Growing Green Revenues
"Much of our revenues come from winning blind-bids where lowest price is the determining procurement factor," says Mike Hannigan, President of Give Something Back , California's largest independent office-products supplier and a pioneer in corporate responsibility. "Being sustainable means also being price competitive."
The office supply industry is a tough business, generating approximately $175-200 billion annually with no single supplier holding more than 10 percent market share. However, Give Something Back attributes its fast growth rate and market share to their ability to align with the customer's expectations on both sustainability values and value.
Selling recycled paper is a classic example of Give Something Back's success in growing revenues by aligning with consumers' adoption of sustainability. Industry-wide, recycled paper accounts for 8-12 percent of total paper sales, says CEO Sean Marx.
"Our annual volume in paper sales ranges between 60-80 percent recycled paper," Marx says. "We have built this volume by being price competitive, by offering recycled paper that is equal in quality and by educating the customer on the entire life-cycle costs of paper."
Life-cycle costs and environmental impact are increasingly key criteria in selling products as customers seek certification that what they're buying is truly sustainable and not just "green-washing."
This focus on life-cycle product impacts is growing in importance as the American Climate and Energy Act of 2009 , which establishes stricter CO2 emission reduction standards, works its way through Congress and while the EPA also makes regulatory stronger accountability regarding waste and pollutants.
Focusing on life-cycle impacts can also result in the discovery of new revenue producing services that save customers money and create a competitive advantage.
One new service Give Something Back has developed is the use of their delivery trucks to bring used boxes from prior orders back to the warehouse for reuse. The process saves money by cutting Give Something Back's annual box consumption approximately 25 percent. It also provides cost savings for the customer by lowering their waste handling costs. Give Something Back is now expanding this service to include the recycling of e-waste (used printers, computer monitors, etc.), effectively creating enhanced competitive differentiation and a path to new revenues.
There are some implementation challenges to Give Something Back's life-cycle sales strategy due to manufacturer legacy practices that focus on product specifications and price per unit. But consumers are assessing and validating of a product's financial and environmental impact from "cradle to grave." This concept is actually becoming obsolete as customers seeking sustainable goods and services shift their expectations to a new definition: "cradle to cradle." The idea is to insure all products are part of a cycle that restores the resources required by the environment and the economy.
One solution used by Give Something Back to address the legacy manufacturer's focus on price and product specifications is to find alternative suppliers who have adopted a life-cycle conscious approach. " Seventh Generation is a company we are working with to supply our customers with sustainable cleaners and dishwashing supplies," Marx explains. "They have some of the leading sustainable products in this category and we are working with them to package them in quantities that fit into the bulk purchasing format of a business customer."
Another way to work with legacy companies is to educate them on the growth potential of being mindful of life-cycle impacts during product development.
"This is a tremendous opportunity for U.S. manufacturers," Marx says. "The Asian manufacturers are price driven and in many cases have not been focused on their life-cycle impacts in terms of CO2 emissions in the manufacturing process, the environmental impacts of their waste by-products and on the environmental impacts of transporting something heavy like paper rolls half-way around the world." Marx adds that American manufacturers who focus on developing price competitive products with cradle-to-cradle solutions now will have a tremendous revenue growth opportunity as businesses the world over adopt sustainability as a core principle.
Two key lessons to be learned from Give Something Back:
- "Cost Less, mean more" is the path to revenue growth and competitive advantage. For many consumers, "Why should sustainability cost more?" is the critical question. For innovative entrepreneurs, like Sean Marx and Mike Hannigan, the answer is that you can still be price competitive and sustainable. In fact, doing so is a high growth strategy for a business.
- Aligning values and value is an emerging sales strategy for winning contracts. It's an "educational-sell" that helps shift the customer focus to sustainable options that reduce emissions and save money.