By Zack Rosenberg
Business leaders act, not react. By nature they are forward thinking and innovative– a ballast on a ship. But never before has leadership been a more critical tool, with billion dollar brands being built overnight and distribution trending in ways we never imagined.
It’s the Internet, of course. Consumers are interacting with brands in ways that could never have been done before. Twenty years ago our choices were limited to whatever was on the shelves at our local supermarket or pharmacy. Now, every brand and product is available at anytime and anywhere.
So how do we as leaders distinguish ourselves? The key is to understand how our brands can provide solutions to problems as well as to communities (our own or others). Here are eight reasons that business leaders who incorporate social responsibility into their business models will survive and thrive.
1. Social responsibility is GREAT for business
If the only focus is on the bottom-line (and it shouldn’t be), it leads to missed opportunities and revenue stream. Over a 15- year period, businesses with a social mission perform 10.5-to-one over their competitors. This is according to John Mackey’s (co-founder of Whole Foods) book, “Conscious Capitalism.” That would be reason enough for me!
2. Positivity yields brand loyalty
What drives consumers to purchase isn’t adverting per se, but the belief that their action has a positive reaction. Does this mean that they are willing to pay more? According to Nielsen, yes. In fact, they are willing to pay on average 20 percent more than for a similar brand without a social mission. It’s why we are willing to pay $5 or more for Starbucks when Dunkin Donuts offers coffee at a fifth of the price.
3. Social responsibility drives return on investment
Here are two more tangible ways that social responsibility drives ROI. The average social business spends 2 percent of its revenue on adverting. That’s compared to 20 percent for traditional businesses, according to “Conscious Capitalism.”
4. Great stories draw in new customers
StorySelling is the idea that because of your purchase, amazing things are possible. And not just for the shareholders. Your purchase is directly linked to a tangible, positive result. Perhaps it’s providing medicine or building schools. My actions cause a positive reaction. Your impact is tangible.
5. …And inspires existing customers to buy more
According to the Tuck School of Business at Dartmouth, this also results in 10 to 15 percent more purchasing from existing customers. As we know, it’s much cheaper to acquire an existing customer than a new customer. Why not make it even more desirable that they work with you?
6. A social mission attracts top talent
Being the leader that you are, you know every objective is driven by the best talent. You might be surprised to learn that the social mission of your business affects them, too. Say what you will about Millenials but, 70 percent of them are willing to take less compensation to work for a business that is socially responsible, according to a Deloitte survey.
7. …And helps you retain it
Here is the kicker, employees are also 87 percent less likely, according to a Gallup study, to leave the job once they get the job.
8. A foundational purpose helps you set and achieve goals
Lastly, leadership is about setting and achieving goals. How can this be done without a social purpose? Henry Ford believed that everyone had the right to own the road — that an automobile wasn’t meant for only the elite but the masses. To prove his point, he paid his employees some of the highest wages per hour in the country so they too could afford the dream.
Everyone in the organization was focused on the mission. Whole Foods is another amazing example. Their belief in the quality of what we eat is being ineffectively copied by hundreds of competitors.
You can’t match what your organization doesn’t understand. Fundamentally, purpose is instilled in every aspect of what they do. From the sourcing to the display. And, Whole Foods has the highest margins in the grocery business.
Finding your purpose is what makes you a leader. Think about your community, your constituents or ask your employees. Inspiration will overwhelm and actions will be met with positive ROI.
Provide your customers with a euphoria that can’t be bought!
Image credit: Flickr/philliecasablanca
Zack Rosenberg is a social entrepreneur and founder of DoGoodBuyUs, the marketplace for Goods that Do Good. After a career in advertising working for companies such as BuzzFeed, WebMD, SmartBrief and others, he turned his attention to transforming the world through business.