Historically, customers used to buy the practical benefits of a product or service.
More recently, however, the experience that customers receive has become ever more important and the battleground on which most companies are now competing.
But, that experience seems to be evolving and is now being influenced by an emerging trend, one that finds that many customers are increasingly buying based on a company or brand’s purpose and how focused they are on the greater good.
What seems to be happening is that, in the face of the many economic, societal and environmental problems that we face, customers are looking for ways to put their money to good use and in ways that matter for them. Moreover, they are starting to show that they believe that companies have a responsibility in society to help solve some of these challenges. As a result, buying with purpose is now starting to emerge as a sustainable differentiator that can help separate one company from another in a crowded marketplace.
But, this trend is not restricted to just customers.
Employees too are starting to looking for places that they can find meaning through the work that they do.
There is also real value in companies embracing this trend according to Alicia Tillman, Global CMO of SAP, who, in an interview, explained that
“When companies have purpose driven strategies you see increases in sales, share price and the firm’s ability to attract higher performing talent”.
The problem with this trend is that, unless a business has been purpose driven from it’s inception, like Tom’s or Patagonia say, then many struggle with the idea of how to translate the need to be purpose driven into tangible and meaningful plans, activities and objectives.
Some turn to their Corporate Social Responsibility (CSR) initiatives as a means of growing purpose in their business. That tends to be a mistake as CSR initiatives are typically only an adjunct to the business and are not at the heart of what it does.
Two companies that I have spoken to recently offer useful and different perspectives on how they are interpreting this trend and how they are making it meaningful for them, their customers, their employees and their wider communities.
The first is TCC, the largest Verizon Authorized Retailer in the USA, who is empowering their employees to make a difference in their local communities.
In 2013, led by Ryan McCarty and Scott Moorehead of Culture of Good (Scott is also the CEO of TCC Verizon) they launched ‘A Culture of Good’ in TCC, which is all about helping their people and their stores do good in the local communities where their stores are located. Their biggest success has been their Big Good initiative, where every quarter the employees of each store give back to a specific group of people.
- In the months of January-March, each TCC store selects 10 local school teachers to receive a “Care Kit” full of school supplies;
- During National Nursing Home Week in May each TCC store selects a local nursing home to give ”Care Kits” to;
- In the months July-September and in preparation for the new school year, TCC gives away over 125,000 backpacks per quarter with school supplies to children in need; and
- On Veterans Day in November, each TCC store chooses five veterans to honor with each veteran receiving a “Care Kit”.
Through their initiative, they learned that connecting with their customers and supporting the people and the community where they do business at a hyper-local level makes the most sense to them. In terms of business impact, their efforts have translated into:
- A fall of 40% in staff turnover in an industry where it is not uncommon for retailers to face an annual turnover rate of 100%. This has saved them around $5.7 mln per year in recruitment and training costs.
- Moreover, their same store sales have gone up by 42%, in an industry that is plateauing in terms of sales.
The second company is SAP, the world’s largest provider of enterprise application software, who re-aligning themselves with their original mission and purpose to better communicate what the company stands for.
Established 40 years ago to “to build technology that helps their customers both run the world better and also improve peoples lives“, SAP have always been a purpose driven company. However, in recent years they have found themselves talking more and more about their technology and less and less about their purpose. That is all set to change in 2018 and they are going to stop talking about technology and are going to start talking about how their customers are using their technology to address the economic, societal and environmental challenges that we face, in recognition of the rising importance of purpose to both their customers and employees.
It’s too early to tell what difference this will make to SAP’s business results. But, I hope these two examples illustrate the scope that is available to firms who are willing to work out how to put purpose at the heart of what they do.
If that sounds like something that you and your organisation would like to do, I asked Ryan, Scott and Alicia for advice on where leaders and entrepreneurs should start when it comes to putting purpose at the heart of their business. They all agreed that you should start by doing two things:
- Find out what matters to your employees and customers, and
- Figure out how you can help them matter.
Here’s to purpose playing a bigger part of the customer and employee experience in the coming year.
This post was originally published on Forbes here.
Thanks to godserv for the image.
