Duration of Sales
Hypothesis on Duration of Sales Growth The business that (i) introduces greener goods and services to the market, backed up consistently by recognized standards and labels, will (ii) reap the benefit of greater brand value and reputation, enabling it (iii) to sustain a good growth of sales with longer duration.
Any assessment of the financial health of a company needs to consider not only its “growth of sales” over the last quarter or year. It also has to consider the “duration of sales,” for example, trends over a 5-year period. The ability to not only reach new customers but also maintain their loyalty and trust over the longer term is determined by a range of factors, all of which serve to build company or product brand value. This is where credible use of LCM tools and consistent communication of product performance based on LCA applications can be critical. It may also require applying LCM in developing or assessing not just individual products or product lines but a broader product portfolio with longer-term customer relations in mind.
From surveys of senior managers and investment professionals in global firms it is evident that brand and corporate reputation tends to be a key area where they see a business case. The concern with reputation implies not only business to consumer (B2C) but also business to business (B2B) relations. If brand is to provide a guarantee of product safety and quality, the ongoing performance of all tiers of suppliers in the value chain becomes critical. This presents fertile ground for applying life cycle methods in business value chains. Accompanying the attributes of greener products and services with greener standards in operations will serve to further boost the reputation of both product and company (cf Iraldo et al. 2014).
A survey in 2012 of 1,375 consumers and 575 senior executives of companies with revenues of over US$500 million in China, Brazil, the USA and the UK found that 78 % of respondents indicated they do not buy a product if they do not like the parent company (Weber Shandwick and KRC Research 2012). In addition, 67 % indicated they examine product labels to find the parent company, and 56 % would think twice if they could not find information about the company behind it. This illustrates possible limitations of only applying LCA to products, and the advantages of broadening the scope and applying life cycle thinking transparently to the broader enterprise.
Supporting duration of sales and continual improvement in quality is of course the training of employees and incentives for management in the use of LCM tools. Consider the example of life sciences and material sciences company Royal DSM (2010/2012). It links almost one-quarter of management compensation to the company's performance in eco-product development, energy efficiency and employee engagement. The company's 23,000 employees deliver annual net sales of more than €9 billion. ECO+ products constituted 40 % of running business sales in 2010 and 43 % in 2012.