This is “Getting the Business Off the Ground”, section 7.3 from the book Sustainable Business Cases (v. 1.0).
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When Simply Green’s biofuel business commenced in April 2007, Andrew started with family and friends as his first customers. Some of the other initial customers came from contacts from the hydro-seeding side of Simply Green’s business, including the USDOT official.
In the first six months, Simply Green expanded its customer base to fifty. Building from the first season’s customer base was mostly about education, getting potential customers familiar with Simply Green biofuel products; getting people to understand what biofuels were, its environmental benefits, and how it was easy to use; and convincing them that it was not going to negatively impact their vehicles or their homes. With outreach and education, people started to learn, develop interest, and trust and started to tell their friends. Some took the leap of faith and signed on to try BioHeat.
In its second year, Simply Green grew quickly. It started to grow fast, in part, because of the increased concern about the human influence on climate change after the 2006 release of the movie An Inconvenient Truth. As Andrew describes it, “When we were talking to potential customers about the environmental impact of different fuel options, people were seeing it on the big screen. It just helped pave the path a little bit easier for us to get down the education road. And we quickly started to see an increase in our customer base.”
Simply Green was entering an established market for fuel that had certain characteristics that the company had to understand and figure how to effectively compete in the context of these characteristics. While most of the competition was based on price, it was also subject to strong customer loyalty to dealers who had been delivering their fuel for a long time. A larger dealer might be making $0.60 a gallon over wholesale, versus $0.40 a gallon for a smaller establishment. Simply Green usually came in anywhere in the middle of these, as it was unknown whether customers would pay a premium for a more environmentally friendly product.
Simply Green pegged their price to range from $0.05 to $0.10 on either side of the conventional competition. And in addition to being able to address their customers’ environmental concerns, a benefit Simply Green’s product had over the conventional competition was that it burned cleaner in furnaces and car engines. It helped the system: either the engine in the vehicle or the heating system in the home or workplace. It allowed engines and furnaces to clean themselves, as the biofuel acted as a natural solvent. And this lowered the customer’s maintenance cost, extended the life of the furnace or engine, and increased the burning efficiency of the furnace or engine by about 5 percent. So any relatively small price premium for Simply Green biofuels could pay for itself.
In the first full year, Simply Green grew the customer base to about five hundred customers. In addition, Simply Green continued to engage in creative marketing and outreach. One of the best examples of this was Andrew making cold (unsolicited and without any prior connection) phone calls to music industry performers touring in the region whose fans and the performers themselves were expressing concerns about the environmental footprints of their performance tours. For Andrew this was fun and exciting. He was able to connect with Guster, Dave Matthews, Jack Johnson, and Farm Aid.
In May 2007, as Andrew describes it, “I saw that the band Guster was coming to this area. And I knew that they were pretty environmentally concerned with how they set up their concerts. So I put a call into this organization that was managing their concert venues, called Reverb. And the woman who runs it was the wife of one of the band members. Long story short, she and I grew up in the same town, and we didn’t realize, she was friends with my best friend’s older brother.” Again, Andrew was able to make a personal connection and turn social networking into a business benefit.
The Reverb representative (http://www.reverb.org/about) was very excited that Simply Green could deliver the biodiesel directly to Guster’s tour entourage. So Andrew brought the truck filled with biodiesel to their location and filled their tour buses and their tractor trailers. Guster’s handlers took a photo of the tour bus being filled from a Simply Green biofuels truck and the photo went viral in many publications and the Internet, the biggest publication being an issue of Rolling Stone.
After Guster, Simply Green fueled the tour buses for Dave Mathews, John Mayer, the Beastie Boys, Farm Aid, Kelly Clarkson, the Blue Man Group, Sheryl Crow, Willie Nelson, Jack Johnson, Phish, Coldplay, Maroon 5, and Styx.
Reverb: Helping the Music Industry “Go Green”
Reverb is a nonprofit organization based in Portland, Maine, that was founded in 2004 by environmentalist Lauren Sullivan and her musician husband, Adam Gardner of Guster. Reverb provides comprehensive, custom greening programs for music tours while conducting grassroots outreach and education with fans around the globe. In addition to their “greening” work with bands and artists, Reverb also works to move forward the sustainable practices of music industry leaders, including venues, record labels, and radio stations. Reverb is an example of a social enterprise.
This instantly gave Simply Green higher credibility and visibility. The perception of the fuel industry in general was the delivery driver that would come to your home, maybe your parents’ home, and maybe even your grandparents’ home. And that same company came to you every year. But Simply Green was trying to change the standard practice. They wanted it to become something different. They wanted to enable the public to be able to make a purchase motivated by environmental concerns and to have that be “hip and cool.” And once they got the Rolling Stone exposure, that credibility and market buzz carried through into their local press. A lot of local press started picking up on what Simply Green was trying to do.
As Andrew describes it,
That’s really what impacted our business the most…the amount of public relations that we got from Rolling Stone and some of these really fun events, that may not even been the best business decision because we might have driven to the southern part of Massachusetts to deliver 500 gallons of fuel and we might not have covered the cost of getting there and the driver’s time. But what that and similar efforts did for us was continually got us in the press. If it wasn’t every week, it was probably every other week, or a couple times a month, a few times a month. And then people started to read about us, and that’s where the phone calls started to come in. We started to get up the education curve with our potential customers, the credible component to hearing it or reading it in the newspaper, started to multiply, and we really start to see the business pick up.
It was not just the cover of Rolling Stone. Simply Green used community engagement and its commitment to serving the community to reach out to potential customers, to get noticed, and to establish its market presence. In April 2008, the company created a not-for-profit subsidiary, the Green Alliance, in the greater seacoast of New Hampshire area as a public relations and marketing division to educate the community on “being green.”
Simply Green also used its commitment to serve the community to build its customer base. In February 2008, the company serviced former Veilleux, Peron Fuel, and Price Rite customers after the companies stopped delivering fuel and went out of business in the middle of winter. For this, Andrew Kellar and the Simply Green team won the Environmental Hero award in Maine. Again in May 2008, Simply Green helped out households in need, offering special pricing for Rye Fuel customers that were unable to get deliveries of their prebuy fuel at the end of the heating season. And in July 2008, when fuel prices were peaking at $4 a gallon, Simply Green offered discount prices to large groups, such as neighborhoods, town co-ops, and employees of local businesses.
From April 2007 to the end of the year, Andrew operated as a solo entrepreneur and employee. In January 2008, Simply Green added its first employee. Staffing increased steadily along with customers and revenue growing to ten employees in April 2009 and seventeen employees in April 2010. The first hires were fuel truck drivers who became the public face of the company. As Andrew describes it, “We wanted each of our drivers to be the face of the company and be able to educate and handle any onsite customer service concerns. We also wanted them to have a clean and friendly demeanor. We were fortunate to find just the right mix of drivers that supported the brand and our mission.”
Simply Green then added to its marketing staff for customer outreach and acquiring new customers. The last area Simply Green added to was operations staff. Operations managed customer relationships after deliveries occurred and also managed the internal relationships of the employees. Simply Green was able to find all their employees, with only two exceptions, through referrals by staff members. Recruited employees wanted to work for a socially and environmentally responsible company that was contributing to the community that they all lived in.
In the fall of 2008, Simply Green expanded and diversified, adding a biodiesel division, opening up a gas station, and starting to do research into third-generation biofuels with scientists at the University of New Hampshire.
The gas station was a first of its kind. The station located at a busy intersection in Dover, New Hampshire, sold biofuel for automobiles and also included a congreenience store. The concept behind the congreenience store was to be a traditional convenience store with a green twist to it. The store had solar panels on the roof, used bamboo flooring, and sold local food. About 75 percent of all the products in the store came from within a one hundred mile radius, to support the local economy and local vendors. The station had two different types of biodiesel available at the pump, gasoline, which had a 10 percent blend of bio (ethanol), and a fully biofuel product.
With the station, Simply Green had the ability to further promote the sustainability mission and commitment of the company. The station became a highly visible showplace for Simply Green to educate more customers. There were more than one hundred people at the station every day and about 50 percent were new to the store, looking to fuel up their vehicles or get a cup of coffee, and thousands of others drove by every day. So that was an opportunity, every day, to educate.
Source: Simply Green.
With the congreenience store, community outreach, and other efforts, Simply Green’s customer base continued to grow at a steady pace. By April 2009, Simply Green had one thousand customers. And by September 2009, as Andrew describes it, “We were creeping towards profitability.”