Nike and Bud Light have been in the media spotlight over the past two weeks, with both brands receiving significant backlash from consumers for featuring transgender rights activist Dylan Mulvaney in recent social media campaigns.
As the world becomes more socially conscious and politically active, many brands are taking up the cause and showing support for various social justice movements. From supporting LGBTQ+ rights to championing environmental issues, companies are becoming more vocal about their values and transparent about their stance on social issues.
But championing social causes can backfire, hurting profitability, or, as some media commentators have argued, “Woke up and gone bankrupt? ” may be said.
Well, the answer appears to be “yes” for Silicon Valley Bank (SVB), which collapsed last month. He has pledged $5 billion in green investments and donated $73 million to Black Lives Matter and other causes.
Board member Elizabeth Barr argued in a 2021 interview that “racism and white supremacy” were more important considerations than focusing on numbers. SVB had an executive responsible for “diversity, equity, and inclusion,” but no chief risk officer. That was the undoing.
The bank was exposed to falling bond prices, and worried customers withdrew their funds and started a bank run. Now, it is clear that the cause of failure is the absence of a risk officer rather than the presence of a diversity officer. Still, based on the idea that “form follows function,” bank executives appear to have made some choices about where to prioritize their attention.
There’s no question that taking a stand on social issues can be a risky move for brands. After all, the world is divided, and what one group sees as progress, another group sees as an attack on their values. So brands that take bold stances on social issues risk losing customers who don’t agree with them. So is this risk worth taking?
Brands that take bold stances on social issues risk losing customers who don’t agree with them.
I think the answer is yes. Brands that become socially visible can and do succeed. In fact, research shows that consumers are increasingly choosing brands that align with their values.
A survey of more than 30,000 consumers in 35 countries conducted by Accenture found that 62% of consumers want companies to take positions on social, cultural, environmental, and political issues. It was found that 65% of respondents said they were more likely to purchase from a company. A brand that supports the causes they care about.
Brands that adopt a social stance can also benefit from positive media coverage and increased brand awareness. When a company takes a stand on social issues, it creates buzz, attracts attention, and stands out from its competitors.
Of course, there are risks involved. Brands that make a point of marketing around social issues can be accused of “virtue signaling” or not doing enough to support the causes they champion. There is also a risk of alienating some traditional customers who feel the brand’s values no longer align with their own.
But the risks of not having a perspective on social issues are perhaps even greater. Consumers increasingly expect brands to take relevant positions on issues that matter to them. Companies that remain silent run the risk of being seen as indifferent or indifferent.
In today’s world, consumers want more than just products and services and want to support brands that share their values. For example, Patagonia has a long history of environmental activism and corporate responsibility. Their commitment to sustainability has not only strengthened their brand image, but also created a loyal following of customers, proving that ‘Wake’ can work when done well.
However, not all brands are so successful. Take a look at Gillette’s 2019 “The Best Men Can Be” ad campaign. This was an attempt to address toxic masculinity. The campaign sparked a backlash from some consumers who felt the brand was attacking men. The controversy reportedly resulted in the company taking a $8 billion writedown. The difference is that Patagonia is authentic and “lives” its brand purpose, while Gillette is just running an advertising campaign.
There are also many executives who support the view that focusing on anything other than the bottom line is bad for business. That was certainly the view of scholar and economist Milton Friedman, who published his book Capitalism and Freedom in 1962, which shaped economic thought for the next 50 years.
According to a Wall Street Journal study, the S&P 500 index fell 1.8% from 2021 to early 2023, but companies deemed to have a strong ESG (environmental, social, and governance) focus scored even worse. It worsened, falling from 2.5% to 6.3%.
This suggests that companies that advertise social responsibility perform poorly. However, due to the recent rally in energy stocks during this time of crisis, I believe these results may not reflect normal performance. When the going gets tough, aren’t investors willing to compromise their principles?
So what should brands do to ensure they are delivering on their purpose, both in terms of customer support and long-term shareholder return?
- Reliability is very important. Brands need to ensure their social stance aligns with their core values, what their target customers really care about, and is a true reflection of their company culture. . Inauthentic or superficial attempts to jump on social or cultural bandwagons can easily backfire and damage your brand’s reputation.
- Education and engagement: Brands should strive to understand the issues they are addressing and be proactive in having meaningful conversations with consumers. Listening to a wide range of voices and incorporating feedback is essential to ensure acceptance of social initiatives.
- Stay consistent: Brands must maintain a consistent commitment to social purpose across all aspects of their business. Includes marketing, customer experience, product development, and supply chain management. Inconsistency can lead to accusations of hypocrisy and undermine consumer trust.
- Measure and report progress. Regularly tracking and reporting the impact of your brand’s social efforts helps demonstrate transparency and accountability to stakeholders. By setting clear goals and tracking progress, brands can demonstrate that their commitment to a social purpose is more than just a marketing tactic.
Finally, brands must be prepared to weather the storm. Taking a stand on controversial issues can be risky and may result in a backlash from some consumers. Brands must be prepared to stand firm, even in the face of criticism, and explain how this aligns with their values.
In Bud Light’s case, Anheuser-Busch, the brewing company that owns Bud, quickly distanced itself from the campaign. Alyssa Heinerscheid, the marketing executive who oversaw the effort, was placed on “a leave of absence,” and the brand issued a statement saying the move was “an extension of our commitment to brewing great beer for all consumers.” It will help me stay focused on what I do best.” Making a positive impact on our community and our country. ” and the importance of being clear about your brand’s purpose.
Brands must be prepared to stand firm, even in the face of criticism, and explain how the chosen issue aligns with the brand’s values.
In the book Andy Milligan and I wrote, On Purpose: Delivering Customer Experiences for Brands People Love, we argue that purpose actually has three components. Brand purpose (customer and employee focused), commercial purpose (shareholder focused) and social purpose (ESG focused).
If companies prioritize delivering value to their customers, they will be commercially successful, and if they do so in a socially responsible way, they will sustain success over the long term.
We’ve helped some of the biggest brands define their purpose and carefully align their customer and employee experiences to it. In my opinion, you need to do it in this order, and the key to making it successful is intentionality and consistency. However, the most important consideration is that these three elements must work in harmony.
Let’s take Amazon as an example. Since its founding, Amazon has focused radically on its brand goal of “becoming the most customer-centric company on the planet” and delivering tremendous value to its customers, rather than focusing on shareholder returns or employee experience. has been created.
Amazon is now one of the most valuable companies in the world, and Jeff Bezos is one of the richest people on the planet. The company has pledged $10 billion to combat climate change and has set a goal of using 100% renewable energy by 2025.
Therefore, the brand started with a clear brand purpose focused on the customer. As a result, commercial objectives were achieved and value created for shareholders. As a result, we are now able to secure financial resources that allow us to reliably fulfill our social responsibilities. If Amazon addresses some of the poor employee practices it has been criticized for, it will be able to maintain its success. Therefore, balance is key.
In conclusion, taking a bold stance on social issues can be a powerful tool for building customer loyalty, gaining positive media coverage, and increasing brand awareness. Yes, there are risks, but the risk of not taking a stand on issues that matter to your target customers is even greater.
So if your brand is considering a broader purpose, don’t be afraid to take a stand. Make sure it truly aligns with your brand and product values, is acceptable to your target customers, and balanced with commercial considerations. – Your shareholders may thank you.