CleanTech WebLog

As a company offering clean technology products, you may have a great story about how your product is better for the environment than your competitors’ offerings. But, if your message does not resonate with your target market, it will fall on deaf ears.

How do you get your cleantech message across when environmental benefits are not of primary, secondary or even tertiary importance to your target – especially if you, personally, think they should be? Should you evangelize the environmental benefits with the hope of changing your customers’ value systems? Most for-profit companies would not undertake such a quixotic quest. This sort of values evangelism is even more doomed to failure when you are selling to a market segment where you already have a strong market position and an established track record and brand.

The Lexus hybrid marketing team takes an interesting approach to this dilemma. They acknowledge that their affluent customers do not want to sacrifice design, quality, performance or luxury when buying a hybrid vehicle. In an interview with CleanTech WebLog last week, Lexus marketing manager, Kimberley Gardiner, told us that her customers’ “luxury car needs must be met, first and foremost.” After that, the customers are willing to entertain other benefits such as lower emissions, higher gas mileage and fewer trips to the gas station. The Lexus hybrid tagline — “gives more to the driver, takes less from the world” — embodies this priority of perceived values.

Once Lexus customers are engaged in a dialogue about the environmental benefits of choosing a Lexus hybrid, they may begin to explore other aspects of what Lexus calls “Hybrid Living” or how they can “minimize their impact on the environment without sacrificing comfort and luxury.” This seems to build on the idea that when you buy a Lexus, you are buying more than a car. You are making a “lifestyle purchase.”

So, Lexus has created a lifestyle website, Lexus Hybrid Living that highlights “luxury ecodesign,” covering eight different product categories from architecture and art to travel, food and wine. Of course, transportation, featuring Lexus hybrid vehicles, is one of those categories. The site displays high production values, with luscious photos and video. It serves up the environmental message in a way that is informative, entertaining and palatable to the affluent Lexus target customer. In tone, it is quite consistent with the Lexus rewards program that is open to all Lexus owners – not just hybrid owners.

Perhaps the Hybrid Living website will change the behavior or impact the values of some of the Lexus hybrid vehicle owners. But those changes do not have to happen before the consumer purchases the product. Because Lexus knows its customers and understands their needs and wants, the company can speak to them in a way that will actually be received. The “values evangelism,” if you choose to call it that, is soft-peddled, not preachy, inviting, not strident. Over the long haul, it just may have a small, positive impact on the values of a group of consumers with significant purchasing power.

Lexus has found a way to tailor its cleantech messages to its target market by focusing on how environmental messages best fit into its customers’ needs and perspectives — a lesson to us all.

Over the Thanksgiving weekend, I spoke with a friend who was involved in green product certification back in the early 1990s. My friend came away from her green certification experience feeling that it wasn’t really worthwhile for companies to certify their products as green. She concluded that the vast majority of consumers would buy “green” products that don’t cost more or that don’t cause any significant inconvenience. Granted there was a niche market of consumers who would pay more and would inconvenience themselves in order to be green. But this niche market was very, very small.

I wondered whether things had changed enough in the 17 years since Earth Day 1990 so that it’s finally worthwhile for mainstream companies to get serious about greening their product lines and operations. Of course, the biggest impetus behind any “greening” initiative is still likely to be pure economics. If a company can save money by adopting clean technology or green practices, then the decision is easy. But, aside from rising energy costs, has anything else changed about the market landscape that would drive companies to adopt environmentally sustainable business practices?

Clearly several things have changed since 1990. The data about climate change is more dramatic and more widely publicized, fueling interest and concern among two very important stakeholder groups for corporations – customers and employees.

There is increasing customer willingness to pay more for “green” products. The recent Deloitte Annual Holiday Survey of over 10,000 U.S. consumers reveals that nearly 20% of consumers will purchase more “eco-friendly” products this holiday season and that 17% say they are willing to pay more for them. My guess is that this group is much larger than the “niche market” of the early 90s.

There is emerging pressure on corporations from their employees. McKinsey & Co. recently surveyed CEOs about strategy and social issues. Among those surveyed, the stakeholder group with the most influence on their company’s social issues is employees – outstripping the influence by consumers, government, suppliers, boards or investors.

Companies that can articulate a vision of sustainable business practices may have an easier time attracting new employees. A recent MonsterTRAK survey found that 80% of those seeking entry-level jobs are interested in working for companies that have a positive impact on the environment.

The combined influences of customers and employees may finally produce the tipping point that makes it worthwhile for companies to take action on devising and implementing sustainability strategies. Indeed, more than 90% of CEOs surveyed in the McKinsey study say they “are doing more than they did 5 years ago to incorporate environmental, social and governance issues into their core strategies.” It’s a step in the right direction. And every such step makes for a more viable market for cleantech solutions – even those that do not have a high, immediately demonstrable ROI.

At last week’s Cleantech Crossroads* event in San Francisco, architects were well-represented among the attendees. It’s clear that architects play a pivotal role in green building. They do something every day that most businesses, institutions and individuals may undertake only once a decade. Because architects design large and complex building projects that have long-lasting effects on energy and resource use, their recommendations and decisions about everything from construction materials and windows to lighting and HVAC systems have very significant, cumulative impacts on the environment. By and large, architects take their environmental responsibility very seriously. Most large domestic firms have at least some staff accredited by the non-profit U.S. Green Building Council. And 88% of architects recently surveyed have received some training in sustainable design.

But what’s really interesting to me is that architects are well-positioned to know the needs of a potentially enormous marketplace for clean technology. In the U.S. alone, the construction business contributes almost 5% of our nearly $14 trillion gross domestic product. That’s a $600-700 billion dollar market!

For cleantech startups and for businesses that aim to develop cleantech products, architects can be a source of ideas. What sorts of lighting problems exist and what are some ideal solutions that architects dream about? What sorts of waste water capture and re-use systems are possible but currently not available? How could roofing be adapted to capture photons for solar energy or to heat water?

Beyond the ideation stages, architects can also vet product concepts, assisting new product developers with practical matters such as explaining when, in a typical project timeline, certain product decisions will be made. They can highlight code-compliance issues and describe how to best reach and influence the architects and others who have a say in the decision process. Architects can also be the connectors to commercial construction firms that could assist in testing products in a real-world environment and evaluating the ease or difficulty of incorporating new cleantech products into the construction process itself.

Developers of cleantech products would do well to ally with forward-looking architects to source new product ideas, improve product concepts and even devise ways to get new products to market.

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* The Cleantech Crossroads event was held on 11/15/07 and jointly hosted by the Bay Area Council, the California Commission for Jobs and Economic Growth and the Urban Land Institute.