The Keys to Marketing Green Building

Engineering firms are beginning to realize that the green building revolution is here to stay and that they should join in. In 2006, LEED-registered projects increased 50% over the previous year, and LEED-certified projects increased nearly 70%, which suggests that more firms are accumulating green building expertise with each passing year. My own projection of green building growth points to a cumulative total of 24,000 LEED-NC registered projects by the end of 2012—a six-fold increase in just six years.

Who will be the winners in the battle to serve architects’ and owners’ needs for integrated design and cost-effective MEP services? When will your firm have all principals become LEED APs? When will more than 50% of your professional staff become LEED APs? Clients are eager to know the degree of your commitment and competency, and they view LEED AP status as indicative of character and capacity to produce green buildings on conventional budgets.

This series explores what each engineering firm can do to meet the test of the green building revolution. It won’t be easy. To date, engineers have not stepped up to the plate, and the world is waiting for zero net energy buildings, on-site energy production and a host of green building measures that are largely the province of the MEP engineer. This revolution is an unprecedented opportunity to craft leadership positions for MEP engineers. Unlike data centers in the 1990s, green buildings are not easily going to be replaced by cheap bandwidth and memory.

So, what’s needed?

The keys

There is no single competitive response to the growing green building market that is right for every design firm, because much has to do with the 4 Cs—the clarity of the company’s strategic vision, the firm’s capability to execute its vision, the capital available for marketing and sustainability initiatives and the character of the principals—their willingness to “walk the talk” of green engineering. Nevertheless, a conscious choice among strategies, and a clear focus on one dominant approach, is vastly preferable to having none or just improving responses to opportunities. This series describes seven good ideas for developing a marketing strategy.

In today’s environment, a company must be remarkable in the eyes of its clients and the media just to get some attention. How to make a purple cow out of a pink sow—something remarkable from something ordinary—is the perpetual task of the engineering firm’s marketing arm.[1] Looked at in this fashion, the task assumes strategic importance, as firms struggle to retain both clients and key employees in the face of an increasingly competitive global marketplace for design and construction services.

The seven keys to marketing green building are a combination of two familiar principles of marketing, as shown in the STP formula (p. 30): Segment your market, target key segments and position your company, and then, use the building blocks of competitive strategy—differentiation, cost and focus—to achieve success.

1. Segment markets. Marketers try to understand and segment markets in order to focus on the most profitable or available segments. Segmentation variables include demographics, geographics, firmographics and psychographics.

In demographics, the focus is on the social and economic characteristics of buyers. However, one could see that change agents favoring green buildings are more likely to live in politically liberal states, in big cities and to have higher education levels, so some socioeconomic characteristics could be relevant.

Geographics—where people are locating and building—is certainly a prime variable to consider in deciding where to market green building services and products. There is plenty of evidence that green building activity is concentrated in the western, mid-Atlantic and northeastern states, with other nodes in the large cities of the South, Southwest and upper Midwest. Evaluating the number of LEED project registrations by state is one way to evaluate the impact of geographic location on the availability of clients for green engineering services.[2] Within each state with a large number of LEED registrations, one can then drill down in the data and find out which cities are the most amenable to LEED certification projects at any given time.

Firmographics is a term coined for business-to-business marketing, as an analog of demographics for individuals, to help marketers understand the nature of the client base. The distinctions are the size of the company or organization (annual revenue or turnover, number of locations, number of employees, etc.); private, public or nonprofit entity; industry type; and other data. USGBC data show that LEED registrations and project certifications are becoming more prevalent among private, for-profit clients, and relatively less so among public entities, institutions and nonprofit groups that made up a majority of projects through 2005.

Psychographics refers to segmenting by lifestyle, including propensity for risk-taking and tolerance of ambiguity. In segmenting the market for green buildings, a marketer looks for a risk-tolerant personality, typically found in industry leaders and innovators. Most firms target industry leaders with new ideas, knowing that the vast majority of decision-makers want to see experimentation done successfully using someone else’s money before they commit.

2. Choose competitive targets. Targeting is a process marketers must use when deciding to focus on one or a few segments. Targeting is a critical component in setting marketing strategy because it limits the number of competitive targets in order to focus on those most likely to be successful. Most engineering firms specialize in one or a handful of client types (public, private, nonprofit), project sizes (less than $10 million, $10 to $100 million, more than $100 million) and market segments (K—12 education, museums, libraries, urban offices, historic preservation and adaptive reuse, health care), so the choice of targets is necessarily limited by the company’s prior experience, financial capability and the project resumes of key individuals.

Many engineers aim to take greater market shares in given industries or extend the geographic reach of their successes in tackling certain types of clients, but most focus on increasing revenues from current relationships to grow their businesses. Engineers who have built a reputation in a particular market segment and have a history of successful projects are often invited to compete for projects far from home, often associated with architects from a local design firm, and they are often successful in this endeavor. Clients want the best engineering firm for their green projects.

Prime targets for green building marketing share these characteristics:

• They are early adopters of new technology

• They may be potentially significant users of a new approach (for example, they control multiple properties)

• They may be opinion leaders (and therefore willing and able to sway others, both inside the organization and in a larger community of peers)

• They can be reached at low cost (for example, already are clients of a firm or customers for a product).

Few prospects share all of these characteristics. Marketers must choose a segment to target based on a consideration of each of these factors along with some intangibles, which might include existing relationships, stakeholders pushing prospective clients to choose green buildings, and market forces pushing local entities to keep up with innovative companies.

3. Position your company as a leader. Positioning is the third activity of the STP formula. It takes segmentation and targeting analyses and turns them into messages that go out to clients and prospects. The textbook definition of positioning is the act of designing the company’s marketing offering and image so that they occupy meaningful and distinct competitive positions in the target customers’ minds. [3].Positioning is a communications activity that aims at changing a target prospect’s view of an engineering firm in such a way as to create a difference that makes a difference.

These differences should have one of more of the following characteristics:

• Important benefits delivered

• Something that not every competitor can claim

• Superior to other ways to get the same benefit

• Communicable and somehow visible to prospective clients or buyers

• Pre-emptive—not easily copied by competitors

• Affordable—little price difference to get this superior benefit

• Profitability in this market segment.

Firms that position themselves successfully as green building experts by publicizing project successes find it possible to maintain this positioning even as more companies try to emulate them. [4]

Positioning, then, is what a company does to take real facts and position them in the minds of the targeted prospect. In marketing green buildings, positioning is an essential component of an engineering firm’s communications strategy and needs to reinforce a single powerful message. Because green buildings are a new industry, they offer the positioning strategy of grabbing a new, unoccupied position that clients and prospects value.

For example, a company could claim the most LEED-registered projects in a given industry or location, or the most LEED APs, or the most LEED Gold projects with a certain technology. Among engineering firms, most are trying to get 30% or more of their technical staff LEED-accredited. In Portland, Ore., two MEP firms show this tendency: Glumac has 49 of 200 total staff LEED accredited; Interface Engineering has 35 of 146 total staff.

In the June installment of this series, I will explain the next three keys: differentiating your green development offerings; becoming a low-cost provider; and focused differentiation/relationship management.

References

1. Seth Godin, Purple Cow: Transform Your Business by Being Remarkable, 2003 (Dobbs Ferry, N.Y.: Do You Zoom).
2. This can be done from data on the USGBC web site, www.usgbc.org.
3. Philip Kotler, Marketing Management, 9th ed., 1998 (New York: Prentice-Hall).
4. “New Tricks for Old Dogs,” Building Design & Construction, December 2005.
5. Personal communication from each firm.

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