How to market a circular alternative
Bram van der Sanden - Marketing Manager Mitsubishi
Is selling a circular alternative in a sector where customers base their choice mainly on price simply a pipe dream? Not for Mitsubishi Elevator Europe. Marketing professional Bram van der Sanden gives potential customers new insights and demonstrates how a circular lift is actually more profitable in the long term. This is sustainable for the environment and good for the budget.
As a marketing professional, what drives you personally?
I don’t believe in an economy that can only function through growth expressed in monetary terms. Certainly not given the rapid global population growth and the resulting patterns of consumption. My motivation in life is to contribute as best I can to a more sustainable society and associated economy. In my own life, this means making conscious decisions, such as flying less, changing my consumption habits and following a vegetarian diet. In terms of my work this means, among other things, helping raise awareness among our stakeholders (e.g. fellow employees and clients) through marketing communications and establishing new business models that are geared towards circularity
How did you begin working with the circular economy at Mitsubishi Electric?
n 2013, our lift sales were flagging. The most common lifts that were sold then (and now) were inexpensive models with a short lifespan and a high turnover rate. Suppliers make money on after sales: repairs and parts sales. Though our lifts are more expensive, their high quality means they’re cheaper over the length of the product life cycle. For the vast majority of buyers in the market, the lowest purchase price is the decisive factor, yet we didn’t want to compromise on our quality. All this meant a new proposition was needed. Together with our managing director, sales manager and lead engineer in R&D, I – as the marketing manager –began to devise a new proposition. In those days, we didn’t know much about the circular economy but we learned as we went along. During this process, we learned that we could derive greater value from our higher quality by applying circular strategies. And not only for ourselves, but also for our customers and the environment. So circularity also distinguishes us from competitors.
At our company, the whole process began with the True Value Case Study we carried out in partnership with KPMG. Together, we calculated the true value impact — i.e. the use of materials, CO2 emissions, logistics process and usage — of a standard lift and compared this with the use of our lift over a thirty-year period. This study demonstrated that our lifts had fewer malfunctions, for example, but also that a smarter design for reassembly and shorter logistics processes offered prospects in terms of the environmental impact and more efficient maintenance. Next, we prioritised these opportunities and linked them to several strategic projects, such as designing for reassembly or the option to relocate our production facilities. As the marketing manager, I took the lead on this project: from the cooperation agreements with KPMG and the other parties involved to the data analysis and design of the report. In addition, we focused on making the components transparent at the level of materials. We did this initially with Life Cycle Analyses and for the past two or three years, we’ve also been using material passports that indicate precisely which materials our products contain. I worked with our managing director to set up this collaboration.
What did you settle on as your circular proposition?
Our new proposition was M-Use®. We’ve advanced the development of this lift to such an extent that it will last at least twice as long as the average lift. The user pays annually for its use, i.e. for the number of vertical movements. For that amount, we provide the brandnew lift, assembly, all the maintenance, lift inspections by third parties and even repairs in case of vandalism. We make an estimate of the expected lift usage and, at year-end, the customer either gets money back or pays an additional amount, depending on the actual usage. It’s the same as your energy bill. We retain ownership of the lift. We deduct the residual value of the lift, particularly the steel, from the purchase price and, over time, re-introduce it into our production process. And we pass on these lower costs to our customers. Taking all these costs into account, throughout the usage phase, ensures that we can now compete on price in a customer’s procurement process.
What is your role as a marketing professional in informing customers about the circular option, even if they don’t ask about it themselves?
““We’ve thought about why
it’s more beneficial for all our
stakeholders to use our lift
instead of buying it.””
We view it as our duty to raise our customers’ awareness about the raw materials we consume, but we’re also a commercial company that can only survive by making a profit. Still, that does not relieve us of our responsibility to make conscious decisions in this area. Nor are we saints when it comes to this, because the shareholders’ interests also weigh heavily in our boardrooms, but we also do our best to take the long view within a changing world in which climate change and scarcity of materials are a given. The vast majority of our customers still just want to have the most affordable lift at the time of purchase. Sustainability may be that final push that encourages customers to choose our company. So as marketing professionals, we’ve thought about why it’s more beneficial for all our stakeholders to use our lift instead of buying it: the developer of the building where the lift will be installed has no initial investment, the contractor no longer has to buy the lift and, for housing corporations and other building owners like investors, the service costs they charge per square metre are lower. We’ve targeted our communications with all these stakeholders to ensure that, from the perspective of their own interests, they’re open to the impact on the larger system.
““In order to properly
do your job as a circular
marketing professional, you
need to know a lot about
the entire chain.””
Our proposition was not the result of endless considerations before finally discussing it with our customers. Instead, we approached our customers with the idea of offering them a circular service and presented the idea to those who highly value the circular economy. We further designed the lift with Delta Development, and shared data with them in good faith. We provided information about the costs and margins of the lifespan of a lift, lift usage, maintenance methods, the risk of components malfunctioning and so on. In short, we developed the model of a circular lift together with partners throughout the chain. We also worked with ABN AMRO and BAM to see how a circular lift might work for them. Success depends on finding partners you can trust and who return that trust and starting with clients who share the same values.
““I don’t believe in an economy that can only function through growth expressed in monetary terms.”
”
Within your own organisation, what is your role as marketing professional in advancing the circular economy?
I believe that ‘External success starts internally.’ You can only propagate something after you have experienced it internally. That certainly applies to the circular economy. The circular economy requires a different culture; people need to learn to think in systems. When it comes to the external piece, we marketing professionals excel at bringing people on board. We need to do a good job of that within our own organisation as well.
What helped us tremendously were the breakfast sessions we organised as a marketing department. Everyone attended, from the factory employees to the directors. And under the heading of ‘continuous improvement and innovation’, we’ve repeatedly invited external speakers. This has not only helped us to persuade everyone to get on the same page, but has also really helped us improve our products. It’s been a fun way to interact dynamically and to come into contact with others. It has also led to extensive participation from people from the factory. You could see that they immediately got to work figuring out how they could reuse more, avoid or better exploit residual flows and adapt production processes.
I think that, as a marketing professional, your job entails more than just communications or market research. You also need do a lot more with innovative business development. This means you have to collaborate with different disciplines: external customers and stakeholders and of course salespeople, buyers and internal R&D. Our marketing and communications express a more holistic message. We emphasise systems thinking and make connections between sustainability and the greater business story. We’re also transparent and clear about what exactly we’re doing about recycling and reuse, and their impact. Along with sales, the marketing professional acts as the eyes and ears in the field for the customer’s (circular) wishes. You have to actively gather this information. We regularly hold multidisciplinary meetings with various departments to incorporate the requests for circularity into our innovations. For years, I didn’t know much about the technical product and the process. But in order to properly do your job as a circular marketing professional, you need to know a lot more about the entire chain. That begins with talking extensively to your colleagues and customers
““As marketing professionals, we’re good at getting people on board.”
”
Selling a service over its entire life cycle instead of a one-off product is truly a different profession. You have to think from a systems perspective and link wide-ranging interests. In this capacity, an M-Use® salesperson must therefore not only be able to tell his or her story about a lift, but must also be able to discuss circularity including the legal or financial aspects. This demands far more diverse knowledge. We have therefore worked with various commercial disciplines to ensure that the customer journey and the associated tone-of-voice and tools are correct.
As a marketing professional, how can you ensure that circularity becomes a business strategy and not just a marketing strategy?
At the World Economic Forum 2018 in Davos, our company officially committed to the tough objectives in the circular field by signing the PACE pledge. The Platform for Accelerating the Circular Economy initiative is co-sponsored by ASML, Cisco, HP Inc., Dell, KPN, Vanderlande and Philips. We’re committed to the goal of achieving 50% of our income from M-Use lifts in the Benelux region by 2021. This objective means that a significant portion of our company will only offer circular lifts. In addition, we want to be able to close the loop entirely by 2021. We’ll ensure the responsible 100% recycling and/or reuse of all the components in the returned M-Use lifts. These measures will ensure that the circular economy is a serious business strategy
How do you ensure that the (sustainable) marketing claims are valid?
By continuing to innovate, making them tangible and communicating clearly. You need to honestly show where you’re at in the process, what you still need to achieve and how you will continue to innovate. We often also say, ‘This is a first step for us, but we can do much more.’ We are currently working on six of the ten R’s (reduce, reuse, recycle, etc.). We need to achieve 100% circularity. In my opinion, you should not make claims if you’re not actually serious about the circular economy. How can marketing professionals get started within their marketing role? Embrace your multidisciplinary and connecting role. So make sure you also participate actively in business development. Focus on a sensible and cohesive message. Too many marketing statements focus on form but are meaningless in terms of their content. Focus on the facts and make the message tangible, with figures included. Underpin sustainability with clear figures and be honest about where you are and where you’re going, even if it’s sometimes stressful.
Mitsubishi Elevator Europe is specialised in offering high-quality elevators and escalators as well as related services (i.e. maintenance and modernisations). Mitsubishi Elevator Europe is part of the Mitsubishi Electric Group, which, in turn, is part of the Japanese Mitsubishi conglomerate.
