With issues such as climate change, gender inequality, and global poverty at the forefront of the news cycle, consumers are changing the lens they use to view brands, precisely by increasing the focus on ethics and corporate social responsibility. And these changing attitudes are influencing purchasing decisions—especially among younger demographics.
Three-quarters of millennials believe that companies should prioritize giving back to society rather than only generating profits and Generation Z as a whole share a similar belief. These consumers’ attitudes and purchasing behaviors will hold greater sway over business and marketing decisions, especially as their share of the consumer market grows. By 2020, millennials expected to yield a purchasing power of $1.4 trillion, while Generation Z will comprise 40% of all consumers–market segments that are too large to ignore.
In response to these shifting attitudes, new companies and even some well-established ones are evaluating how they can position themselves as belief-driven brands—brands which are founded based on a set of core values and beliefs that strive for something more significant than just providing a good or service. In fact, many companies are incorporating social impact into their brand’s mission and fabric. For the apparel company Toms Shoes, this manifest in the company donating a new pair of shoes to a child in need whenever a customer purchases a pair of shoes for him/herself. Since its founding, the company model has expanded to include donations for providing eye health, improving health services for women and newborns, alleviating water crises, and providing counseling services for victims of bullying. Toms Shoes is one of the most well-known individual examples of a belief-driven brand.
On a larger scale, the rise of the fair-trade movement incorporates social justice for multiple companies in several industries, including apparel, cosmetics, and food and beverage. Fairtrade prioritizes fair pay for exporters of agricultural goods, while also pledging to adhere to sustainability. For example, the clothing company Everlane undergoes an extensive auditing process to ensure factory workers receive fair treatment and also promises customers “Radical Transparency,” providing a breakdown of the costs that go into creating each item in addition to the retail price. Similarly, LUSH cosmetics is not only fair trade and organic, but it also works directly with its sourcing partners and invests two percent of the amount spent on raw materials and packaging back into the community.
But doing good is not enough to sustain a business—they also have to communicate their social impact efficiently to consumers and gain their support. Marketing and sales are no longer passive activities with belief-driven brands, with a consumer viewing a print ad or a TV commercial encouraging them to buy products or services. Instead, marketing tactics for belief-driven brands include looking at how their brand has made a positive influence in the world and telling the stories of the people who have been most affected. Engagement and storytelling—from charismatic CEOs, dedicated employees, farmers and factory workers in developing countries, and underserved communities that benefit from the brand’s social responsibility initiatives—enable consumers to experience a deep emotional connection for the brand’s cause and become collaborators in forming and re-forming the brand’s mission. Platforms like social media can also show, in real time or close to it, how the brand’s products, services, and purpose are making an impact on someone else’s life, thus inspiring customers to continue to engage with a brand.
The Bottom Line
But what about the bottom line? Wouldn’t spending additional money to make a positive social impact lead to decreased profit margins?
According to the Havas Media Meaningful Brands Index, belief-driven brands outperform the overall stock market by 120%. Similarly, a ten-year study conducted by Jim Stengel and Millward Brown Optimor discovered that the top 50 brands out of 50,000, when ranked by financial performance, were all belief-driven. Taken together over the course of the study, these 50 brands outperformed the S&P500 by 1200%. At the consumer level, an estimated 23 percent of belief-driven buyers will pay at least a 25 percent premium for a brand that aligns itself with a social or political position that the buyer agrees with, compared to one that is silent. On the other side of the coin, a 2017 study conducted by Edelman reveals that 57 percent of consumers around the world are either buying or boycotting at least one brand because of its position on a social or political issue, an increase from only three years ago. Belief-driven buyers are also more likely to stay loyal to their brands.
It is evident that these changes in consumer and company behavior are already underway. Existing brands are adapting their existing social responsibility initiatives and marketing to align with these new expectations, and up-and-coming brands are incorporating strong social impact from the outset. There has never been a better time to “do well by doing good.”