br />To wrap up, in my experience, three issues that should be considered when attempting to incorporate environmental value into a go-to-market offering are:<br /><ul><li>Customer pull
  2. 2. Transparency
  3. 3. Evidence</li></ul>Acknowledging and addressing these issues puts your environmentally friendly offer in a (potentially) strong market position.<br />