June, 2006

How to Sell “Green” Products

Environmentally friendly and energy-efficient products are growing in number as well as demand. Are you meeting the need in your own market?

By Craig A. Shutt

The number of "green” products—items that help protect the environment and energy resources—is growing rapidly, spurred by a variety of market trends. Demand likewise is rising as more customers become aware of the options and the potential benefits. Stocking such lines can give dealers a distinct advantage in their markets, if they approach these products with an eye toward serving customer needs and remain wary of overstated claims.

"There definitely is a growing interest in green products and many ways that dealers can capitalize on that interest,” says Alex Wilson, executive editor of Environmental Building News and the author of Your Green Home: A Guide to Planning a Healthy, Environmentally Friendly New Home, to be published this month by New Society Publishers. Consumers are certainly more aware of energy costs, he notes, reminded every time they fill their gas tank.

Homeowners can be directed toward green products through three different interests, says Bill Hayward, CEO, president and director of sustainability at Hayward Lumber in Monterey, Calif. Everyone is aware of energy efficiency, and dealers can gauge customers’ interest in enhancing those attributes by bringing up the topic, he adds, noting that men in particular are interested in this aspect of their homes.

Health also is a concern, and while it can be harder to quantify and sell products against, the number of products aimed at this concern is growing. These products can include paints and sealants with low Volatile Organic Compounds (VOCs) and mold-control products. Women especially are interested in these factors, Hayward says.

The third area of interest is the environment and reducing waste. Certified lumber and other products recommended by environmental groups appeal to this group—especially men, Hayward notes. "Once you have seen customers express an interest in one of these areas, you can expand their world view with the other components and see if they want to consider more products that align with those interests,” he says.

Stocking green products not only can create a distinct image with customers, it also can help with employee morale and retention, Hayward points out. "Our employees appreciated when we switched from arsenic treatments for pressure-treated wood even before new alternatives were offered, because they were concerned about handling and cutting,” says Hayward. "Builders and remodelers also appreciated that we were giving them another option.”

A key reservation expressed by dealers about stocking these products has been the premium cost that environmentally friendly products have required. This has changed in some categories, however, as higher volumes and more demand reduce prices. "We are very competitive on pricing, if you compare quality to quality,” says Matt Freeman, president of Environmental Home Center in Seattle, which was founded to promote and sell environmentally friendly products. "There are alternatives to our products that are cheaper, but they aren’t as good.”

The key to selling these products, according to Freeman, is to differentiate between price and cost. Buying a higher-quality product, which may require less maintenance or that saves long-term operating costs, lowers the overall cost. "There’s no reason dealers can’t sell these products by explaining the value,” he says. Upkeep and maintenance on homes comprise the biggest part of a home’s true costs, and stressing that point can help make builders and homeowners understand the value of looking long term.

In some cases, customers are willing to pay the premium in any event because of the environmental benefits the product provides, notes Judi Ettlinger, director of marketing for Truitt & White in Berkeley, Calif. "Some customers are totally price-driven, and they go for other products or go somewhere else,” she says. "But they wouldn’t be our customers anyway—our customers want value-added service, which we provide by showing them these products. They’re certainly sensitive to price, and that’s true of their own customers, but it doesn’t always drive the selection. Building materials typically make up a small percentage of the cost of a home or remodeling project, Ettlinger points out. "Even if the material cost does go up a little, it’s usually not a deal breaker.”

Besides, not all green products cost more than other materials, says Hayward—despite assumptions in the market. "On top of that, energy-efficient products often have a strong payback that returns the difference quickly,” he says. "But it’s still very much of an education process to explain that.”

That education process can be shorter than you expect. "Builders and homeowners are becoming more focused on operating costs,” says Wilson. "Homeowners are asking more often about the energy performance of homes and looking for recognition such as Energy Star labels. Builders often don’t give homeowners the credit they deserve for understanding the value. Often, they do a lot of research and know as much about technologies as the builder does.”

In fact, Hayward stresses, the further the chain recedes from the customer—be it architect or homeowner—the deeper the drop-off in knowledge about these products. "The customers are substantially more educated about green building materials than the builder, and the lumberyard knows the least about them,” he says. "We’re not on the front lines talking with the architects and homeowners, who know the most. This is a new topic at the lumberyard level because our world doesn’t put it out there or realize the end customer is asking about it. The lumberyards don’t know what the demand is because we don’t ask our customers—or their customers—if they’d be interested in these other products that we don’t stock.”

Dealers should consider these products because they could help separate the company from its competitors and add value for builders, Wilson says.

"As interest rates rise and the housing market cools off, builders will need something to differentiate themselves from the competition,” he points out. "Success for builders will come from promoting their distinct features, and green construction and energy efficiency will be a part of that.”

Hayward has seen this happen at his company, which became one of the first stocking dealers for lumber certified by the Forest Stewardship Council (FSC), a product architects were asking for. Adding $300,000 worth of inventory allowed the company to ship entire house packages with FSC-certified lumber overnight. That did more than meet customer demand. "It created a huge market-share opportunity for us, because customers who were committed to other lumberyards began talking to us since we could give them something they couldn’t get elsewhere.”

Becoming more involved with green building products requires a controlled process to ensure that you add the right products in the right amount—just as would be true of any new products, dealers say. The benefit comes in stocking a variety of products not readily available elsewhere and promoting them not only to create awareness but also to promote an image for the store.

The good news is that many dealers already are more heavily invested in green building products than they realize, says Hayward. Energy-efficient windows are an obvious line, along with insulation, which includes a variety of new batt and spray-in options. But there’s more. "If your nails use recycled steel, they’re a green product,” he says.

Low-toxicity sealants, low-VOC paints, formaldehyde-free paneling and other products, when totaled, may make the dealer greener than he—or his customer—realizes.

Here are steps to take to increase the green-building aspects of your operation:

Review existing products. Examine your current inventory and take stock of which products already have environmental benefits. As the above examples show, that may include more products than you expect. "If you look at what you’re selling now, you’ll realize that you may have a marketing opportunity with your customer base already to show them that you’ve got sustainable products,” says Hayward. Ettlinger agrees. Truitt & White began its program of promoting its environmental concern six years ago by looking at what it already carried and making judicious changes within those lines.

Listen to your customers. Both Truitt & White and Hayward began adding green building products only after customers expressed an interest. "A core group of [remodeling] customers came to us and asked us to carry some products,” says Ettlinger. "That was the single most important factor. They wanted products they couldn’t get, and we saw there was a real void in our market for readily available stocks of those products.”

At Hayward, the requests began in 1997 from architects interested in sustainable design. With no program in place, Hayward began investigating. "We discovered there was a huge group of builders in our market that had special-order needs for green products that we could serve by stocking certain products.”

Talk with suppliers. Current manufacturers or distributors may have lines that will fill a green gap or can replace a less-efficient line. "It’s a big help if your current distributor can supply the product,” says Ettlinger. "You’re just changing a product line, not creating a new supply system. That creates a lower barrier of introduction.”

Be certain that the supplier can meet demand. "When a supplier can’t produce, it hurts,” Ettlinger says. "You have to ensure the chain makes sense and that it’s reliable before you commit.”

Get buyers on board. Educate buyers about key attributes to watch for and encourage suppliers to bring those products to buyers’ attention. "Buyers have to know what customers are looking for and which suppliers might have something,” says Ettlinger.

Green products have a definite advantage in Truitt & White’s buying system, notes Ettlinger. "With any new product, we look to see if it can perform better than what we’ve already got. If it’s green, that’s a great plus,” adds Hayward. "We always ask vendors if they have products that are green, and we approve vendors based on their ability to participate in our environmental program. If one product is greener than another, we’ll go with that one.”

Focus your efforts. "Making wholesale changes would be suicidal,” says Ettlinger. It’s better to find key areas your customers will respond to or that can supplement existing products. FSC-certified lumber is a key area for dealers to review, since customer demand could be hidden. Even then, it may not account for a large portion of the business. "The market is still limited, but it will be growing,” notes Wilson. Other strong choices include new, easier handling types of insulation as well as no- or low-VOC paints and sealants.

Lighting products have great potential for creating a strong niche in the coming years, notes Wilson. "Homeowners spend more on electricity for lighting than for air conditioning, and there are pretty significant changes in the past 10 years in terms of the impact and quality of fluorescent lighting and fixtures,” he says.

LED lighting will create even more opportunities in the future, offering lamp lives that are 10 times that of fluorescents—considerably better than incandescents. LEDs currently work best as task or highlight illumination, Wilson notes. "A progressive building-material dealer can begin understanding these products and try out a line or two for specialty applications,” he says. "It is good to keep up with this technology, as it will be quickly evolving.”

Be wary of claims. The market is full of "greenwashing,” or environmental claims that don’t hold up or skirt the edges of credibility. Dealers must be certain the products they stock work as claimed. For instance, some products now claim to have no CFCs or other harmful ingredients that they never had in the first place, Wilson says. "They want to pick up on catchwords that people know to exaggerate their [products’] attributes.”

It’s a growing niche, so manufacturers want to make as strong of a claim as they can, says Ettlinger. "You have to be aware of the claims being made and check the reliability of the product’s source,” she says. "Customers look to us to be that filter, and it’s important for our credibility to do the due diligence. It’s easy to get caught and pass on a claim that isn’t accurate.”

Promote your difference. Ensuring customers know you have these products and have stocked them for a reason can raise your visibility and your priority with customers. Hayward operates an EnviroSmart program that the company encourages vendors to join with green-oriented products. Shelf talkers featuring the EnviroSmart logo advertise each product in the set. The tags appear throughout the store, working as billboards to emphasize the company’s commitment and show the range and diversity of the products available.

Dealers should educate employees about the benefits of these products so they can explain them to customers, Hayward stresses. "Make it easy to navigate around the store to find these products and put the word out that you’ve got them.”

Be a resource. Dealers who become known for having these products will become their customers’ first stop, especially if they have questions. "Builders want honest comparisons,” Wilson says. "If you sell a variety of products, they will respect your opinions, because you can sell them whichever one they want.” These products also are natural choices for displays that can explain features and benefits not offered by more traditional lines.

Building-material dealers want their customers to rely on them for product information, which creates opportunities to educate customers and provide them with long-term benefits for using the store, according to Wilson. "Dealers should invest in education for their sales staffs by sending them to workshops or supplier seminars,” he says. "The successful dealers are going to be the ones that keep up with these trends and communicate what’s happening to their customer base.”

The opportunities aren’t going to be shrinking, Ettlinger says. "I definitely see these products growing in number and sales. I don’t know how large they will get, but the awareness is out there and growing. All of us need to listen to our customers and take a leadership position. I think it will be huge.”