An interview with Professor Dr. Rainer Elste and Franz Speer of the Sales and Marketing Institute (VMI), a Steinbeis Consulting Center
For companies and society in general, it is crucial to become truly sustainable. The entire value chain must be made sustainable, starting with raw materials and finishing with the end consumer. In this interview with TRANSFER magazine, we asked Professor Dr. Rainer Elste and Franz Speer of the Sales and Marketing Institute (VMI) about the role of sales and marketing in this context. Both marketing and sales experts, they explain how sales and marketing have to adapt when it comes to sustainability, the role of pricing in this context, and why all stakeholders should invest in this transformation exercise.
Hello Professor Elste, Hello Mr. Speer. People primarily think about resources and raw materials or even manufacturing when you ask them about sustainability, but your focus lies in the sustainability of sales and marketing. Can you tell us more about this?
You have to think sustainability holistically, about all stages of the value chain. One key factor in achieving the global sustainability goals will be to make consumption more sustainable. To , there are three sets of questions. The first is: What do we consume? This is about the raw materials that end up in finished products, sustainability in production, the social circumstances under which products are made, the length of transportation routes, and how products are designed to meet the criteria of the circular economy. The second set of questions deals with how we sell. A lot of the topics have to do with B2B relationships between producers and their customers, so that’s mostly manufacturing companies and retailers. Retail and industry have to think about logistical issues, such as making optimal use of trucks, reusing shipping cases, and, in addition, questions relating to category management, i.e. planning sales assortments, shelf designs, etc. The last set of questions is about what we communicate and how we dispose of products. This covers important issues such as “green communication,” nudging (which is about stimulating consumers to change habits), and how goods are disposed of at the end of the product life cycle. As you can imagine, the sales department plays a crucial role in this, since it identifies the client needs, it translates these into required internal actions, and finally – working with the client – it proposes and works out concrete solutions for the consumer.
A particular challenge still lies in pricing. Some leading retail chains have already discovered the advantage of conducting market research with consumers and they say they’d be willing to pay more for sustainable products, but in reality they decide differently. Lidl tried only offering fair-trade bananas, but they lost a huge amount of market share to other discounters. As a result, they had to go back to offering cheap bananas. For consumers, it’s difficult to make sustainable decisions. Here’s an example from one of our consulting projects: If a supplier of plastic films provides something like a film for fresh cucumbers, it gets branded as unsustainable. But compared to an unwrapped product, the packaging significantly lengthens the shelf life of the cucumber. So if the cucumbers were offered without packaging, consumers would always have to consume the fresh produce immediately, in line with the quantity available. Under normal circumstances that makes things a bit difficult, unless you’re willing to find the shelves empty. Also, in terms of the environmental footprint, destroying a cucumber is even worse than disposing of the film.
In what ways can companies, but also their customers, benefit from sustainable sales and marketing solutions?
Selling no longer works these days without . In concrete terms, there are three ways customers can derive benefit from sustainable selling: The first is low product footprints when it comes to material use, such as using recyclates, but also in terms of energy use in production as well asstandards. The second is about lower carbon emissions in logistics. And the third is about sustainable consumption by creating less waste, not wasting food, and using circular economy processes such as circular packaging solutions.
As far as sustainable marketing is concerned, it’s essential to be in greenwashing, i.e. don’t try to hide things behind a fig leaf of sustainability. Consumer organizations, the press, but also switched-on consumers soon find out what you’re up to; then the boomerang comes flying right back to you and your credibility suffers. If, however, a company is able to manage its sustainability properly, it can still turn this into a competitive advantage. Why do I say “still?” Because for the foreseeable future, sustainability will be the new normal in some industries or price ranges. It shows you’re clean, and those that lag behind will lose. It’s much more difficult to sell sustainability in classic B2B marketing, where international competitors fight over every cent for commodities, by which I mean goods that are easily interchangeable.
Some time ago, the United Nations Environment Programme issued some useful guidelines on communicating sustainability. They’re worth reading.
Sustainable selling requires a change in thinking, not just on a management level but also in the workforce. What do you think will be the biggest challenge in context?
People have already started to rethink things because of political pressure, which is also a result of the EU Green Deal. But also, we’ve already reached the point whereby most products and services wouldn’t be marketable if they didn’t meet minimum sustainability criteria. Selling already underwent a rethink a number of years ago, because clients – including retail customers – were already raising sustainability issues and pushing them. The biggest challenge in my view is giving staff appropriate training so they know, understand, and are able to talk about relevant sustainability issues. But also companies are realizing that it’s not enough to have your own sustainability strategy, your strategy has to be challenged and, if necessary, adjusted as part of the relationships you enter into with customers and . And the last thing I’d like to mention is the challenge of balancing out the three pillars of sustainability – ecology, business, and social issues.
I think this is where things overlap with corporate social responsibility. Companies don’t have to translate investments in sustainability into like-for-like profits just because senior management sees things that way. In any case, a variety of studies have shown that young professionals are attaching increasing importance to this issue. So a firm’s ability to do business more sustainably can be a differentiating factor in the “war for talent.”
What other services do you offer customers to help them sell sustainably?
The Sales and Marketing Institute has developed a four-step approach for making sustainability an enshrined aspect not just of sales, but also of marketing. The first step involves getting to know relevant stakeholders and understanding their sustainability strategies. In the second steps, you pinpoint sustainability issues at each stage of the value chain and assess their relevance. Thirdly, you conduct a risk assessment of the company’s business model. Last but not least, you work out marketing and sales solutions focusing on product packaging, logistics, category management, marketing, and waste disposal.
In addition to that, we also conduct market research with and on behalf of our customers to better understand their perception of sustainability and identify price acceptance and approaches to sustainability. We create strategies, tools, and finally also guidelines on selling arguments, which can also be particularly useful for medium-sized companies and companies in industrial markets. We’ve been working with the Vogel Media Group on the development of an open seminar, which we warmly recommend to anyone interested in these issues.
How important are collaborative consulting services from networks such as the Steinbeis Consulting Group for Marketing & Sales?
Consulting services offered by company networks are extremely important if you want to offer customers all kinds of solutions they require on this complex topic. You can’t have all competences in house when you’re a small consulting firm, but a network allows you to remain adaptable and responsive to all kinds of potential requests. Also, every consulting project is different. That’s why we believe in the networking approach, and our Steinbeis Consulting Group – Marketing & Sales – means we have excellent partners for almost any kind of topic.
Absolutely. We have some experienced experts in the Steinbeis network, specialized in a variety of detailed areas – from PR, to tendering for business, and even highly specific selling practices.
Prof. Dr. Rainer Elste (interviewee)
Steinbeis Consulting Center Sales and Marketing Institute (VMI) (Göppingen)
Franz Speer (interviewee)
Freelance project manager
Steinbeis Consulting Center Sales and Marketing Institute (VMI) (Büro Düsseldorf)