- The Business Case in a Nutshell
- Businesses Can Drive Real Impact
- Giving Drives Growth
- Boost Brand Identity
- Grow Online Sales
- Gain Publicity
- Engage Employees
- Why Small Businesses Aren’t Giving Back
- Conclusion
The Business Case in a Nutshell
Did you know that by doing good in business, you can increase profits? It is crazy that by simply caring for others and doing the right thing, your business can be rewarded in measurable ways. Here is a glimpse of the impact doing good had on Unilever as a business: "Unilever today announced that its purpose-led, Sustainable Living Brands are growing 69% faster than the rest of the business and delivering 75% of the company’s growth" (Briggs). While all of Unilever's brands are sustainable, the Sustainable Living Brands place an increased focus on social impact. In my opinion, the fact that many companies still do not see the value in doing good makes this issue urgent. While helping others and making the world a better place, they can be growing their business too; it’s a win-win opportunity that is consistently missed. Additionally, with the large budgets businesses have, they can move the needle effectively on important social issues that nonprofits cannot do because of their financial constraints. Businesses should prioritize doing good beyond their normal operations in order to drive greater social impact and grow their organization.
The private sector makes up most of the economy, so it has immense potential to successfully move the needle on social causes. Next, because people gravitate towards purposeful businesses, social impact can help elevate brand image, boost ecommerce sales, gain publicity and engage employees. Major stakeholders in this issue are business owners and customers. I propose that customers must first raise their expectations for businesses. This would show appreciation to the brands already committed to solving social issues while forcing other brands to follow suit. Businesses owners must first recognize the benefits and need for social impact in their business to be incentivized to take action.
Businesses Can Drive Real Impact
The first of my main reasons for businesses doing good beyond their normal operations is that they can move the needle on social issues in immense ways. According to Conscious Company Media, the total revenue by sector in the United States $1.2 trillion for nonprofits, $3.1 trillion for government, and $20.1 trillion for corporations. As seen in these statistics, corporations have revenues of nearly 7 times nonprofit organizations. This shows that if philanthropy comes out of the pocket of corporations there could potentially be much more money moved to social causes than solely nonprofits or the government supporting these issues.
A few examples of businesses making a difference on social issues are TOMS, Warby Parker, and Salesforce. TOMS, a trailblazer in the social impact space, has impacted 96.5 million lives through its one-for-one business model. They have donated shoes, glasses, and other essential resources to those in underdeveloped countries (“Your Impact: TOMS®.”). Warby Parker, a direct-to-consumer brand that followed suit, has distributed over 40 million pairs of glasses to people in need (Lagorio-Chafkin). Both companies have not done this alone. They leveraged strategic partnerships with nonprofit organizations and NGOs to deliver to those in need in effective and impactful ways. For a not entirely mission-driven company, Salesforce has enacted a model that commits them to donate 1% of all profits, resources, and employee time. Through this model, they have donated over $240 million, 3.5 million hours, and product to over 39,000 nonprofits (“Pledge 1%.”). Though these companies are large and successful, we see that businesses have immense potential to impact our world beyond providing jobs and adding value with their products or services. Additionally, small pledges of 1% can add up to create a tangible impact on those in need. While these businesses are behemoths in their industries, small businesses, too, can drive social impact by leveraging its resources, including customers, employees, products, and profits. As nearly 99% of all firms of the United States are small businesses, if all small businesses pledged even 1 percent of their revenues, their efforts could add up to create measurable impact (“Profiles of Local”).
Giving Drives Growth
The second reason for businesses doing good is that it will benefit their bottom lines and allow them to hire even more people in-turn. The main ways that businesses will generate profit by doing good is by elevating their brand value, gaining publicity, growing online sales, and engaging employees. Customers and stakeholders of businesses are consistently moving more towards purposeful brands, giving socially impactful brands a chance to stand out against their competitors. It starts with brand.
Boost Brand Identity
As DoSomething Strategic, a social impact agency, puts it, “[doing good] is about taking the long view; ‘future-proofing’ the business. It’s about thinking of your consumer 30 years from now and aligning with their values and needs versus focusing squarely on the consumer of today, or worse, yesterday.” The idea of future-proofing is that consumers will only care more and more about their favorite brands and businesses having a purpose beyond profit. Future-proofing prepares businesses for this time. Moreover, today’s consumers gravitate more towards brands that align themselves with social causes. According to Nielsen, 56% of consumers are willing to pay more for products from brands and companies that demonstrate a commitment to social value. Additionally, 56% of customers actively seek philanthropic businesses to buy from (Salesforce). Lastly, 80% of Americans are likely to switch brands (equal in quality and price), to the one that supports a charity (CONE Communications). It is clear that committing to a social mission attracts customers and drives sales.
Grow Online Sales
For eCommerce brands specifically, doing good can increase digital advertising clicks and engagement, average order value, customer lifetime value, and conversion rate. This is extremely important for a brand looking to grow online. As Mageworx put it, “Companies like Amazon and eBay use checkout donations to reduce cart abandonment and increase sales. Buyers spend 26% more, and retailers have 29% more sales when it comes to the power of giving back. What’s more, by supporting non-profits, eBay retailers have reduced customer churn rate by 67%.” For digital advertising efficiency, I had the opportunity to personally speak with Brit Booth, VP of Marketing at Chewse, a business-to-business catering company. Brit saw excess food waste at her job and wanted to donate it to people in need. She knew that if she pitched a giving program to upper management and investors at the company, she would have to prove the program would generate a positive ROI for the business. Brit decided to use the campaign as a cause marketing tactic and closely monitored the effectiveness of these advertisements. Her findings were telling. The advertisements associated with Chewse’s social impact program had a 33% higher conversion rate, 15% higher engagement, and 100% higher time on page than their other advertisements. Next, I spoke with the Co-Founder of ShoppingGives Phil Kaulfield to understand the impact of their point-of-sale donation technology. It allows ecommerce businesses to offer customers a donation of their choice at checkout. Phil mentioned that his technology helped boost his clients’ conversion rates by 19%, average order value by 23%, and customer lifetime value by 18%. These statistics can mean the difference of thousands of dollars when talking about major online retailers. Even small businesses could see immense gains from programs like these.
Gain Publicity
Next, social impact can help gain publicity for a brand. Think about the times we tell our friends and family about a company. Often, there is something emotional about the content that we are share that makes us care enough to share it. Social impact in business is the perfect type of substance for a sharable story, making it contagious content. Alan Jope, Unilever CEO, stated, “We believe the evidence is clear and compelling that brands with purpose grow. Purpose creates relevance for a brand, it drives talkability, builds penetration and reduces price elasticity. In fact, we believe this so strongly that we are prepared to commit that in the future, every Unilever brand will be a brand with purpose.” The key point in this quote to connect with the publicity benefit of doing good is “it drives talkability.” What he means by this is that it provides people with content worth talking about. This is extremely important for businesses who are looking to increase their share in the market or gain recognition for a new product launch. According to Nielsen, 92% of consumers believe suggestions from friends and family more than advertising. This implies that word-of mouth marketing can be highly effective and should be prioritized. Next, 78% of respondents from CONE Communications Purpose-Driven brands report admit they would tell others to buy products from a brand with a social mission. Moreover, 65% of respondents would also advocate for the social issue that the company supports. This is a clear win-win opportunity – raise awareness for a cause while raising awareness for your brand.
Engage Employees
Lastly, social impact in business has much potential to engage employees in their work by expressing a greater sense of purpose. As Marc Benioff, CEO of Salesforce, said “Philanthropy isn’t just about gifts; it’s about participation. It is about the grace that comes from working together.” Doing good is emotional and it connects people. Benioff clearly sees the benefit in bringing employees together over doing good. For this reason, he has been a pioneer in the space of responsible business. Conscious Company conducted a study where they analyzed the productivity of employees in the following categories: dissatisfied, satisfied, engaged, and inspired. What they found was that inspired employees produce 225% of those merely satisfied. That means that by inspiring employees, your overall productivity can double. Next, people want to work for companies who do good. According to a study done by Sustainable Brands, 75% of millennials would take a pay cut to work for a socially responsible company. If companies just shift their resources to do-good initiatives, they could save time and money.
Why Small Businesses Aren’t Giving Back
The main argument against businesses doing good is that they do not have the resources to do so. Big companies have seen returns on these investments, but smaller businesses do not think that an investment in social impact is wise with their limited resources. I spoke with Dan Rosen of Hubble Contacts to better understand the needs of small business who stand apart through competitive pricing. He stated that his competitors like Scout by Warby Parker can have social impact plans only because they are a bigger company and price their products higher. Hubble’s marketing strategy is to stay as lean as possible, so spending on doing good is too “premium” for them.
Lack of Education
In my opinion, Hubble is unaware of the benefits of doing good. If they was aware of all the benefits of doing good, they would make it a priority. The issue is education for small businesses. As noted, bigger business are aware of the benefits and make investments in it for that reason. Next, Dan is unaware of the impact he could have on those in need. According to OneSight.org, a charity in the eyewear space, it costs just $30 to bring someone the gift of sight. While supporting 10,000 children per month may eat into profits, there is an amount that will allow for profitability. Perhaps supporting just 10 children in a month could be the perfect program for a small business. The issue is still that smaller businesses do not picture themselves able to make any measurable difference with the resources they have.
Conclusion
Businesses should align themselves with a social cause or mission because it will have drastic impact on social issues and help grow their business. Private businesses make up most of the economy, so they have immense potential to successfully back and move the needle on social causes. Social impact can also help elevate brand image, boost ecommerce sales, gain publicity and engage employees. While many large businesses are already taking action, smaller businesses have yet to make the leap. This is because they are concerned about the ROI of their do-good efforts given their scant resources. I propose that businesses develop programs that resonate with their brand, but more importantly, fit their business needs. This will allow them to grow and give more as a result, creating a positive spiral effect.