For many waste management firms marketing is a new phenomenon. Kevin Hirst, marketing & communications director at Veolia, the largest waste management company in the UK, has worked at the company for a decade and says that up until five years ago marketing meant little more than having a simple website and a few leaflets.
Even now, it has not moved on a great deal. Veolia has invested in rebranding since it changed its name from Onyx in 2005 and it now has 4000 trucks and 10,000 uniformed staff up and down the country, projecting its name and logo. This is a powerful medium, but hardly one that will win awards for marketing innovation. In fact, the majority of Veolia’s marketing budget goes on collateral for its 100-strong salesforce.
And this is the largest player in the market. In terms of its marketing it is probably one of the most advanced. Andrew Garcia, director in the environment & energy practice at Navigant Consulting, a specialist environmental consultancy, says, “By and large, in the waste management sector, marketing is about sales reps trying to persuade buyers their services are more reliable than those of the existing provider.”
Neales Waste Management is based in the North West with a turnover of £8.5 million. It has a sales team of five and its sales & marketing manager, Steve Jones, says that a great deal of its marketing is focused on customer service. “Many of our competitors treat their customers like they’re doing them a favour,” he explains. “We differentiate ourselves by being focused on the customer.”
However, he also admits that price is still very important. “There are still companies that will buy business at any price, then lock those customers into long-term deals and gradually increase prices. We spend a lot of our time persuading prospective customers they’ll be better off with us than they would be trapped in a relationship like that.” However, he believes it is time this changed. “There are now enormous opportunities out there even for regional players like us, and it’s up to marketers to get out there and seize them.”
New opportunities
It is indeed a sector that is changing fast. Punitive taxation on landfill, fluctuating global commodity prices, changing attitudes towards sustainability and the emergence of new technologies have all combined to make it barely recognisable from the sector of a decade ago.
Firstly, it is becoming significantly more expensive for companies to dispose of their waste in landfill. In 2003 landfill cost around £25 per tonne. The Government is imposing an annual increase on Landfill Tax of £8 per tonne, so that by 2011 a tonne of landfill will cost around £80. At the same time, in the past few years demand from the emerging economies such as China, India and Brazil has provoked unprecedented increases in the prices of recycled products.
Garcia at Navigant says, “The twin factors of increased taxation and soaring commodity prices has led waste management companies to start working with their commercial clients to do two things. Firstly they are helping them separate out waste at source so that disposal becomes cheaper. In practice this involves introducing separate bins for different types of waste. Secondly, they are investing in technology, which will allow them to turn waste into something they can sell.”
They have been helped in this by the emergence of new technologies, which allow them to cost-effectively recycle and sell waste. The effect on the industry has been dramatic. Victor Perez-Mares, regional communications manager SW at Viridor, a Somerset-based firm with 240 facilities across the UK, says, “Ten years ago we made all our money from disposal. Now the recycling side has grown so much that it represents around half our income. This has been badly hit by the recent fall in the price of commodities, but despite that, it’s still profitable for us.”
At the same time, the growing enthusiasm among larger companies for environmental responsibility has played a key role in this shift. No business in the public eye wants to be seen to be producing truckloads of waste that is then poured into landfill, so those companies are now falling over themselves to talk to waste management firms about how they can do more than collect and dump rubbish.
New threats
Inevitably, this shift in the market has changed the shape of the sector. While there are 4000 waste management firms in the UK, the top seven control around 40 per cent of it. There are the big three: Veolia (£1.2 billion annual turnover), Biffa (£700 million) and Sita (£700 million), while the other four are Waste Recycling Group (£580 million), Viridor (£380 million), Cory (£200 million) and Shanks (£170 million).
Then there is a tier of regional players, and finally recycling firms who are now competing for the same market as the traditional waste management firms. We can no longer talk of separate waste management and recycling sectors.
Paper Round is an example of a recycling firm that has moved into the area traditionally occupied by waste management. Twenty years ago Friends of the Earth realised there was no way for SMEs in London to recycle paper and launched a service allowing them to do just that. In 2000 Paper Round was spun off from its charity parent and now helps offices within the M25 recycle any part of their waste – even food. Its customers have between two and 2000 staff, and it recently won the contract to deliver recycling services to Transport for London.
Hayley Berry, marketing manager, says, “Traditional waste management firms are doing more and more recycling, and recycling firms like us are increasing involved in waste management. The key is that our customers don’t see it as different. They want help on separating out their waste so their disposal costs are as low as possible, and they want to recycle as much as they can.”
Paper Round is different to many of its competitors in that it helps its customers separate materials at their premises, rather than further down the line. This is cheaper and better for the environment – two factors that have fuelled impressive growth. The company now turns over £4 million a year and has 4000 clients. It is growing at around 35 per cent a year. Berry admits that this has had very little to do with marketing. “We only started marketing a year ago,”she says. “Before then the phones were just ringing off the hook.”
New marketing strategies
Companies such as Paper Round are clearly taking market share from the established players, and a combination of this threat, and the opportunities outlined previously, are persuading many of this sector’s players to step up their marketing efforts.
For example, Veolia has recently hired business marketing specialists IAS B2B to help it further penetrate the corporate market. Rob Morrice, MD at IAS B2B, says, “The waste industry is gradually waking up to the fact it’s now more than just a commodity provider. Businesses don’t want someone cheap who comes in and collects rubbish at the same time every week. They want someone who can advise them on the most cost-effective and environmentally-friendly solution for disposing of their waste.”
He continues: “There are great opportunities for waste management firms to offer value-added services, and we’re working with Veolia to help promote those services. The key to it is segmenting the market, and then demonstrating to that segment that we understand its issues. We’re doing that through events, online channels, and traditional database marketing.”
It is not just the large players that are starting to raise their game. Jones says Neales Waste Management has invested £165,000 in a mobile shredding device. He says, “Our clients want these ancillary services, so it’s up to us to make the investments and then communicate our new range of services.”
Perez-Mares at Veolia agrees. “Looking ahead, I expect to see more blue chip companies looking for a zero-landfill option so we need to invest in technologies that will allow us to offer that. At the same time we need to be working with smaller companies helping them to recycle more and more of their waste materials.”
For its part, Paper Round is now starting to invest in marketing. Berry says, “We’re active online, on sites like www.sub-it.co.uk, which matches companies with waste management providers. We run ads in facilities management titles, and we’re doing everything we can to get some coverage in Metro. At smaller companies it’s PAs and receptionists who make these decisions, so we need to get some editorial in the newspaper almost everyone reads on the way to work.”
Interestingly, Paper Round is already shifting its focus from persuading businesses to start recycling to showing them a better recycling option exists. “Our research shows 80 per cent of businesses in London already recycle,” says Berry. “So they ignore messages about the need to start recycling. Therefore, our message has to be about how we can save them money and make them greener through a more effective recycling operation.”
Continuing the boom
On the whole, the waste management sector is booming. Evidence for this comes from September’s Recycling & Waste Management exhibition in Birmingham, which attracted 9028 people, a 12 per cent increase on last year, which attracted record attendance itself. Stand space was sold out with 500 exhibitors.
Gerry Sherwood, RWM 08 event director, says this is because of the opportunities that exist in this fast-evolving sector. “The construction industry is the biggest waste producer in the country,” he says. “It spends around five per cent of its turnover on waste management, so if someone can show them a way of saving a few percentage points on that, it puts thousands, millions even, onto the bottom line. Wherever you look, there are opportunities in the commercial waste management sector.”
However, opportunities are not enough. Only those that market themselves effectively will be able to take advantage of those opportunities. The waste management sector has little tradition of marketing itself, so in the next year or two there is a great chance for those who understand B2B marketing, and invest in it sufficiently, to make impressive profits.
