Companies need to transform their business and incorporate purpose into their strategy to future proof their organisations. Society needs it, consumers want it and it makes good business sense. Let's examine how purpose is becoming profitable.
While socially responsible business practices were once seen as a competitive disadvantage, business purpose is now a key strategic asset. Accenture Strategy assessed purpose-alignment as “an opening for companies to demonstrate their competitive agility”. Larry Fink, Chairman and CEO of global investment management corporation BlackRock, wrote that: “Without a sense of purpose, no company, either public or private, can achieve its full potential. Deloitte went so far as to determine a focus on purpose and values as “the number one strategic issue for retailers” in 2020.
Purpose and the higher ethical standards that drive it are not warm and fuzzy nice-to-haves, they advantage the bottom line. What a brand says, does and stands for are significant considerations for today’s consumer.
A 2018 study by corporate social responsibility agency Cone found that 66% of consumers would switch to a purpose-driven brand from their regular product. Further, 77% of consumers feel a stronger connection to a purpose-driven company over a regular company.
Another 2018 study by Accenture Strategy surveyed nearly 30,000 consumers and found that 62% of customers want companies to take a stand on issues like sustainability and fair employment practices.
Consumers’ ethical wake up has only further accelerated in 2020. Businesses have to reinvent themselves to survive the current consumer climate, a crisis of relevance at a scale we haven’t seen since WW2. The 2020 Conscious Consumer Spending Index polled 1,000 consumers to understand the impact of COVID-19 on consumer behaviour. Half of respondents expect brands to be more socially responsible than they were before the pandemic and 29% said they will increase buying from socially responsible companies. When considering which brands to support after the pandemic, 64% of respondents said the company’s purpose or mission would be important, and the same number stated they have already purchased goods or services from a socially responsible company in the past 12 months – a ten-point increase from just 54% in 2019.
These findings are particularly important as Australia faces the risk of a deeper coronavirus recession. Consumers are being more considered than ever when it comes to where they put their dollars – and which businesses they trust them with.
The Buy from the Bush (BFTB) campaign targeted values-driven consumer spending by highlighting drought-affected regional and remote Australian businesses to metropolitan customers. AlphaBeta studied 275 businesses featured on BFTB and found these businesses experienced an average sales uplift of 300%, generating a total of $5 million in additional revenue. Responding to this marked shift in consumer behaviour, the campaign has since expanded to connect consumers with businesses affected by other issues they care about, including bushfires and COVID-19.
The tables are turning against status quo corporations and in favour of purpose-driven businesses. The higher standards that once made it harder for socially conscious companies to thrive, grow and scale, are quickly becoming strategic assets. The ‘competitive disadvantages’ of serving stakeholders beyond shareholders are now strengths. Purpose is now profit.
If you want to find out more about the business power of purpose and need help to transform your business into a force for good contact us at The Purpose Agents to have a chat.
This is part five of a five-part series on the importance of purpose in a post-COVID environment. Read part one on purpose as retail’s major industry disruption, part two on defining purpose, part three on environmental sustainability, and part four on aligning employees with your business’ purpose