In recent years, many companies have been making significant strides toward sustainability, from using green energy sources to developing products and services with a focus on reducing waste and emissions. One such example is the use of functional sales models and remanufacturing processes.
Companies are now exploring ways to extend the life cycle of their products, reduce waste, and improve energy efficiency by refurbishing and reusing existing equipment instead of exclusively producing new ones. Electrolux Professional is one of those forward-thinking industry players that has already implemented advanced technologies to not only reduce waste but also to support the remanufacturing and refurbishing of its bigger, often built-in equipment.
These practices not only promote sustainability but also contribute to strong business growth, as evidenced by the positive results seen in sales and profitability. But implementing sustainable practices in the service industry can be difficult. Unlike automated production lines, services that support daily consumption involve different triggers and resources.
Electrolux Professional´s Green Approach to Service
Electrolux Professional being a listed company after a spin-off in 2020 from the Electrolux Group. The company operates in over 110 countries and has some 2,300 service partners and nearly 10,000 service technicians, employs just short of 4,000 people, and has a net sales of approximately 11 billion SEK. Food and beverage accounts for about 60% of its revenue, while laundry makes up the remaining 40%. Its business is primarily located in Europe, which accounts for around 60% of its revenue, with 25% in the Americas and 15% in Asia.
Because the majority of its business is in Europe which imposes stricter regulations, the company faces even greater responsibility in terms of customer care and sustainability. Its task is to innovate service packages to make its value proposition more sustainable for customers while also remaining profitable.
When considering the environmental impact of its products, only 5% of the energy used during production contributes to its footprint. The remaining 95% is affected by factors such as detergents, chemicals, and transportation distribution, making it essential to focus on sustainability during the product’s lifetime.
And so the company has developed a triangle of service that includes offering, sales, and execution, all with a focus on sustainability which helped it develop a comprehensive service agreement approach for its products.
The Forces Driving Sustainable Service
Back in 2015, Electrolux Professional had no such approach in place. And today, the company has a defined and established global harmonized support system that serves as a central structure for future expansion. This has led to the development of the Essentia roadmap, which has been driven by a number of key factors, including urbanization, globalization, digitalization, and sustainability, as well as needs created by the pandemic for remote resolution, central support, and service sales remote training.
Despite their progress, the pandemic of 2020 presented a major challenge for the company, forcing them to find new ways to develop and implement its sustainable practices in crisis situations. By partnering up with 3S, a management consultancy focused on growth by sales transformation, Electrolux Professional was able to execute its Essentia strategy and train its service agents and direct salespeople.
Throughout this journey, the company recognized the importance of localized central support in different areas, particularly in areas with high demand for certain products and services where equipment needs 100% uptime. It also recognized the importance of offering sustainable solutions to its customers, ensuring that its products remain viable and environmentally friendly for years to come.
Not only to adapt to the pandemic but to also future-proof its business and build resilience, Electrolux Professional invested in its own AR remote support system, Two Pairs of Eyes, which enabled back-office support to remotely guide its customers or service technicians through digital files and data for diagnosis and self-help.
This approach has proven beneficial in situations where physical access to equipment was limited such as in hospitals during the pandemic. And it also helped the company to increase efficiency and save on travel and maintenance time, enabling its staff to do more with less.
The Impact on the Bottom Line
Electrolux Professional´s focus on sustainability led it to develop and implement more connectable products, with the share of connected assets increasing by 85% since 2018. This initiative has resulted in exceptional growth in 2021 and continuing in 2022, as well as saved travel time through remote support and resolution, optimized customer processes through data analysis, and improved proactivity and knowledge.
To further extend the life cycle of their equipment, they have also developed a green program to refurbish installed equipment in the field, rather than shipping large machines for repairs. This not only reduces the company’s carbon footprint but also allows it to upgrade hardware and software in the field, resulting in more energy-saving programs and better equipment performance.
Through its efforts to do more deliberately ahead of time and with increased efficiency, Electrolux Professional has committed to making its products and services more viable and sustainable for its customers and the environment. And in the future, the remaining of its equipment will likewise be connected.
So far, the company’s branded life extension program has received the green pass. In order to achieve standardization and ensure compliance, Electrolux Professional replaces every component necessary to achieve the desired uplift for its customers.
This approach has been very successful and has resulted in strong interest from their partners and the press, with a positive impact on sales. And their functional sales business model and earlier acquisition of Schneidereit in Germany now allow them to provide and extend the full fleet management services and service agreements that significantly improve customer retention and uptime among several product ranges and geographical areas.
Electrolux Professional has already had a strong start in selected countries, and their long-term collaboration with customers and approach to sustainability have earned them support in customer and supply chain green profiling.
They are also becoming more popular with the younger generation that values environmentally-friendly equipment in their homes. This is especially evident in multi-housing environments where customers to a lesser extent are own washing machine, where sharing a green machine with reused components in the central washing room is becoming more appealing to them.
Additionally, they have also implemented another green approach with the Wormhole platform. By using a simple QR code, they have been able to reduce paper usage by up to 93%, providing better support to their customers. Currently, 85% of their products utilize this QR code.
Converting Sustainability to Profitability
By focusing on the remanufacturing and refurbishing of larger equipment found in big facilities, Electrolux Professional has tapped into new revenue streams. The company not only ensures that the base equipment is supported by its connected products and services, but also that smaller over-the-counter equipment benefits from its own distinctive type of fleet management.
They have successfully implemented this strategy by creating separate factory lines to refurbish used equipment. However, marketing these products can still be a challenge at times. Many misconstrue the idea of refurbished equipment as a second-hand asset with a different price tag. Yet, with the components Electrolux Professional uses, the assets are declared as nearly new as is their lifecycle. Good for the wallet and great for the environment.
The profitability of the company’s sustainable practices has been remarkable with strong double-digit growth for service sales of PACS (Products, Accessories, Consumables, and Services) across all segments, above-target performance for the past 9 consecutive quarters, an increasing aftermarket relative share, and profitability at an all-time high.
Moreover, the company’s customers now benefit from equipment and products that are functional for longer, meaning that they can safely rely on them to continue to grow their own businesses.
Sustainability has become a key aspect of modern business practices, and companies are starting to recognize the importance of incorporating sustainable solutions into their operations. Through the implementation of green programs and the use of branded technologies such as Electrolux Professional’s Wormhole platform and functional sales approach, businesses can extend the life cycle of their products and equipment, reduce waste, and conserve resources. Additionally, there is a growing trend among B2C and B2B consumers, especially the younger generation, to prioritize environmentally friendly products and services.
By integrating sustainability into their offerings, businesses not only help preserve the environment but can also increase profitability by attracting customers who value eco-friendliness and improving their own operational efficiency. The present case demonstrates that it is possible to achieve both environmental and financial sustainability while providing high-quality products and services to conscientious customers.
Overall, the focus on sustainability is not just a trend, but a necessary step towards a more responsible and environmentally conscious future. It is crucial that companies continue to prioritize sustainability and take proactive measures to reduce their environmental impact while providing innovative solutions that meet the needs of both customers and the planet. And although these ideas have been on the minds of many industry players for years, it is time to bring them to life by implementing functional sales and expanding into new countries.