Companies that are good corporate citizens should sell more stuff: 55% of consumers claim they are more likely to purchase from companies they deem ethical (Nielsen, 2004).
As a result, corporate communicators and marketers spend lots of time telling us about the good deeds of their employers. Those who intellectualise the phenomenon cite buzz-terms like reputation economy, conscious capitalism and shared value. Everyone agrees: being good is good for business.
All true, but not to the extent that most claim.
Companies should do good. It’s the right thing to do. And it does make business sense. Being good means a company is more likely to attract good employees and investment. And less likely to be targeted by activists. And more likely to limit damage in a crisis.
But surely it’s not that great for sales. In the long term, probably. And in some sectors more than others, no doubt. If you’re a smoothie producer you’re more scrutinised than if you make ball-bearings, one would assume. But in any case, at this moment in time, how many people are truly fussed whether a company limits carbon emissions, has sound financials and treats its employees well? In the real world, Apple is the most highly valued brand in the world despite not being an especially renowned corporate citizen. Unpopular companies like Nestle and Monsanto are doing pretty well. In the real world, most people don’t even know whether the company that made their product is a good corporate citizen. They purchase based on habit, price or how pretty the packaging looks.
And the figures? Consumers claim they are more likely to buy from companies they deem ethical. Sure: but who gets polled? And what are they asked? If it’s something along the lines of “are you more likely to buy from a company that is ethical?” most people would say yes. If asked: rank the 5 top determinants of your purchasing decisions from the following list (price, habit, quality, ease and ethical manufacturer) would most not place ethical manufacturer quite far down the list? Probably.
Doing good is noble and beneficial to business on some level, and will be a prerequisite for success in the future. Is it an absolute prerequisite for immediate success now? In most cases, no.
2 thoughts on “An overblown business truism: behaviour as a driver of consumer purchasing”
I have worked in FMCG/soft drinks and currently in pharma. Behaviours are very different in the two industries. It is correct to say that there are very limited short term opportunities for sales when projecting a CSR policy. At most, the cause-related marketing programs that I have been involved in may provide long-term benefits for brand reputation.
But you are totally right when you say “And it does make business sense. Being good means a company is more likely to attract good employees and investment. And less likely to be targeted by activists. And more likely to limit damage in a crisis.”
Good expectation management