Selling service as a sustainability strategy

Selling service as a sustainability strategy

To incorporate sustainability into our economy, businesses and customers have to shift to new consumption habits that are incentivised by economic efficiency. It takes time to change deep-seated habits, so a pragmatic approach is to gradually remove barriers, target market segments that are more receptive to change, and work with the society’s tide of change.

How do we do more with less? Can we grow our economies without depleting limited natural resources? One strategy is to sell value or services, rather than resources or products. This concept incentivises resource efficiency and is great in theory, but in practice it needs customers to shift away from their old habits of consumption.

A core element of sustainability is that we do more with less natural resources. But our industrial economy doesn’t work that way. Selling services means customers pay for the outcome rather than the product. A common example: we don’t need to own a drill that spends most of its life in a toolbox (product), we need it only when we want to drill holes with it (outcome).

Piloting new service approaches enables large companies to test concepts and learn for the future - as Livework helped Volkswagen do with their Quicar car sharing service

Benefits from not owning

Selling services instead of products relieves the burden of ownership from customers. This is a compelling idea from a financial perspective. It also offers customers peace of mind, as they no longer have to worry about maintaining and repairing the products. Another benefit is that the performance of the products can be assured as experts maintain them.

New models have not yet scaled up

Take a family car. Most of the time it lies idle while we are at work, asleep or doing other things. This car is not being used to its maximum efficiency. Car clubs like Zipcar aim at exploiting this fact with some success, but they are still very small compared to the number of cars sold each year. We are all locked into existing patterns of behaviour.

Deep-seated habits

Ownership and convenience are deep-rooted in our habit. We tend to cling on to the old ways which have been verified by our past experience.

There are always early adopters who are willing to try, but for the mass market to change, it requires clear strategies that remove the barriers and work with the tide of change. If the new model is too radical, we should look for ways to gradually introduce it in small steps and allow customers to try before making a leap of faith. iTunes, for instance, introduced digital music by looking reassuringly like the old music formats.

Work with the bigger trends

To promote change, you should also understand the longer-term trend of your market. In the car club market, for instance, there is a lot of success with younger customers who do not have ownership habit and have many reasons not to own. Understanding the bigger market trends helps you spot the right moment and target segments.

Car sharing memberships are expected to exceed 12 million globally by 2020 up from 2.3 million

Be ambitious to disrupt

Providing a service with a goal of sustainability is a long-term strategy that requires a radically different business model and customer proposition. It cannot simply be a different way of selling. It has to become a different way of doing business and creating a customer relationship. If done right, this approach offers a radically different value proposition that helps you leapfrog the competition.

Download whitepaper: service innovation in 21st century cities