Many companies have accelerated their transformation towards a more sustainable future, often initiated based on external pressures in changing customer behaviour, regulations and increasing awareness. The sustainable initiatives span all areas of business from innovation and product design to sourcing and operations. Most frequently with the primary goal of measuring and decreasing the total environmental footprint but also to reduce climate and social-related risks. Many initiatives are also driven by the need to comply with stricter reporting standards and requirements, especially for larger corporations.
For sure, we need a continuous acceleration of sustainability efforts. However, we also know that there is a great opportunity in taking the step from playing defence to winning in the offence. Winning in a way that enables growth based on sustainable value drivers and superior sustainability performance embedded into the brand promise.
Several high-performing B2C companies have taken great strides in transforming their value propositions and go-to-market approaches to support their transformation towards a more sustainable portfolio. B2B companies still have a way to go.
Some of the reasons might be that B2B companies are tackling complexities in their value chain dynamics, as for example raw material innovation needs, and experience an increased cost related to sustainable solutions. Enabling B2B organisations to translate their sustainability efforts into a compelling value message and enable growth, a sustainable commercial strategy is needed.
Rethinking the commercial choices
To establish a strong commercial strategy, you must connect the market and customer segmentation, value proposition, go-to-market approach and commercial capabilities.
Therefore, designing a strong value proposition around sustainability is not only a question about communication but also about making choices in terms of which customers to focus on, through which channels to reach the customers with which value messages and also about critical capabilities needed to communicate and deliver on the value proposition.
Characteristics of companies who successfully use sustainability as a differentiator
We have compiled a list of the key characteristics of companies that have successfully commercialised their sustainability efforts:
1. Go beyond direct customer challenges – understanding the end consumer needs
To design and develop a sustainable value proposition, you need to go beyond the direct customers’ immediate needs and understand in depth the impact of emerging trends on the end users of the product. It is in the actual application of the product that the value is created and a reduction in the climate footprint is shown. High performers are curious to understand customers across the entire customer journey and continuously collect and discuss customer trends and insights. Not only in commercial capabilities but across the organisation, creating a customer-centric culture where the needs of their customers in terms of sustainability are key.
2. Sell the vision of a more sustainable future
Moving towards a more sustainable application or version of a product often requires a changed behaviour. Acknowledging the reason for a change needs to be connected to a larger purpose, a vision of a more sustainable future and the role you take in that vision. The value message connected to sustainable solutions should in addition to resonating with the immediate need also relate to the larger purpose connected to the solution and the brand. Enabling this, high-performing companies understand their customers’ business models and are able to describe which elements that are influenced by the changing conditions in strengthened sustainability ambitions.
3. Engage in strategic sustainability projects with your key customers
Take and share risk with your most prioritised customers to drive the development of your collective ecosystem and cross-necessary bridges. High performers have made it an ambition for their largest accounts to engage in joint strategic sustainability projects. Knowing that by engaging in a joint promise will provide them with strong competitive advantage and significantly minimise the risk of churn. Strategic initiatives could imply a disruption in the value chain, joint development of a new offering, initiating new partnerships to broaden the value given to customers etc.
4. Prove customer value and build new commercial capabilities
Companies which are able to differentiate on sustainability are not always the front-runners when it comes to the classical sustainability metrics – but their commercial organisation is able to prove the value to their customers of the sustainability efforts they have made. They prove the value for their customers in terms of a stronger end customer value proposition and support their customers in measuring the impact. Enabling the commercial organisation to bring new conversations to the market requires a dedicated effort to sustain trust. Starting with a dedicated commitment from leadership, resulting in training in the specific value drivers and impact that the sustainable solutions can bring to customers and end consumers. Salespeople will also need to convey how to apply the sustainable value message throughout the customer’s buying process to get the most impact.
5. Create new internal conversations focusing on sustainability value drivers
To change conversations, you need to adjust the way that value is being measured and clarify priorities through incentives connected to progress. While finding ways to measure and relate to status towards the overall purpose, you must connect sustainability to profitability.
High performers are quantifying the historical and potential customer value of improved sustainability and communicate this equally to financial measures on revenue and customer profitability.