Time to stop selling more and start selling smarter

Can you remember where you were seven years ago? Most of us can. It’s not that long ago, in 2016, that Britain voted to leave the EU, the Olympics were held in Rio, and Donald Trump was elected President of the United States.

In the business cycle, seven years is a blink of an eye. Yet this is the tiny timeframe set out in the most recent report from Intergovernmental Panel on Climate Change that we have remaining to make the necessary changes to keep our planet liveable.

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Decoupling growth from consumption

Previous IPCC reports have made it clear that a thriving circular economy that is “using materials more efficiently, reusing and recycling products, and minimising waste” is one of the key components of a sustainable future.

We know industry must play a substantial and important role in making this happen by designing and manufacturing products that can be reused, and that reduce the drain on natural resources caused by creating and selling more new items.

This requires a seismic shift away from our current economic model, where growth is driven by consumption and selling more means making more. Any transition of this magnitude takes time to digest and there is understandably concern among some manufacturers about how the shift to the circular economy will impact their business models. After all, offering goods as a service is a totally different ball game to selling products.

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Selling service, saving planet

But changes are happening. At BNP Paribas Leasing Solutions, we’re working with manufacturers across different industries who are starting to think about how they can sell the function of their product, rather than the product itself, so customers can benefit from using things, without having to own them.

Product-as-a service is becoming a popular way of resetting business priorities – instead of focussing on the number of units sold, organisations are finding smarter and more dynamic way of selling services to the customer across the whole lifecycle of an asset. This includes offering support services, product infrastructure, repair, refurbishment, and recycling, all of which satisfy customer needs and reduce environmental impact.

Leasing is a huge enabler of this shift because the very essence of sustainable finance is the idea that we can help customers transition from asset ownership to use. Leasing is circular by nature because the model is predicated on keeping assets remaining operational, in good health, and holding their value for as long as possible.

When manufacturers sell their product-as-a-service, they are effectively embarking on a journey to extend product life by maintaining responsibility for the asset and selling sustainable services like asset, repair, reuse and decommissioning. ?

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Data-driven performance

Many of the benefits of product-as-service are founded on using technology and data to interpret and take advantage of new business opportunities.

Every time a customer uses an asset it generates data that can offer insights into usage behaviour and asset optimisation, so rather than trying to sell more to a customer, it’s possible to start having conversations about how to use assets more sustainably, efficiently, and profitably.

Equipment suppliers across key sectors can now offer asset management tools that track the use, location, health, and service needs of products, helping customers to make better decisions about how they use their assets.

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The power of partnerships

This approach feels much more sustainable and customer-centric, but we know that successfully transitioning to the circular economy through the adoption of green tech and low carbon equipment relies on a complex value chain. Even with all the will in the world, no organisation can make their operations sustainable overnight or on their own.

Sustainable procurement and circular asset acquisition is a really important step, but it begins with finding likeminded partners that can facilitate the change.?While leasing plays a crucial role in enabling the circular transition, we need willing manufacturers who are open to embedding the principles of the circular economy in design and production, as well as demand from the customer side for better, greener solutions.

At BNP Paribas Leasing Solutions, we’re actively seeking partners who share our passion for the circular economy and are open to learning and growing in this space. In each industry we represent we want to create an ecosystem of manufacturers, suppliers, servicing agents and of course finance provider, who together can make the circular economy a reality. If that’s you – please don’t waste a moment in hesitating to contact us, the time really is now.

We already have some great partnerships underway. Through our joint venture BNP Paribas 3 Step IT, we help business acquire tech assets more sustainably. By leasing IT through us, an organisation kicks starts a procurement process that embeds sustainable IT management and repair, refurbishment, and reuse from the outset.

Our partnership with Zuora also aims to transform traditional financial services by embracing the subscription economy. Together with Zuora we are enabling our partners to offer new usage-based solutions to their own clients, eliminating the need for companies to maintain the equipment, with customised invoicing based on how and when machinery is used. These services provide a more sustainable approach by prolonging equipment’s lifetime, reducing upgrade costs, and enabling the purchase of second-hand and refurbished equipment.

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Win, win, win

Examples like this show what can be possible when organisations with good intent and an eye on the future come together to find solutions that address today’s business challenges and reduce the impact our operations have on our planet.

Sometimes sustainable initiatives are seen by companies as cost centres, but with the transition to the circular economy and the adoption of product-as-service models, all parties in the value chain stand to benefit.

For manufacturers there are opportunities for innovation and market development and deeper, more insightful customer relationships. Customers get better service, driven by a desire to optimise performance of existing assets, rather than needlessly drive unit sales. The planet is the biggest winner because through this approach we dramatically reduce our drain on natural resources, lower emissions, and eliminate waste.

Seven years may not be long, but rather than despairing, this timeline should urge us forward. The business community has shown time and time again that we have huge propensity to change and adapt to new circumstances. The next seven years presents a great opportunity to transform operations to be future fit by embedding the circular economy and selling services that help customer acquire and use assets in a better, more sustainable way.