CHAPTER 11

SKILL #3:

GIVE BACK: ETHICS AS THE NEW MARKETING

[A] world in which government is burdened by historic debt, philanthropy has limited resources, and the private sector is only interested in its own personal gain is simply unsustainable.

—SIMON MAINWARING,
branding consultant and blogger

IF YOU EVER attended an Occupy Wall Street demonstration, you may have heard this chant: “People over profit!” The flattening of the world economy and the advent of social communication media allow us to know how companies that manufacture our clothes, harvest our coffee beans, and assemble our smartphones treat their employees, care for the environment, and so on. The implications for marketing based on company behaviors are immense.

Buycott is a mobile app created by Ivan Pardo, a Los Angeles–based developer, that scans the bar code of any product in your grocery cart and traces the ownership of those goods all the way to the top corporate parent, including conglomerates like Koch Industries and Monsanto. Pardo explained that he made the app to empower consumers and their consciences. In a 2013 Forbes interview, he said, “I don’t want to push any single point of view with the app. For me, it was critical to allow users to create campaigns because I don’t think it’s Buycott’s role to tell people what to buy. We simply want to provide a platform that empowers consumers to make well- informed purchasing decisions.”

The biggest transformation to business in the last fifty years hasn’t been mobile computing or the influence of Millennials. It’s a larger undercurrent that will pull down many businesses in the next five years. In fact, it may be the single most disruptive movement to affect marketing since the advent of the radio advertisement. Its name? Corporate social responsibility, or CSR.

MARKETING AND CORPORATE SOCIAL RESPONSIBILITY

You may have heard the term. You may have ignored it. Recently, I was talking with some marketers at a Brand Innovators event in Seattle. I asked ten of them this question: “If you have only $15,000 to spend, should you spend it on a message about a product’s price point or on social media customer service?” Their answers may surprise you. The data showing how they should have answered will surprise you even more.

Nine out of ten responders in my unscientific poll noted that they would use that money to create more price point awareness. Only one said she would put the money into a social media customer service program. Is this because they think customer relationship management (CRM) is unsexy, quiet, and boring, and they misunderstand how powerful it can be with customers? Probably.

My colleague Lin Huang at Bing Ads recently studied how social signals affect brand reputation. His results confirm that more and more customers leave brands or service providers because of customer service issues. So, if you have a low-priced product and you aren’t going to follow up by providing proper support, they are going to churn in droves.

Of course, many people in social media like to complain, but it’s still a marketer’s responsibility to handle those issues. Some might not think so, but customer service is as much a part of marketing now as is amplifying narratives. Customer service may also motivate existing customers more than another brand-perception campaign or television ad. In fact, many of the customers who put customer service at the top of their list and don’t care about price also don’t want the companies they do business with to be pillagers of the world’s resources.

To truly understand the impact that CSR has on modern-day organizations, consider that Millennials, who number 86 million in the United States, think social responsibility is an essential quality in the companies or service providers they do business with. Before they hit the Pay button, they want to know that the company gives back to society in some way.

While brands appealing to the baby boomer generation in the 1980s and Generation X in the early 2000s could simply profit from providing a service at a low price, Millennials are steering away from companies they perceive are solely rooted in profit. To test this theory I sometimes ask my Millennial friends to read this quote from Microsoft’s former CEO, Steve Ballmer—and then I video their reactions:

We’ve grown from 18 percent of the profits of the top 25 companies in our industry to 23 percent of the profits of the top 25 companies in our industry over the last five years. Profits are up over 70 percent, where the industry profit is up about 35 percent. Pretty good.

That’s pretty good if you are speaking to boomers, but Millennials don’t want to hear about that, even if they are shareholders. They want to know what you are doing to advance the world.

Companies whose marketing is truly disruptive realize that you can’t just be philanthropic and assume customers will buy your product or service. The way to keep customers interested is to have a culture that lives its belief in social issues and thinks beyond sales. Before you decide to ignore this observation, consider that seven out of ten Millennials regard themselves as social activists, according to a 2011 study by TBWA/Worldwide. You ignore this warning at your own peril if what you care about when it comes to marketing is a spreadsheet showing increased product adoption.

What doesn’t look, feel, or sound like marketing now actually is. Some other data about Millennials’ views to consider are the following:

One in three will either boycott or support businesses based on the causes they care about. They tend to reward organizations and businesses for their involvement in social causes.

Four in five say they are more likely to purchase from a company that supports a cause they care about (if price and quality are equal) and three in four think more highly of a company that supports a social cause.

A stunning three in four believe that corporations should create economic value for society by addressing its needs.

Earlier I noted that if you are to adopt a disruptive marketing mindset, you can’t simply think about business as usual. That last bullet point is why. If three out of four young adults believe companies need to create economic value for society, that translates to companies actually having to “give back.”

Giving back comes in many shapes and sizes, but for the most part, it isn’t about giving back in the form of dividends to shareholders. For this reason, CSR has become a prime area of focus for disruptive marketers; it is often more important than many other initiatives. CSR is such a large part of business now that universities have entire departments dedicated to the practice. One is Boston College and its Center for Corporate Citizenship, part of the Carroll School of Management. I sat down with the school’s director of marketing and communications, Tricia MacKenzie, who said:

I think that companies are embracing CSR because they are seeing an actual impact in brand loyalty and revenue. At 86 million strong, Millennials are helping to drive this change. Research reports that 50 percent of Millennials make an effort to buy products from companies that support the causes they care about and they have a high expectation for companies to make a long-term public commitment to CSR. Companies are reacting to this by incorporating CSR as not simply a “nice to have” but an integral part of their long-term business strategy.

I asked MacKenzie to drill deeper, and discuss what falls under the CSR rubric. She elaborated:

CSR goes beyond community giving. CSR is fostering an inclusive work environment, cutting net carbon emissions to zero, building transparency through a sustainable supply chain—companies are setting these goals and a notable list are actually achieving them. The question is, “What is your organization’s vision for the future and how do you progress towards that vision?”

WHAT COMPANIES NEED TO DO TO BECOME SOCIALLY RESPONSIBLE

While CSR sounds impactful, the reason some companies don’t bother with CSR and many conventional marketers brush it aside is that it can be difficult to push organizations to adopt what is essentially a lifestyle change. As MacKenzie told me:

After a company builds a strong definition of what success looks like by incorporating a CSR program they will not only need to change their policies in place for systems and products, but they will also need to change the expectations of the consumer. This will not be achieved by preaching about saving the world with buzzwords. Companies are going to have to build on a demonstrated commitment over the long term, dedicating communications and marketing resources to inform the consumer with data and reporting on these efforts. Word of mouth is challenging to measure. The data shows that companies who do well for the world do well in the long and short term. Therefore, CSR goes beyond word of mouth to a results-driven strategy which integrates the consumer via communication tactics.

If CSR integrates the customer in the company culture, I wondered whether this didn’t force companies to be more open about how they operated. MacKenzie explained:

The currency of leadership is definitely transparency. The two-way medium that social media creates can reveal how a company invests in the environmental, social and governance dimensions of business. PR will no longer solely manage a company’s reputation. The reputation of a business is not dependent on crisis management or product marketing; its reputation is built by transparency. Transparency with customers, stakeholders, partners, employees—these are the foundation of a CSR program. CSR is the platform and social media is the message delivery vehicle. Companies are actively facing communication challenges understanding the value of CSR across departments and adopting [it] into their overall brand messaging. A company with an engaged digital audience must treat that audience as active storytellers of the company’s efforts to “do well by doing good.” Therefore, companies that are the most transparent are leading in building a world in which we want to do business and a world in which we want to live.

But what, I asked, if you are a company that literally pollutes the earth or exploits its employees’ labor? How do you adopt CSR as part of your overall marketing initiatives? Can you? MacKenzie noted that giving mere lip service to social responsibility doesn’t work; it won’t solve a company’s problem because it isn’t authentic:

This is a challenge for most companies—it’s a large conversation to choose a CSR initiative that is tied to your business purpose and makes sense strategically for the investment. However, many companies are setting stakes in the ground supported by marketing efforts, paving the way for others to do the same. There are many excellent examples today. One that stands out is CVS Caremark. CVS Caremark is the largest retail health company in the U.S., with 200,000 employees and 7,800 locations. By being the first national pharmacy chain to make the decision to stop selling cigarettes in 2014, they eliminated $2 billion in possible revenue yet, by promoting a tobacco-free lifestyle, the company aligned more strategically with their mission to improve the quality of health for their customers.

In other words, CSR must be a long-term, ingrained-in-the-culture-of-a-company strategy that flies in the face of PR crisis communications, short-term quarterly profit models, and Wall Street earnings calls. Disruptive indeed.