CleanTech WebLog

In the debut issue of HBR Green (from Harvard Business School), Steve Bishop of design firm IDEO wrote an article entitled “Don’t Bother with the Green Consumer”. This is a catchy and provocative headline that obscures the real issue. I believe there is a “green consumer” market – i.e. consumers who prioritize sustainability above other product features. But, it’s a niche market. Some companies can target this market and be financially successful (e.g. Burt’s Bees).

The fact is that many companies must address a broader market. And the vast majority of consumers – and business customers – are looking for other (non-green) benefits first.

This does not mean that product marketers can ignore sustainability issues when they are developing market requirements for new products. It means that marketers and product developers face the very interesting challenge of devising products that incorporate sustainability while still meeting the customers’ other (in most cases, higher priority) needs. It’s an exciting challenge, full of real opportunity for those who like to innovate and want to beat their competition in the marketplace!

There are lots of examples of companies that are using green benefits to create a market opportunity or to differentiate from competitors but are not leading with those benefits in their messaging.

Green Plug, the DC hub company that made such a splash at the recent Consumer Electronics Show, is a good example. The product replaces multiple, device-specific chargers with a single charging hub that calibrates the electrical charge delivered to each device’s particular needs. All this is managed through a protocol called Greentalk. I had a chance to hear CEO Frank Paniagua talk about his product at a recent meeting at the MIT-Stanford Venture Lab. He quipped that a few years ago, his company would have been labeled a tech company but now it’s labeled “cleantech.” Paniagua emphasized the top consumer benefit of convenience (having only one charger for multiple electronic devices). For manufacturers who adopt the Greentalk protocol, the benefits are lower bill of materials costs. Secondarily, “green” benefits accrue to both constituents (consumers and manufacturers). The consumer will reduce energy consumption because the Greenplug hub automatically shuts off power flow to the device once it is fully charged. The manufacturer may benefit from fewer end-of-life product disposal costs.

Another example is the Technotrash service offered by GreenDisk (not related to GreenPlug). GreenDisk’s biggest customer segment, the entertainment business, sees the primary benefits of the service as “secure, documented destruction of products,” with the recycling as a secondary benefit. GreenDisk solves a pressing customer problem while at the same time delivering a “green” benefit.

Lexus marketing efforts for its hybrid cars is another case in point. See my post on “Tailoring Cleantech Messages to Your Target Market.” Lead with the top priority product benefits as seen by the target customer and then deliver the ancillary, somewhat less tangible, benefit of doing less harm to the environment.

As Bishop puts it, consumers “want solutions to their day-to-day problems that also make sense for our environment.”

KJ’s recent post on ROI suggests that one way for Cleantech vendors to move beyond a straight ROI pitch is to sell higher in the organization where other factors can affect the decision process.   After reading her post, I started thinking about what selling higher entails.   It’s absolutely true that the needs, and the ability to make a “risky” decision (one not based entirely on ROI) vary greatly by position.  It’s challenging to find the different kinds of buyers in an organization until you understand what the goals and strategies of your customer’s business are.  This is true not only in Cleantech but in any industry.   In the end, it all comes down to this: the customer must have a problem that needs to be solved, which in most cases, means that there must be some economic advantage to solving the problem. That means that ROI is always relevant, even if not the sole condition for the decision.  Even in cases where there are other drivers, like compliance, or addressing environmental concerns, if it’s not good for the bottom line, it’s really going to be a tough sell, particularly for Cleantech vendors with innovative, yet unproven products.    

How do you sell high?    

• References
• Networking
• Chutzpah
• By understanding your own product well enough to describe the problem it solves to a variety of different people.
• And finally, by understanding your buyer’s buying process, and where in the organization the value of your product is most relevant.

Start your selling process at the highest level you can find, with the knowledge that you will get pushed down eventually, but that by then it will be with sponsorship from above, which carries clout and gives you credibility.  Use your network to find someone that can make an introduction to the person you want to talk to, or find someone who knows someone in the right position to make a “risky” decision.  And be ready to tell your story, with the benefits tailored specifically to that person’s needs.

Many clean technology vendors rely on return on investment (ROI) calculations to justify a sale. The idea is that customer makes an upfront investment and that investment (plus some) is paid back over a period of time. Many vendors will work with prospects to collect data and develop a set of assumptions about costs and savings. These assumptions are fed into an ROI calculator or spreadsheet model that spits out an estimated ROI percentage. See the Advance Green (Canadian Tire) ROI calculator for an example.

The problem with ROI is that even if the cleantech vendor can show that the investment will ultimately pay for itself, that’s not good enough. That’s a 0% ROI. The prospect can get a better return just by parking cash in money market funds. Even a nicely positive ROI, say 7%, may not be enough to persuade a buyer.

Most companies have more investment opportunities than they can fund and can end up ranking these opportunities, one against another. A 7% ROI may not “make the cut.” (For a sobering account of the pitfalls of ROI justification, see Little Green Lies in the October 29, 2007 issue of Business Week.)

Thankfully, in most cases, ROI is not the only criterion used in making a purchase decision. Clean technology vendors have an opportunity to market and sell the value of their offerings against other key customer goals that can include:

• addressing environmental concerns of the company’s key stakeholders (e.g. customers, partners, resellers, investors, employees)
• complying with government regulations
• meeting corporate sustainability commitments or social responsibility missions
• improving the perception of their brand

Cleantech vendors must uncover these other customer needs and values and sell against all of them. This can sometimes mean selling higher in the organization than you might have originally planned, finding the prospect contacts with a broader view of the company’s needs. Then ROI is a piece of the pitch, but only a piece.

Why is an “elevator” pitch so important? And why is it so difficult? And how does it differ from the value proposition that KJ described in her last post?

Our elevator pitch is important because it is the likely to be the first introduction a prospective customer or investor has to our company, and it’s live, not on paper. It’s difficult because it is challenging to distill all we know about the value our company brings to customers into a mere 100 words or so, and to make it compelling at that! It differs from the value proposition by expanding on it, and going into specific benefits that differentiate us from the rest of the pack, and if successful, leaves the recipient saying “tell me more”.

When someone asks, “So what does YOUR company do?” we must smartly, quickly, and confidently deliver the essentials. “My company <does this >, and provides <these benefits>. Companies who use us have <this characteristic> and have found that <benefit>. If you’d like to know more <call to action>.”

For example “My company provides ways for manufacturing companies to waste less and recycle more, thereby reducing their carbon footprint. Our innovative technology changes the way that manufacturing companies process materials. In addition, companies who have used us have found that that they were able to create more efficient processes that increased profitability. If you’d like to know more, I’ll be happy to have a longer conversation.”

Why is an elevator pitch so hard? It doesn’t need to be if you do these things:

• Know your benefits inside out
• Write down your speech
• Practice it, and practice it again…and again
• Teach it to everyone in the company