Doing Good is Good For Business
Photo by Adeolu Eletu
Originally Posted On: https://www.yoavtchelet.com/doing-good-is-good-for-business/
Do you know why brands like Warby Parker Eyewear and TOMShoes have been able to experience such an out-there level of growth and success with brand loyalty and brand affinity? It’s because their philosophy of “buy one, give one,” has established them as “brands with a heart.”
No matter who you are, you cannot help but love a business or enterprise that champions a social mission or shows social responsibility; everybody likes it and wants to associate with such a business.
That’s why startups that demonstrate the will to do good in society are magnets for success and why they usually grow from having just a couple of dollars in their accounts to having millions, if not billions.
From the success of businesses and startups that champion social responsibility, we’ve learned that there isn’t a single bottom line, but a triple bottom line, what some experts refer to as the three Ps: people, planet, and profits.
In his Harvard Business article titled “The Ecosystem of Shared Value,” Michael Porter, a Harvard Business School Professor, affirms that companies see profits by focusing on all the three bottom lines.
He states that companies have to reconnect business success with social progress and further mentions that what matters for companies is not what they do on the margin but at the centre.
The paper, published in 2011, predicted that a business model of shared value would be the future of any successful company. Based on the state of the business environment of today, he was right.
We’re living at a time where social responsibility is no longer about check-writing token or gratuity, lowering income inequality, or reducing toxic gas emissions.
Today, company values, encouraging innovativeness, and offering opportunities that allow employees to have a positive impact on the world are proving more valuable than the traditional bottom line.
Without a doubt, social good is good for business. Here is why:
Why Doing Good Is Good For Business
Here are the top reasons why championing social causes is good for business:
#: It’s a great way to build a reputation
When you demonstrate how much your company cares about something other than your bank balance or bank statement, you build a reputation as an ethical, fair, and moral business enterprise.
While simple-seeming, changing your business model to match this can spearhead next-level business growth because customers engage very actively with businesses that embody qualities like transparency, authenticity, and honesty.
Whether you’re all about championing environmental sustainability, fair-trade, conflict-free, and cruelty-free products, the various elements that constitute social good are vital to your as a business owner because they make your brand appear genuine, caring, and compassionate.
When you connect with your customers on a personal level, you automatically build loyalty and a lasting relationship.
Take the example of 108 stitches, a Sport’s apparel company.
Example: 108 stitches and the Jason Motte foundation
In 2014, 108 stitches teamed up with Jason Motte, a Major League pitcher, for the “Let’s Strike Out Cancer” initiative that sought to assist people directly affected by the disease.
Jason rallied players from all the 30 MLP teams to participate in the initiative. When customers bought a t-shirt from “K Cancer,” $8 would go to a charity selected by individual players, and $2 would go to the Jason Motte Foundation.
That initiative went viral, and the show of social responsibility on Jason’s and 108 stitches’ part resonated further than baseball fans and touched the hearts of other people directly or indirectly affected by cancer, and others who value selfless social causes.
Today, anyone who joined the brand during the initiative is an ardent 108 stitches brand supporter simply because the enterprise championed a cause that’s dear to the hearts of many.
You also have to appreciate the fact that all businesses, particularly new ones, often struggle to get mass recognition; it’s challenging to establish trust when customers haven’t even heard off, leave alone interacted with your brand.
Highlighting a genuine social cause—perhaps on your website—is one of the easiest ways to establish a healthy level of credibility and trust that can help you convert prospects into active customers and brand ambassadors.
Alone, doing this can tell potential customers that your values and commitments go beyond more dollars in your bank account.
#: It’s good for team/employee morale
Did you know that your employees are more important than your customers?
Picture a scenario where you, for some reason, tick off a customer —or two— and the customer stops buying from you. While you may lose some money in the process, you’ll learn from the experience and recover fast. Some customers might even continue buying from you, perhaps because you offer an unrivaled degree of value.
Let’s flip that on its head:
What if you suddenly made two of your key employees unhappy, and, out of feeling discontented, they decide they no longer want to work within your business enterprise? Their discontent or unhappiness could destroy your business. Besides impacting your business operations, such a move could trigger a chain reaction that makes most of your employees less productive.
Since one employee lost is not equivalent to one customer lost, you need to ensure that your employees care about your business and buy into its mission before the customers do.
Remember that we all want to engage in something worthwhile and valuable in life. That’s why many socially responsible companies often have the highest employee morale. Social initiatives generally build pride in employees; it motivates them to give their best.
Perhaps more importantly, doing social good creates a spirit of cohesion among your staff. Cohesion is crucial because, ultimately, it makes employees a lot more productive, primarily because their main drivers become the sense of purpose and self-worth they experience from working within your business.
Salesforce is as apt an example as any:
Salesforce is a successful startup and global leader in cloud computing and Customer Relationship Management (CRM) that introduced the popular 1-1-1 philanthropic model of giving.
The company directs 1% of its time, products, and equity to improving the specific communities where its employees live and work. Additionally, the company gives its employees a special six-day “break” each year that they can use to volunteer to a cause of their choice.
As you can imagine, this is one of the most effective employee recruitment and retention strategies. Overall, it’s also a great way to keep the employees engaged and performing at peak levels all year round.
#: It makes your business attractive to investors and gives you a competitive marketing edge
Doing good has given many organizations a competitive, marketing edge over competitors. Moreover, when potential investors learn that a startup is championing social good, they become interested because they always look for companies with signs of good values and future profitability. Being socially responsible and thus, building trust and credibility in, puts your business on the fast track to success.
Social responsibility also creates positive sentiments in the hearts of shareholders. Shareholders often consider increased social responsibility as a sign that the profits of the company are growing, indicating that theirs are also growing.
Here, Ranku is a solid example:
In 2013, Ranku, a popular discovery engine for online degrees offered by traditional learning institutions, shot to the limelight after incorporating acts of giving into their business model.
Notably, the startup determined that strong shared values and philanthropic strategies were critical to attracting investors. As we speak, Microsoft and Mark Cuban are some of its most prominent investors.
Ranku is an excellent example of how social responsibility, or doing good, can help make your business more attractive.
#: It’s good for your bottom line
Lastly, businesses that champion noble causes, like environmental sustainability, also tremendously boost their market value and bottom line.
An article recently published by Inc. magazine reported that researchers found that social good can increase the market value of a company over that of its competitors, especially those not known as socially responsible.
The researchers came to that conclusion after looking through more than 200 studies of corporate social responsibility. From their researcher, they determined that companies that do social good have the potential of adding a price premium of up to 20% on their products, increasing their revenue massively.
Did you know that 38% of Generation Zs and Millennials have either reduced a business relationship or stopped it entirely because of a company’s undesirable ethical behaviour? Well, that’s what the Millennial Survey 2019 published Deloitte Global revealed.
On the other hand, 36% of the respondents said that how socially engaged a company was is what pushed them to become customers or the thing that strengthened their relationship with the company.
That means more and more consumers are demanding that companies address the critical issues of our time; the companies who manage to do so are getting an impressive reputation bump in the market.
Many startups and traditional companies tend to put off their social responsibility deeds until they get their “house in order” or “a better bottom line.”
Such organizations often start by focusing on making a profit as a company but often fail to reach their desired targets in the long-term, or if they do, they hit a revenue or growth ceiling.
Such companies tend to look at social responsibility as curb appeal, rarely as a core element of the organization where a good cause has the highest effect and can yield the best results. However, as you now know, there are no downsides to corporate social responsibility.
In parting, let me remind you of the wise words uttered by Anne Frank: “No one has ever become poor by giving.”
Please take a moment to think about how your organization can do good in society. Besides being the duty of all of us, doing so can improve customer loyalty, attract more customers and investors, and help your business retain and attract employees that compliment your long-term growth goals.
Getting involved in philanthropy is unlikely to change your business overnight or in the short-term. However, long-term, this approach has many positive benefits that align with the business profitability, growth, and success you want.