Actions Speak Louder Than Ads

Like many clichés, the one about how a company’s response to a scandal is more important than the cause of it, has a good deal of truth. Just ask Mark Zuckerberg and Kevin Johnson.

Julie Wittes Schlack

SVP of Product Innovation at C Space

Julie Wittes Schlack is known across the business as an historian and an oracle; having been with us since the very beginning, she holds the keys to our past and our future. Julie is also a writer, teacher, editor and researcher; she has won awards for her fiction, her essays and her research.

Facebook’s woes with fake news, biased news feeds, and privacy in general have been simmering for a while. But the controversy over how the company acquired and inadequately protected user data from the machinations of Cambridge Analytica and other would-be manipulators of the American election has a long tail, and encapsulates all about Facebook’s basic business model that’s giving many people the heebie-jeebies.

Starbucks’ recent challenge is a bit more tangential to its core business, but no less visible. Having initiated, then quickly ended what some perceived as a tone-deaf attempt to talk about race last year, the recent action of a Philadelphia Starbucks store manager that led to the arrest and nine-hour detention of two African-American men was not only ironic, but did more to raise awareness of implicit and explicit bias than provocative hashtags on coffee cups ever did.

Public relations nightmares come and go, but what’s so educational about these two is in how the companies and their respective CEOs have addressed them. Their actions can teach us a lot about the impact of “activist” CEOs on brand perception and consumer loyalty.
Mark Zuckerberg responded to the Facebook crisis not only with advertising policy changes, but with new privacy features – notably, the “Clear History” feature that will purge your browsing history from your Facebook account so that the company and its partners and advertisers can’t use it to target you. And since testifying before a Congressional committee (and indeed, for the past year), he’s been reinforcing the company’s lofty if vague mission, most recently on his own Facebook page: “We are taking a broader view of our responsibility — to not only give people powerful tools but to make sure these tools are used for good. At the same time, we also need to keep building new services that bring people together in meaningful new ways.”

As some critics have noted, this new feature still puts the onus of privacy protection on the Facebook user, not on the company. But in an attempt to defuse any potential consumer backlash – and in recognition of the fact that most people rarely check, let alone modify, their settings — Facebook has rolled out a new television commercial meant to remind the platform’s billions of users of what Facebook ostensibly stands for: bringing people together.

While Facebook has responded to the firestorm with advertising, Starbucks CEO Kevin Johnson (and Howard Schultz before him) responded with both personal and corporate actions. Johnson has offered to “personally mentor” the two arrested men, and is closing the more than 8,000 company-owned stores for an afternoon of training on how to avoid racial bias and discrimination.

And while Zuckerberg is doggedly adhering to his vision of Facebook as a platform for everyone, as a meta-connector that can bring people together regardless of their beliefs and orientation, Schultz frankly conceded that in standing for a set of principles, a company will inevitably alienate some portion of its potential investors and consumers. At Starbucks’ 2013 company meeting, he effectively opined that shareholders and customers who didn’t support same-sex marriage should feel free to sell their shares in the company.

Gen Z demands diversity and social responsibility

It’s too soon to know which approach will yield the greater social and/or commercial benefit – advertising or direct action. But what is clear is that people’s brand loyalty and buying decisions are increasingly determined by their perception of the company’s values and social responsibility. That’s especially true among younger consumers. Call them Gen Z, call them Post-Millennials – whatever their moniker, according to GenZGuru.com, they currently represent almost 25% of the US population and are estimated to comprise 40% in just two years.

Indeed, over 50% of respondents in MNI Targeted Media’s recent survey of 2,500 college undergraduates said that “a brand showing dedication to social impact, by giving proceeds to charity, being environmentally conscious, having strong values, or projecting an impact-driven image, is an important factor when they make purchases.” And according to GenZGuru, “77% of Gen Z say that the level of diversity in a company affects their decision to work there.”

In light of that assertion, it’s not surprising that Starbucks – with an avowed and demonstrable commitment to a diverse workforce and political activism – outperforms Facebook in research by C Space into the Customer Quotient (CQ) of companies. CQ represents the degree to which they emotionally connect with and “get” their customers. And on measures like empathy, openness, relevance, and providing emotional rewards (such as feeling smart and feeling valued), Starbucks is among the leaders in its category. Facebook, in contrast, still has a lot of room for growth.

How much of that perception is shaped by the CEO?

“Consumers are turning to CEOs in search of leaders that not only provide long-term commitments, but leaders who push their brands to catalyse consumers and other brands in new and collaborative ways,” declared the authors of a recent study by Alto Data Analytics.

Their research looked specifically at the role of activist CEOs in the move toward greater sustainability. But given consumer passion for brands that stand for something beyond shareholder earnings, what is clear is that in the current climate, companies – embodied by their (still largely white and male) CEOs – must take a principled stand on social issues, and reinforce it with concrete measures.

For tomorrow’s consumers, as well a growing swathe of today’s, actions will speak louder than ads.

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