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Turning Sustainability Principles into Profits: An 8-Step Framework

Jan. 23, 2024
Industry leaders are developing ways to monetize their ESG initiatives.

In recent months, I have emphasized the imperative of monetizing sustainability programs. Rather than providing a one-size-fits-all solution, I advocate for a comprehensive framework that addresses the crucial dimensions of a go-to-market plan.

There is no room for shortcuts or improvisation in this strategic endeavor. The framework underscores the importance of fostering collaboration between sustainability and monetization teams.

This joint effort enhances the likelihood of sustainability initiatives being integrated into the mainstream or core business, eliminating any notion of them being secondary considerations in the product portfolio. This collaborative approach also underscores the necessity of adopting a structured framework, similar to that employed in lean manufacturing, cost improvements or new product development. If it is part of the process, it will be effectively managed!

Let us deep dive into the eight steps of the framework.

Step 1: Segment for Sustainability: The initial step involves identifying sectors, applications and customer groups with a heightened interest in sustainability, ESG or decarbonization. Within your customer or prospect populations, specific accounts will stand out as either highly mature or exceptionally interested in your sustainability programs. These accounts become the primary focus, being the ones that appreciate the unique differentiators you can provide. It's essential to recognize that not all accounts share the same level of concern or interest in sustainability.

Step 2: Produce Ideal Customer Value Proposition: For each group or ideal customer profile you have identified, you must list their needs, pains and requirements. They might differ by group. In this step, you focus mostly on understanding your customer profiles.

Step 3: Productize and Package Your Sustainability Offers: This represents a pivotal stage in the framework. Your sustainability offerings should not be vague or intangible; instead, they must center around tangible deliverables and activities that customers and prospects can clearly identify. For instance, in the case of sustainability consulting offered by an industrial company it is crucial to specify the services you concentrate on, outline the deliverables, and describe how you actively involve the accounts. (Schneider Electric’s sustainability consulting services is a good example to check out.) Many industrial players offer informal help and services to their customers in the area of sustainability. Not many of them offer formalized ones. Monetizing something that lacks a clear productized structure can be challenging.

Step 4: Extract Differentiators and Customer Benefits of These Offers: When productizing your concrete sustainability programs, it's essential to consider what sets them apart from the competition and the specific customer benefits associated with their purchase. For instance, if you intend to provide customers with decarbonization support, you need to evaluate your proficiency in this area and highlight how it enhances customers' decarbonization success, whether through Scope 3 contribution or cost reduction.

Step 5: Measure and Quantify the Economic Value of the Offers: That is why it's crucial to quantify the true value of your sustainability advantages. The value derived from top-notch sustainability consulting, for instance, can be measured in terms of the cost savings in consulting fees it provides to customers. For example, if you support some key customers with decarbonization calculations and mitigation in exchange for product purchase, you can formally calculate the value of your actions and either justify your premiums or extract a fee for the consulting services. But first, you need to measure and quantify the value of your partnership. By working with customers on carbon projects, you might be saving them thousands of dollars in consulting fees. A good sustainability consulting charges around $200 to $300 per hour. Some industrial companies have made significant process in decarbonization and can assist their customer base. For example, Dyson, LafargeHolcim, Interface, and BA Glass have all launched carbon-free products and are working on new technology to reduce emissions. Similarly, the economic value of attending exclusive sustainability events for gaining technical knowledge can be quantified, considering factors like speed to market, or cost savings. Every aspect holds value and can be measured, but it requires discipline to do so.

Step 6: Select the Right Pricing Model(s) and Level(s) for the Offers: The subsequent step involves determining how to monetize and price your sustainability programs. You have three viable options: 1) Offering them for free; 2) Integrating sustainability offers into traditional packages with an added premium 3) Charging a separate fee. The ultimate decision rests with you. Some companies have introduced independent circular business models, generating revenue from them. Alternatively, some firms apply a price premium to carbon-free or -friendly products.

Step 7: Package and Produce the Sustainability Value Playbook: Building upon the groundwork laid in the preceding steps, you develop a comprehensive sales and value playbook to showcase your sustainability initiatives. This playbook encompasses brochures, leaflets, website pages, value calculators, tools, customer value propositions and more. This is akin to the marketing collateral you would create for any other product or service. Unfortunately, in many cases, this crucial marketing effort is overlooked. Consequently, sustainability programs remain too nebulous and are not formally presented to customers and prospects.

Step 8: Deploy Sales Enablement Programs and Train Salesforce: This final step is pivotal, determining the success or failure of your go-to-market plans. Unfortunately, many sales teams and account managers lack proper training in sustainability. While they may have perused a sustainability report or heard about certain products or initiatives, they are often ill-equipped to convey essential sustainability messages and promote relevant offerings. Rectifying this is imperative. If your products boast a substantial amount of recycled materials, your sellers must be adept at selling them and justifying the associated premiums. Similarly, if your eco labels are the best in your category, account managers should articulate how this benefits customers.

The momentum toward sustainability is undeniable (The Sustainability Ship Has Sailed. Latecomers, Grab a Raft and Hope for the Best | IndustryWeek). Organizations are allocating more resources to ESG and sustainability strategies. Trailblazers in this domain have successfully monetized their initiatives, transforming them into tangible competitive advantages. Given the escalating regulatory demands, the frontrunners have adeptly navigated both the technical and business facets of sustainability strategy. The time for strong commitment has arrived!

Do you want to know more about how to turn sustainability into a competitive advantage? Join us at The Annual Summit | PricingForThePlanet in Paris on April 9th, 2024.

 

Stephan Liozu is founder of Value Innoruption Advisors, a consulting boutique specializing in industrial pricing, XaaS pricing and value-based pricing. He is also the co-founder of Pricing for the Planet, which specializes in pricing for sustainability. Stephan has 30 years of experience in the industrial sector with companies like Owens Corning, Saint-Gobain, Freudenberg and Thales.

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