The Why, What and How of Purpose Led Corporate Giving This is part 1 in a three part series distilling our research and what we’ve heard around three key questions 1. WHY should corporates adopt a purpose led approach to giving? 2. WHAT does best practice, purpose led corporate giving look like? 3. HOW can corporates embed social purpose within their organisations?
BUILDING A TANGIBLE BUSINESS CASE 1. Building customer loyalty in a world of declining trust (Thankyou has) seen sales grow by 200%, outperforming cheaper products with no ethical pay-off The modern consumer expects businesses to operate ethically, and believes that businesses have a responsibility to contribute to solving societal and environmental challenges. This belief guides consumer behaviour, with 90% reporting they would swap to a more ethical brand given a comparable offering 3 , and 66% willing to pay more for a socially responsible product or service 2 . In 2014 Thankyou hand wash was the most expensive product of its kind stocked in Australian supermarkets. Despite warnings that Thankyou was at risk of pricing itself out of the market, they remained steadfast that discerning consumers would be willing to pay more for an ethical product contributing to social good. Since getting Thankyou products into supermarkets, they have seen sales grow by 200%, outperforming cheaper products with no ethical pay-off 7 . Further to this, retailers here in Australia and abroad have been building customer loyalty (while boosting sales) by providing consumers with opportunities to recycle goods at their stores. Bunnings warehouse for example offers e-waste drop off events to ethicaly dispose of the materials on your behalf, giving people another excuse to wander the aisles over the weekend. By contrast, Volkswagen’s sales plummeted by 20% in the wake of its diesel emissions scandal, and the company recorded its first annual loss in 20 years 9 . The VW example is a stark reminder that people have the power and their collective action (or inaction) can hit a company where it hurts – their share price. These examples demonstrate the power of the consumer and how willingness to pay can be heightened when the consumer connects with the purpose behind a product. 8
Trust is a valuable commodity that cannot be bought, and once lost is hard to restore. 92% of consumers trust peer reviews over advertising, proving that businesses need to embed deep levels of trust in their employees, clients, and shareholders 9 . The average consumer is worth 10 times the amount of their first purchase, but it takes 12 positive interactions to counteract every negative one 10 . Employees are at the coalface of building trust for your business. In fact, millennial employees feel that where they can have the greatest amount of influence is on customers, suppliers, and their peers. They see that their influence can be exerted through small scale, immediate actions, that ultimately influence the bigger picture. Why should you care? CUSTOMER LOYALTY IS A THING OF THE PAST 90% 90% of consumers report they would swap to a more ethical brand for a comparable offering 3 CUSTOMERS PAY A PREMIUM FOR PURPOSE 66% 66% of consumers are willing to pay more for a socially responsible product or service 2 This brings us to one of the fundamental reasons for investing in a corporate giving program: employee engagement. 9