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Profitability, Customer Experience Not Correlated with CSR Performance

3p Contributor | Monday July 28th, 2014 | 1 Comment

closeup of handshakeBy Chi-Pong Wong

We have seen recent report cards on corporate social responsibility (CSR) with remarkable results from institutions like Tata, Morgan Stanley and Infosys. The question is: Have these and many other CSR maneuvers made notable global impacts?

Well, not quite. By examining the CSR scores of those multinational companies that are top rated in customer experience (CX) or annual profit respectively, one would find that their overall CSR achievements are far from ideal. And from a different angle, flag-waving CSR winners did not capture sizable market shares to make a difference.

This study demonstrates that institutions renowned in CX or net earnings are not necessarily rated highly on their CSR activities — contrary to what many believe.

Businesses with highest customer satisfactions do not shine on their CSR operations

Marketingcharts.com recently published the leading CX global brands based on Foresee’s customer experience findings, but these brands are no CSR medalists according to CSRHUB’s database.

The following line chart is created to show how irrelevant those global brands’ CX ratings are to their CSR ranks. The case that the No. 1 CX ranked company, Amazon, had a much below average CSR score really hammer the point home loud and clear.
CX & CSR Chart
The evidence that companies’ CX scores and CSR grades do not correlate indicates that customers do not really value CSR that highly when they engage with the brands. If CSR outcomes do not contribute to CX, which is a key driver of customer purchases, then there will not be any strong incentive for businesses to embrace or strengthen their CSR efforts.

World’s most profitable companies are also pretty dismal on their CSR achievements

If the CSR tally of the top CX score receivers are disturbing, then the CSR grades the world’s most profitable corporations earned should be outright perplexing. Yahoo Canada published a list of the world’s 25 most profitable companies last year on its finance page, and those institutions’ respective CSR marks dug up from CSRHub are utterly frustrating.

The chart below is created to show not only how bad they are on their CSR performances, but also how uninspired CSR must have been to their profitability.
Profit & CSR Chart
There are plenty of reasons why these companies were most profitable, but the fact that they could get away with disappointing CSR results is frustrating. The message from this study is clear: The shoppers did not care too much about these firms’ CSR attainment status when they made their purchases. Warren Buffett’s Berkshire Hathaway is perhaps one most striking example among many to demonstrate this point. It was the world’s fifth most profitable team last year despite its disheartening CSR performance. This says a lot about the broken connection between consumer behavior and the conflicting message conveyed in CSR surveys.

Coda

Okay, the world has not been serious enough about CSR according to the data that have just been examined. How about CSR on a smaller scale? Has there been any particular country where its residents really walk the talk on CSR matters?

I know that it’s a daunting task to go through the same analysis on every country in the world, so I decided to sample a couple of countries with very active CSR evangelists just to validate. I triaged the CX data for USA and U.K. and charted them against their CSR values from CSRHub; sadly their results confirmed the worldwide phenomena uncovered in this inspection. Furthermore, I did a reverse inference exercise by looking up the CX scores and net proceeds for the top CSR performers. The findings were expected and equally dispirited.

From the aforementioned investigations, businesses highly praised or handsomely awarded with purchase orders by their patrons were no dignitaries, some were outright laggards, on CSR matters. This has revealed the reality that CSR is not among buyers’ primary considerations during their inquisitions and acquisitions. Although CSR sound bites have been gaining popularity online and in print, and clientele claim to have embraced this noble course, business transactions and consumer behaviors have demonstrated just the opposite. Overall, CSR still has a long way to go; its proponents need to enhance their games to better steer consumer behavior toward the desirable path.

Image credit: Flickr/itia4u

Charts courtesy of Chi-Pong Wong; Image

Chi-Pong Wong is a seasoned professional proficient in customer experience, vendor and partner relations, marketing and branding, supply-chain strategy, and program and project management. He has published articles on leading online magazines including Customer Think, UX Matters, Marketing Profs, CEO World, Service Director Business Review, Project Times, PM Hut, Project Management, Supply Chain Brain, Supply Chain Digital, and other popular journals. He earned a MA in Economics at SUNY @ Stony Brook and a MS in Computer Science at Duke University. He is currently with Hewlett-Packard, and has previously worked at Arrow Electronics, IBM, STMicroelectronics, and NEC Electronics. He can be reached at http://www.linkedin.com/in/chipong.


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  • jenboynton

    Frustrating indeed! This tells me that many of these firms are still not truly integrating CSR into their business operations, or business operations (and materiality) are not properly integrated into the CSR reporting. For example, firms with great CX should be reflecting customer feedback in their CSR reporting because customers are key stakeholders.

    Some of these companies may just not be reporting properly, which means we have an issue with how they are providing and we are collecting data on CSR performance.

    Still, we have a long way to go!