The power of purpose in branding
I’ve written posts about the financial and brand-building power of Purpose before. If you want to learn more, check out Simon Sinek, who's the Purpose guru and famous for his mantra: "People don’t buy what you do; they buy why you do it."
I’ve quoted some powerful stats from books such as "Firms of Endearment," which compares purpose-driven companies such as Southwest Airlines, Whole Foods and J&J, to Jim Collins’ "Good to Great" companies (such as Kimberly-Clark and Kroger):
- Over 3 years: Firms of Endearment delivered a 73 percent return to investors; Good-to-Greats delivered 75 percent
- Over 5 years: FoEs delivered a 128 percent return to investors; GtoGs delivered 77 percent
- Over 10 years: FoEs delivered a 1,026 percent return to investors; GtoGs delivered 331 percent
(Want to learn more about the role of purpose in companies? Attend GreenBiz 16 in Phoenix Feb. 23-25.)
Our 2015 Eco Pulse study bears out that purpose-driven companies and brands are better positioned with consumers than those who aren’t:
- 59 percent of Americans say a company’s corporate social responsibility activities impact their purchase decisions.
- 67 percent say a company’s stance on employee wages and working conditions also impacts their purchase decisions.
- 33 percent say they’ve chosen one product over another or stopped purchasing a product based on the environmental record of its manufacturer — and 75 percent could name a specific brand.
Finally, there have been many studies done about the power of purpose in attracting, retaining and engaging employees. In fact, Monster did a poll several years ago that indicated 92 percent of us want to work at an environmentally responsible company. It makes sense — who wants to work for a company that’s only in it for themselves? And who wants to buy from them?
So there are several reasons to believe that when companies authentically commit to a purpose and make business decisions related to that purpose, it results in tangible business value.
Yet my observation is that it’s a newsworthy rarity when a big company decides to put its money where its values are, risking big to put a stake in the ground about what they stand for. In fact, the only two examples I can think of in the last few years are CVS and REI. As you probably know, CVS put its stake in the ground about health, turning away $2 billion in cigarette sales. REI closed its stores on Black Friday and started the #optoutside movement to better live in alignment with its values and purpose.
According to digital analytics firm SimilarWeb, REI actually experienced a 10 percent bump in online traffic on Thanksgiving, and a 26 percent rise on Black Friday. CVS’ road has been a bit rockier, but I’m guessing it takes a while to make up $2 billion in revenue.
As you head toward the end of the year and have a little time for reflection, I encourage you to think about what your company stands for, really. Is it meaningful? Is it worth your employees getting out of bed for? Is it a reason for customers to buy from you over and over again? If not, think about how you could shift. And then think about how you could make a meaningful, public move to align your actions with your purpose. It will pay dividends — not just on your P&L statement, but in your psyche.