Some companies are breaking the old rules of business, taking a controversial stand and risking profit. Julie Wittes Schlack asks: will they alienate or build loyalty?
Julie Wittes Shlack
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.
In announcing new limits on the types of guns they’re willing to sell and to whom, are retail giants like Wal-Mart, Kroger’s and Dick’s Sporting Goods demonstrating moral courage or business savvy? In dropping their discount programs for NRA members, are Delta Airlines, United Airlines, Hertz, MetLife and Enterprise Holdings putting principle before profit, or vice versa?
Until recently, “corporate social responsibility” was essentially a fancy term for small-scale, generally local philanthropy in the form of donations to schools and food banks, employee volunteer days and sponsorship of local, amateur sports teams. But as environmentalism and localism started to gain new traction, manufacturers and retailers began to implement new policies designed to promote sustainability and transparency. In 2007, footwear manufacturer Timberland set out to produce an “eco-conscious” boot made of predominantly recycled materials, and labelled every one of their products with detailed information regarding its materials and environmental impact. A few years later, retail giant Target jumped on the bandwagon, creating incentives for their suppliers to offer innovative products that were environmentally friendlier, addressed dietary or allergen restrictions, or catered to more ethnically and physically diverse customers.
While all of these efforts were laudable, they were also unlikely to make the companies’ shareholders queasy. After all, products for African-American, vegan or environmentally conscious consumers could be manufactured and sold just as profitably as more conventional goods. It wasn’t provocative to assert that consumers were willing, even eager, to buy products with social benefits.
The data suggest that the companies that authentically share and act on the values held by some segment of their customers build the strongest emotional connection with them.
But when corporations began taking a public stance on non-product-related issues, the waters became a bit more roiled and murky. In 2012, Chick-fil-A antagonized its LGBTQ consumers and their supporters when CEO Dan Cathy publicly opposed gay marriage and the company’s extensive contributions to anti-gay marriage groups were revealed. But while alienating a portion of its customer base, the fast food giant strengthened the loyalty of another, possibly larger segment — the religious (and religious right) customers who welcomed Cathy’s unapologetic infusion of Christian evangelism into the company’s culture and policies. Meanwhile, at the other end of the political spectrum, Ben & Jerry’s won both fans and detractors alike for the company founders’ personal and commercial expression of their progressive politics, from issuing an ice cream flavor in support of Bernie Sanders to getting arrested at a demonstration protesting the influence of big corporate money in politics.
Though these companies violated what used to be one of the cardinal rules of business — steer clear of controversy — the commercial rewards of these activities have proven to outweigh the risks. In the past two years, C Space has conducted nationwide research into the companies that consumers feel “get them.” The data suggest that the companies that authentically share and act on the values held by some segment of their customers build the strongest emotional connection with them. This ability to forge relationships with consumers — what’s referred to as CQ (Customer Quotient) — is clearly and consistently linked to measures of both profitability and growth, serving as a powerful predictor of advocacy and intent to purchase.
And the two companies topping the list of high CQ brands in their respective categories are Chick-fil-A and Ben & Jerry’s.
These companies know that it’s neither possible nor even desirable to please all the people all the time. In fact, consumers reward companies that seem willing to sacrifice sales in favor of the social good. When outdoor equipment and clothing retailer REI closed all stores on Black Friday for the past two years, encouraging customers and employees alike to #OptOutside, they weren’t taking much of a gamble. The company knew their customers well enough to recognize that the long-term financial benefits of taking a stand against maniacal consumerism would outweigh one day’s worth of lost sales.
Indeed, Cone Communications’ 2017 Corporate Social Responsibility Report declares that “Seven-in-10 Americans (70 percent) believe companies have an obligation to take actions to improve issues that may not be relevant to everyday business operations.” Their research indicates that not only will 76 percent of Americans boycott a company based on its actions, but 84 percent will buy on that basis.
So was it altruism, business savvy or a desire to find a safe compromise that drove the decisions of these apparently bold big brands to risk the wrath of the NRA? Most likely all of the above.
We’ve come to the sorry point in our national life where at least some corporations have a better understanding of their constituents’ desire for principle as well as product than do “public servants.” Unlike Congress and the president, these companies are trading in the currency of conviction as well as cash.
Citizen activists will probably never have the dollars of the NRA. But we do have votes to bestow and withhold. As the fight for gun control escalates, it will be fascinating to see which currency our politicians value more.