In an increasingly busy and profit-driven world, big brands are taking an altruistic step back. In fact, 5% of the total charitable donations in 2015 came from corporations, a 3.9% increase from the year before. But is it truly a selfless desire to give? Yes and no.
It's true that corporate leaders want to give rather than take. Only, it's not always entirely selfless. Studies show that corporate giving can directly affect the bottom line in a positive way. That's why in the last decade we've seen the rise in a new type of marketing, "cause marketing." And we're going to show you a few reasons why it's become popular among contemporary brands.
What Cause Marketing Is and Is Not
Before diving in, there are two important distinctions to make.
First, cause marketing is not the same as philanthropy. Rather, cause marketing is the marketing of a for-profit product or business which benefits a nonprofit charity or supports a social cause in some way. Philanthropy, on the other hand, is the generous act of writing a check and sending it to a charity.
Second, cause marketing is not simply a campaign, it's an intricate part of an overall business strategy. It involves active consumer research and engagement, product differentiation, purchasing influencers, and effective communication. That said, 97% of marketing executives believe cause marketing is a valid business strategy.
But, cause marketing raises a lot of questions for c-level executives, and rightly so. How do you measure it? Does it actually entice consumers to make a purchase? Will it increase your bottom line? Why are so many brands investing in giving away money?
We asked Megan Strand of Engage for Good, a thought leader in cause marketing, the same questions. She says that cause marketing works simply because of the consumers. "Consumers love, and tend to be more loyal to, businesses whose values align with their own. Cause marketing is a way to demonstrate those corporate values to consumers in a way that, done right, can be both meaningful as well as engaging. In our world of convenience, having an easy way to give back through their existing actions (such as purchasing a product or engaging online) is important to consumers and enables them to make a small difference as they go about their otherwise-busy days."
There are several brands that "get" cause marketing and are seeing positive results in several areas. Here's four brands that are seeing a benefit in four vital parts of their business.
It's tough to measure, but crucial to a brand's success. And when it comes to brands' relationship to cause, consumers have spoken: 80% of global consumers agree that business must play a role in addressing societal issues.
There a few examples of consumers tattooing logos to their chests. But, none that we could find are directly associated with cause. However, there are several big name brands that have seen an increase in brand loyalty through "portion of purchase" cause marketing. Namely, Starbucks.
Starbucks teamed up with (RED) eight years ago and continues the partnership to date. Their promise is to donate 10 cents for every beverage sold (recognizably in red cups). The strategy has raised over $14 million for the Global Fund to fight AIDS.
So what enhances brand loyalty? The red cup. Consumers view the red cup as a sign of their commitment to Starbucks' efforts in supporting AIDS research. And they show that loyalty through social media.
Back in 2013, when Starbucks launched their new Holiday drinks, in conjunction with the red cups, they saw a huge spike in social media engagement. In the first 48 hours when the cups were released, a photo was shared on Instagram every 14 seconds, according to Starbucks. In our times, nothing screams brand loyalty more than incessant social media posts.
If you combine consumer engagement on social media with the later enlisted #redcupcontest on Instagram, you have brand loyalty coming out of thin air (literally).
That's not all. In response to comments about the the red cups, Scott Maw, finance director, reported that consumers love the red cups. So much so that Starbucks, "...entered 2016 with another record-breaking quarter and a continuation of accelerating momentum..." How's that for measuring success and long-term brand loyalty? Once a Starbucks lover, always a Starbucks lover.
Another brand worth mentioning is Patagonia. The company is known for it's bold approach to cause marketing, promising that with their lasting products (which they urge you to buy and then recycle), consumers are "living in a more environmentally responsible way." They also promise to donate their time, services and at least 1% of their sales to hundreds of grassroots environmental groups all over the world.
Patagonia CEO Rose Marcario states the company’s cause marketing objective simply: “Keep your gear in action longer and take some pressure off our planet.” The customers play a part by only buying what they need and then recycling lightly used items.
Their Black Friday advertisement in the New York Times as a shocking and poignant addition to their cause marketing efforts. They told people "Don't Buy This Jacket" and urged people to only buy what they need and decrease their environmental footprint.
What has been the result of Patagonia's outlandish cause marketing? Brand loyalty. Consumers loved it, especially the outdoorsy ones. So much so that Patagonia took it a step further last year and donated all Black Friday revenue to charities in line with their environmental passions. The results were record-breaking. They donated $10 million to charities.
Every brand strives to sell a unique product. But sometimes, what's more important than a unique product is whether or not it has a social purpose. According to studies, when quality and price is equivalent, social purpose is the number one deciding factor for shoppers globally.
TOMS proves it. There are millions of shoe companies in the world. But TOMS tops the list because of their committment of "One For One." For every pair of shoes you buy, TOMS donates a pair. Why buy from DSW if you can buy from TOMS and give a pair of shoes to a child in need?
For TOMS, it's not just a marketing campaign, it's a business model. According to Business Today, "What made it work even better is the fact that a buyer, typically a young adult looking for an affordable yet cool pair of shoes, would feel good in the knowledge that his purchase has actually helped a poor child get a much-needed shoe for free."
The differentiation comes in the social impact. 64% of shoppers say simply giving money away isn’t enough; they want businesses to integrate social impact directly into their business models. TOMS not only lead cause marketing for retail brands, they redefined it.
Blake Mycoskie, founder of TOMS said in an interview: "I think [TOMS one for one model] is incredibly sustainable. Built into our cost structure is the intention to provide great benefit to our customers because they feel like they're getting to be part of something more than just a transaction. More and more understand what the impact of their purchases are on the rest of the world. By doing that, we're able to form more loyal customers; we're attracting new customers. While we spend a ton of money on giving, we also feel that there's a real return on that investment."
Employee Retention - Millennials
This is a big one for every company in the world. How do you keep employees happy? And to take it a step further, how do you keep millennials happy?
There are many tactics. However, the overwhelming response in regard to millennial retention in the workplace is "social purpose." Six out of 10 Millennials say a "sense of purpose is part of the reason they chose to work for their current employer."
But it's not just the millennials. The study, “What Workers Want”, revealed that 72% of students and 53% of the current workforce polled felt that having a job where they can make an impact was essential to their happiness.
Warby Parker, a millennial favorite and an advocate of the "one for one" model, is dedicated to making sure their employees are happy through corporate social responsibility.
In an interview, Niel Blumenthal, founder of Warby Parker said, "We’ve hired over 350 people in the last three and a half years; my co-founder and I have interviewed every one of them, and our social mission always comes up. When we ask, “Why do you want to work here?” they say, “I love the brand, I love the buy-a-pair, give-a-pair program, I love the idea of a disruptive company trying to do good in the world – I want to be part of that.” Our mission – to demonstrate to the world that you can build a scalable, profitable business that does good in the world without charging a premium for it – helps us recruit and retain the best people, and we think that’s only going to accelerate in the future."
An inspiring quote from Wilson HCG on the importance of corporate social responsibility in the workplace: "It comes as no surprise that an organization’s commitment to being socially responsible plays an increasingly large part in their ability to attract top talent.” Indeed, companies’ ability to engage their employees in initiatives that go beyond their immediate business objectives has a knock-on effect on how the organization is perceived externally."
It can't be argued that employees are happier when their employers are giving back.
Increased Bottom Line
Finally, the piece every CFO is asking about. What can cause marketing do to increase the bottom line? The answer is a lot. Here's why.
42% of North American shoppers would pay extra for products and services from companies committed to positive social and environmental impact. Simply, if your consumers are happy with your brand and your product, your bottom line will increase. And supporting causes is the #1 way to make your consumers happy.
It stands to reason that increased brand loyalty, product differentiation and a band of loyal employees all lead to business success. According to a study by Cone and Duke University’s Fuqua School of Business, cause-related marketing can increase sales as much as 74% in certain consumer-goods categories, and consumers spend twice as long looking at cause-related ads than generic corporate ones.
Along the same lines, Bob Kelleher, thought leader said that "successful companies will be those that make Corporate Social Responsibility part of their DNA. It’s been proven that socially conscious organizations outperform those solely committed to beating the competition."
What Does This Mean for Your Brand?
One thing all the brands we've mentioned have in common is that their cause marketing is strategic. They don't just give for the sake of giving. It's part of their business model. If your brand is interested in developing a cause marketing strategy, make sure that it is indeed a strategy.
Megan Strand of Engage for Good encourages any brand considering a cause marketing push to first set business objectives, and "it's the right thing to do" doesn't qualify as a business objective.
She says, "the most important thing for brands to do in order to measure success in cause marketing is to establish a business objective from day one. If you don’t have a business justification for doing a cause program, you’re doing it wrong. Whether that be increased sales, online engagement, brand loyalty, employee engagement or retention, market penetration or opening new markets, that business piece is critical to the continued success and sustainability of these efforts."
Will you take your business to the next level and make cause a part of your business strategy?