… A NEW SALES MODEL HOW MONEY STRENGTHENS RELATIONSHIP Life isn’t fair, and this is especially true in business – years ago, a former employee sold the plans for a Velcorin® plant to a Chinese manufacturer. This company built the plant on the basis of these plans and then attempted to lure the MPP BU’s customers away with a lower sales price. LANXESS naturally took legal action against the manufacturer and eventually won the case. But by that time, another copycat had appeared. “These unfair competitors wanted to take control of our patent-protected market by distributing their copy of Velcorin® in our established and operated ecosystem – dosing pumps, service infrastructure, regulations. This would have allowed the competitor to offer its product at a significantly lower price, as it wouldn’t have had to bear any costs for the ecosystem, whereas we have to keep the entire system up and running. So we had to and must continue to better protect ourselves against this,” explains Matthias Hüttl, head of the Beverage & Food market segment, MPP BU. To make matters worse, the patent for Velcorin® expires in 2027, at which point everyone in the market can offer it in any way they see fit. Service as a Differentiator Up until then, the BU sold its customers a dosing system and helped them train their staff to ensure that the addition of Velcorin® to fruit juices, wines, and isotonic sports drinks went smoothly. The same applied to the natural preservative Nagardo®. “Velcorin® is an additive that requires a good bit of explanation at first. That’s why we also rent out our dosing systems, so that customers can gain experience with them first.” The service offered with Velcorin® and Nagardo® ultimately gave the team the idea for the “pay per liter” sales model. Similar models have long been in use in other industrial sectors – think of printers or copiers, for example. With the new model, customers receive a complete dosing service. The system is provided to them, and MPP also receives the customer’s consumption data via the web-enabled dosing system. The customer determines in advance how many drinks they want to mix with the cold sterilizer. The MPP team calculates the required amount and provides the customer with a monthly estimate, similar to how an electricity provider operates. If the customer doesn’t produce anything, they don’t have to pay anything. This also means they can avoid the high upfront cost of investing in their own equipment. “Our pilot customer in the US was so thrilled with the idea that they added Velcorin® to another drink,” says Hüttl. Anyone who doesn’t want the full service package from MPP can also simply rent the dosing system. “The advantage for us is that if the customer wants to switch to another provider, we take back our equipment and discontinue our service. Since we control the entire process, we would also immediately see if a customer were to purchase a competitor’s product.” Then the system would be removed from their premises. The team hopes that this will enable it to retain all of the BU’s strategically important customers – even after the patent expires. “The biggest problem that arose when launching the new model was essentially an administrative issue. Our accounting department wanted to know how much of the price for the complete package was for service and how much was for the actual product. This question is important for tax purposes in many countries. In addition, the new model somewhat overwhelmed our SAP system.” Inspiring Others The team submitted the project for the Innovation Award and was selected as one of the three finalists. “We are extremely pleased about this and also want to show that a new sales model offers new opportunities to boost customer loyalty. Perhaps we can inspire colleagues in similar situations to try it too,” says Hüttl.