Continuing from the previous blog … If you are a B2B company, here is some ying to the yang of executive deprioritization of sustainability:
“Sustainability is becoming increasingly important to corporate buyers … it is now one of the top 3 purchasing criteria, with 36% of B2B customers reporting that they would already change suppliers that don’t meet sustainability expectations, and 57% expecting to be willing to do so in three years. Similarly, almost half (49%) of B2B respondents reported that they are willing to pay a premium of 5% or more for more sustainable products or services, and expect their willingness to do so to increase in the future, while only 6% said that they would not pay any sustainability premium.
As corporate buyers increasingly integrate sustainability considerations into their purchasing behaviors, the survey found that many suppliers are moving to address this demand, with 35% reporting that their company’s salesforce targets customers with high sustainability commitments, and 35% report having incentive plans in place for sales of sustainable products. However, only around half said that their salesforce understands the economic benefits of sustainable products or are equipped with marketing materials to emphasize product sustainability.
Additionally, while 85% of suppliers said that they are embedding sustainability into their products and services to some extent, only around half of buyers said that the sustainable options meet their expectations.”
Similar to their conclusions about consumers, Bain believes there are significant opportunities to enhance growth in B2B relationships through sustainability initiatives. They suggest four steps for doing this:
- Use data to prioritize the most sustainability-focused customers. “Suppliers need to systematically identify the individual customers and customer segments that are most likely to be interested in sustainable offerings. This involves creating a profile that reflects how much they spend, the importance they place on sustainability, whether the supplier’s product offers them a relatively low-cost way to lower their carbon footprint, the specific aspects of sustainability they care about most, and the goals they have set for those priorities.”
- Construct a sustainable value proposition. “Two-thirds of customers report having a low or average understanding of what justifies the price of their suppliers’ sustainable offerings. Some 45% don’t believe their suppliers clearly state the financial return on that investment, limiting their willingness to pay a premium. There is clearly room for companies to better construct and communicate their sustainable value propositions.”
- Power up your salesforce. “Selling sustainability requires different skills and tools from traditional sales approaches, processes, and models. Sales teams that have been historically product focused have to learn to emphasize not just a product’s attributes and features but also the financial and sustainability value it offers the customer. They must truly understand how their offerings can support the sustainability agenda of the customer. That means companies need to equip their salesforces with the right knowledge and digital tools to target customers based on their sustainability commitments and pair these approaches with an incentive program that properly rewards the new selling motions.”
- Capture all sources of value. “Suppliers must align their pricing strategy with the full array of value their products offer customers. This may include enhancing their customers’ sustainability. Or it may involve helping them gain market share, shift to more attractive customer segments, achieve higher profit margins, or charge a premium price. For many, sustainability alone won’t justify a higher price, but once a fuller understanding of a product’s value is established, sales teams can leverage that to negotiate prices with customers.”
Sustainability leaders, staff and advisors: Here is a chance to use your materiality assessment for more than just reporting (but make sure it is current enough to reflect recent business/strategy changes). Combine that information with research on your customers and their current key buying criteria to create a roadmap for your best opportunities for growing revenue, reducing costs and bringing focus and efficiency to your sustainability programs. In keeping with Bain’s fourth point, finding your opportunities may also require understanding your customers’ customers sustainability needs and priorities as well.
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