Here’s How Ethical Business Can be Good Business, Too.
Updated: Aug 3, 2019
From sponsoring the local Little League to developing environmentally-responsible technologies, US companies have long invested in philanthropy and corporate social responsibility. Today, they spend an estimated $2 billion in cause marketing and another $14 billion in corporate philanthropy (IEG, Giving USA). And for many leading companies, from Wal-Mart to JPMorgan Chase, that means investing literally hundreds of millions of dollars in sustainability and corporate social responsibility (CSR) initiatives.
In turn, American consumer are expressing a growing interest in the social impact that businesses can have on their lives, their families and their communities. And it’s not just consumers who are asking these questions.
Given the size of the current—let alone future—budgets for these efforts, shareholders, CEOs, CMOs and CFOs are now wondering about the ultimate value of socially-responsible investments as well. And rightly so. Gone are the days when “doing good” was enough. And I say good riddance.
Gone are the days when “doing good” was enough.
It is now acceptable not only to expect but to demand an economic return from CSR investments. No one is criticizing Toyota for building a for-profit Prius. Few disapprove of Chipotle’s “Food with Integrity” campaign. This new era of philanthro-phenomena like social entrepreneurship, social innovation, and micro-lending have made it acceptable to blend the worlds of capitalism and charity. And companies are beginning to realize that social impact can be a huge product differentiator and sales engine.
Since the late 1990s, many researchers have written about a growing class of socially conscious consumers. Today 87% of global consumers say that business needs to place at least equal weight on societies interests as on business’s interests, reports Forbes. And according to a 2012 Nielsen report, nearly half (46%) of all consumers say they are willing to pay extra for products and services from these companies that give back.
But here’s something even more compelling: the consumers that don’t proudly proclaim their attachment to social causes may care even more than those who do.
According to the legendary Kellogg School of Management marketing professor, Philip Kotler, in his recent book Marketing 3.0, “consumers are now not only looking for products and services that satisfy their needs but also searching for experiences and business models that touch their spiritual side.”
“Supplying meaning,” Kotler explains, is “the future value proposition of marketing.”
So how’s a company to supply meaning, on top of delivering its products and shareholder profits? Here are four things companies can do to better combine their business and social impact:
1) Identify the primary business metric you want to move
It sounds obvious, but way too many companies don’t start here. When you begin by clearly determining the goal of your do-good efforts, you have a much better chance of achieving it.
For example, it’s not enough to just say you want to improve your reputation. You need to set a specific business goal like: improve brand trust among consumers who intermittently visited your stores. Or, instead of just saying you want to increase sales, set a clearer goal like: increase share of wallet among millennials. The ability to focus on a clear business metric will enable you to build programs that are much more targeted and relevant and therefore much more likely to achieve your desired outcome.
2) Make consumers your primary “stakeholder”
Many executives focus on the loudest set of stakeholders (social activists, NGOs, academics, and experts in corporate social responsibility). But research shows that many of the factors that are most important to the social activists—things like LEED certification, charity, animal welfare, employee volunteering—are not significant to consumers.
If companies identify the universe of “good” that they can produce, and then test these potential social value propositions with consumers, they can identify the subset of “good” consumers actually value. For example, there are no doubt many excellent reasons a fast food restaurant might switch to recycled packaging. But, while a good thing to do, this does not necessarily make consumers prefer that chain over the competition. Whereas, offering healthy, affordable food options is a social impact that research shows does drive consumer demand in the quick serve restaurant industry. And this point applies to business-to-business companies as much as business-to-consumer companies.
3) Understand the relationship between social value and traditional “purchase value”
Most research examines just social value drivers or traditional value drivers (price, quality, convenience, etc.). But consumers don’t make purchase decisions in a vacuum like that. So, companies need to understand the overall significance of both types of drivers as well as the relationships between them.
4) Ensure your efforts are effectively communicated
Even if you do everything else right, you won’t achieve your goal without outstanding communications support. To do that, you need your Communications, CSR, Marketing and Consumer Insights teams to partner up and deliver a multi-faceted yet cohesive campaign focused on your target audience. One brand that did this very well early on was Secret deodorant.
Secret is a female-oriented, teen-focused brand that took on a highly relevant and largely unaddressed issue affecting teenage girls: girl-on-girl bullying. They did this via a campaign called Mean Stinks. It was geared toward making girls feel good about themselves and be nicer to others, more accepting, less critical, etc. The campaign was activated through in-school programming, live events, social media and advertising. And it worked. During the campaign period, according to AdAge data, Secret experienced volume growth of 20% and a dollar brand share increase of 8%.
This is just one example, but it represents hundreds of others, all demonstrating that today, companies and brands can improve business performance while affecting positive social change.
In a world with no shortage of social problems and business pressures, there is tremendous opportunity for companies to address these realities simultaneously and deliver significant, positive ROI. In fact, it’s the ultimate win/win.
More About Perry Yeatman: Yeatman is the CEO of Your Career • Your Terms® a company dedicated to helping women build the careers and lives of their dreams - from launching on the right trajectory; to surviving the mid-career marathon; to thriving within the executive ranks. Perry’s unique approach combines a deep understanding and passion for career advancement with decades of real world experience as a global business executive, C-suite consultant and award-winning author. This enables her to achieve transformational results for her clients. To learn more about what she can do for you, go to www.yourcareeryourterms.com or contact Perry at Perry@yourcareeryourterms.com.