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Do CSR Initiatives Play a Role in Customer Loyalty?

Larry Alton | Sep 30, 2015 692 views 1 Comment

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Throughout 2015, corporate social responsibility (CSR) has been a favorite buzzword for businesses across numerous industries. And while all CSR initiatives should be genuine, there’s nothing wrong with considering how they impact brand image and affect customer loyalty.

Research Identifies Connection

There’s no doubt that CSR plays a role in customer loyalty and profitability, but by how much? Well, that’s what a team of professors from Dartmouth’s Tuck School of Business tried to determine. Using shopping data from major supermarkets and survey results from customers, they sought to “measure behavioral loyalty in response to attitudes about CSR.” They did so by correlating share of wallet (SOW) figures with CSR survey responses.

The conclusion was that CSR activities indirectly improve SOW. The act of selling local products was the most popular, followed by community support, employee fairness, and environmental friendliness. The biggest takeaway is that brands have to take care of their immediate surroundings before focusing on bigger picture issues. “For example, before saving the whales, focus on employee wellness initiatives or sourcing local products,” says the study’s commentary.

Examples of Successful CSR Initiatives

Over the years, there have been thousands of positive examples of successful CSR initiatives. Let’s briefly take a look at two that positively impacted customer loyalty.

  • Chevron. It’s challenging for oil and gas companies to display CSR, but Chevron recently utilized a fantastic opportunity to do just that. As the state of California continues to experience a serious drought, Chevron decided it could help by selling the 500,000 barrels of wastewater it extracts on a daily basis. When purified, this salty water can be used to water crops and allows farmers to remain profitable. While it may seem like a small gesture, it’s an act that positions Chevron as caring.

  • Honda. According to one case study, Honda has been able to improve the perceived value of its brand by developing more fuel-efficient vehicles. As the cost of petroleum fuel has risen, Honda has done what few car manufacturers can manage – increase annual sales figures. When compared to numbers from four years ago, Honda’s sales have increased by 28 percent since launching these newer models. This is in part due to higher consumer demand for more environmentally friendly cars.

Tips for Properly Leveraging CSR

While Chevron and Honda have deep pockets and access to a number of resources, how can you – as a small business – properly leverage CSR for enhanced customer loyalty? Here are a few helpful tips:

  • Satisfy employees. As pointed out in the aforementioned study, CSR isn’t just about saving the environment. It actually starts with how you treat your employees and immediate community. One of the best things you can do is pay attention to employee needs and meet those demands. After all, the happier your employees are, the more successful your brand will be. According to one study, 79 percent of people prefer to work for socially responsible companies.

  • Exhibit diversity. CSR in the 21st century calls for diversity. From marketing and advertising to hiring and HR, it’s important that you respect the marketplace’s wishes for diversity and inclusion. In doing so, you’ll show consumers that you’re willing and able to work with people of all backgrounds.

  • Give back. Millennial customers love to do business with companies that care about their immediate environments and local communities. If you truly want to maximize your CSR efforts for enhanced customer loyalty, you need to find ways to give back to those around you.

CSR Initiatives are More Important Than Ever

This article isn’t meant to discount the underlying importance of CSR initiatives. Every initiative should start with a genuine goal or desire. However, it’s important and practical to understand that these programs also result in enhanced customer loyalty. When properly leveraged, CSR is beneficial to everyone involved.

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One Response to Do CSR Initiatives Play a Role in Customer Loyalty?

  1. Bill Fotsch October 1, 2015 at 8:16 pm (12 comments) #

    Corporate social responsibility efforts are certainly a good way to encourage loyalty among customers and employees. But I think speaking with customers, asking them for their input on what they really value, and acting on that will drive much more customer loyalty. It’s pretty easy to do. We have used a customer interview script that is a modified version of Fred Reichheld’s “Ultimate Question”. The script enables more employees to be involved in interviewing customers, providing great customer feedback, and inevitably increased repeat and referral revenue. If you would like a copy of the script or discuss how it is used, especially as part of your plans for next year, just send a request to [email protected].

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