BioCycle June 2010, Vol. 51, No. 6, p. 21
Understanding the basics of compost marketing will get you in the game. What will keep you in the game is understanding market conditions and learning how and when to modify your program.
THE economy over the past few years has changed market conditions across every sector. Composting and compost sales are no exception. During these times, effective compost marketers consider what they need to do differently to stay successful. Changing your program in order to meet changing market conditions may include modifying product positioning (which target-market segments and geography emphasized, what product mix), staffing, pricing structure and required investments. Remember, understanding ‘the basics’ of compost marketing will get you in the game. What will keep you in the game, and allow long-term success, is understanding market conditions and learning how and when to modify your program as these conditions change.
Before providing strategies to succeed in today’s economic times, a quick review of the basics is helpful. When working to increase compost marketability, three major factors must be kept to the forefront: Produce a product that is “fit for purpose,” i.e., meets the technical requirements of the application; Establish a proper price (and pricing policies); and Possess accurate market knowledge, then initiate appropriate sales activities.
Your compost product must have characteristics that make it appropriate for use in specific applications, as well as possess good “general” qualities. In addition, customers not only purchase compost according to its technical or measurable characteristics but also by its appearance (and smell). People want an attractive compost – dark, fine, no contaminants, uniform throughout. Customers often have a preconceived notion about what compost should be, and for better or worse, perception becomes reality. Changing these perceptions can be difficult and time consuming.
A compost marketing plan should take into consideration the issues outlined above as well your particular geographic market conditions. The plan should address: Product characteristics / facility infrastructure; Product development/research; Market research; Promotion / education; Sales / distribution. Creating and implementing a compost marketing plan is described in detail in The Practical Guide To Compost Marketing And Sales, Second Edition, which I authored and BioCycle published in April 2010 (see sidebar).
SIX TIPS TO KEEP YOU IN THE GAME
Keep investing in sales and marketing
A key mistake made in tough economic times is that compost producers/marketers stop investing in sales and marketing. This, of course, opens the door for their competition to come in and erode their customer base. Being more frugal or selective on how the marketing budget is spent makes sense in tough times (at all times), but slashing budgets does not – especially if this was a tool successfully used to help market expansion. In these situations, monies should be redirected to approach market segments that are more financially able to purchase – now. For instance, if stimulus monies are being invested into regional roads projects, focus there.
We also have found that when the economy is slumping, homeowners spend more money producing their own food (fruits and vegetables) or may even landscape their yard, in part because they don’t have the money for an out-of-town vacation and so will be spending more time at home. These types of markets are where the resources and time should be spent. Further, there can be a tendency to dump product (free or too cheap) into historically high-paying markets during tough economic times. This may generate some short-term income, but it will often negatively affect product values over the long term.
Offer customers the ability to sell a new service, not just a new product
When people buy compost, they are buying a solution (often to a soil problem), not just a product. However, there are times when you can market compost as the means for a customer to offer a new service. With this service, they make the majority of their profit. Good examples include turf topdressing and erosion control services. By implementing this strategy, your product and technical assistance become much more valuable to the customer, as well as a “differentiator” between you and your competition. You also will be seen as more of a partner to your customer, rather than just their supplier. In order to effectively manage this role, you must become familiar with both the tools of the specific trade and be able to match, and provide, the right compost products for the particular application.
Boost sales via environmental trends that affect compost usage
Use of compost in reclamation and land restoration is well understood and has been applied with great success throughout the United States. In the near future, climate change, soil protection and the management and protection of water resources could lead to huge markets for compost. Compost blankets for slope stabilization and vegetation establishment have become popular with many state Departments of Transportation (DOTs). The process of applying the compost and seed simultaneously using a pneumatic blower truck is both efficient and effective, assuring appropriate vegetative cover after a single application. Further, the use of compost equips designers with an easy method of meeting federal and/or state requirements of recycled product usage.
In the Northwestern U.S., compost is being extensively used to create permeable soils, which can better accept the increasing amounts of storm water being generated by development. Research has shown that by creating more permeable soils near water sources, nutrient and pesticide movement into the water – and perhaps flood damage – can be reduced. Further, the technique of creating permeable soils that have extremely high water-holding capacities, through the addition of compost, also offers an important and economically viable means of managing storm water. For every one percent increase in soil organic matter (over an acre within a 1-foot depth), an additional 38,000 gallons of water can be held.
Track economics and availability of competing products (e.g., fertilizer, pine bark)
Being active in the marketplace should allow you to identify when competing products, or products that can sometimes be replaced by compost, become more expensive or low in supply. A great example of this is the increased usage of compost when agricultural fertilizer prices increase. Further, the reduced availability (and increased price) of decorative bark in the landscape industry has led some companies to use their screened compost “overs” (which must be free of contaminants) as a mulch replacement or bark diluting agent (ground along with raw bark to extend the supply). Also, don’t disregard the potential “lime replacement value” of your compost, which can be determined by using a calcium carbonate equivalency (CCE) test. With the cost of liming agents increasing, some composts possess an intrinsic $5 to $10/ton liming value.
Understand plant/crop management trends
As mentioned earlier, it has been shown that more people grow food in their backyards when times become economically difficult. However, a few years ago, the high price of oil had farmers growing more “oil” (e.g., soybeans, canola) and “energy” (e.g., corn, switch grass) crops. Further, based on climate change, pest establishment or competition, the viability of growing agricultural crops in a specific region may change. Regardless of the situation, these trends must be monitored, and composters must determine if the trends are beneficial to them or not (and how to adapt). If a new crop is being introduced, determine if compost can be introduced as well into the crop’s cultural practices. This is fairly easy to do with the proper technical training.
A good example is using compost to grow soybeans, a potassium-needy crop. This crop matches well with compost, which releases potassium readily during the first growing season following application (80-90% release). In a North Carolina scenario, we were able to replace the typical 8-0-24 fertilizer, applied at 300 lbs/acre as a preplant fertilizer source, with 8 tons of compost. In certain arid regions of California, Oregon and Washington, native plants became popular for DOTs to establish because they are easier to maintain. These plants often do not like a lot of nutrients (they are light feeders), so compost would not typically be used to establish them. However, to open these markets, we figured out how to use coarse compost in establishing native vegetation.
Don’t ruin end use markets (and anger specifiers) by cheating
Don’t increase sales by “cheating.” The product you sell must meet project specifications or customer requirements. Repeat orders are the critical key to long-term marketing success, and they are where the real money is made. You educate the customer once, then sell them product time after time. Of course this process, and the confidence engendered, is destroyed if you don’t provide the customer the product they expect. Don’t forget, people have long memories, especially when they feel they’ve been “wronged.” Further, companies that specify use of compost (e.g., landscape architects, agricultural advisors) can be easily alienated as well, especially when a project is ruined by an inappropriate or inadequate product. Bottom line: Product consistency is extremely important to long-term marketing success.
The only way to be prepared to make program modifications is by being engaged in market development activities on an ongoing basis. Composters must get plugged into what is going on around them. Many of the market conditions (trends) outlined above must be identified early enough to take advantage of them. By modifying your program to address changing market conditions, composters can generate additional revenue, more efficiently move their inventory and more effectively build their business.
Ron Alexander is president of R. Alexander Associates, Inc. (Apex, North Carolina, USA, Telephone: 919-367-8350, www.alexassoc.net), a company specializing in market development and research for organic recycled products. Alexander is a horticulturalist with over 25 years of experience working with compost. He has also authored “The Practical Guide to Compost Marketing and Sales” (The JG Press, 2010).
Sidebar: How To Sell Your Compost