Will purpose marketing (a/k/a purpose-led marketing and purpose-driven marketing) drive increased customer loyalty, improve customer acquisition and speed revenue growth? Or is it just another passing fad that will soon fade away? Or something in between?
Many marketers are trying to answer these questions, but it's not as easy as the current hype and a multitude of research studies suggest.
In this article, we'll explore how to determine whether purpose marketing is right for your company, and how to decide whether your company is ready to launch an effective purpose marketing program.
Why Purpose Marketing
Purpose marketing is the use of content in external communications that emphasizes a company's core mission and values, i.e. its brand purpose.
A company's brand purpose essentially describes its "reason for being" beyond the basic business functions of offering products or services and earning a profit. The brand purpose encompasses how the company is making a positive contribution to society and where the company stands on important social issues.
The current popularity of purpose marketing has resulted from a growing interest in corporate social responsibility (CSR). The principle that business organizations have obligations to society isn't new, but increasing concerns about climate change, the massive disruptions caused by the pandemic, and recent social and political upheavals have made CSR a major priority in corporate boardrooms and executive suites.
Several recent developments illustrate CSR's growing importance. For example:
- In 2019, the Business Roundtable, an association whose members include the CEO's of nearly 200 major U.S. companies, released a new Statement on the Purpose of a Corporation. The 2019 statement departed from earlier versions and declared that in addition to serving shareholders, corporations should deliver value to customers, invest in employees, treat suppliers fairly, and support the communities in which they operate.
- At the end of 2020, there were 392 ESG* mutual funds available to U.S. investors, according to a report by Morningstar. That was up from 303 such funds in 2019. The Morningstar analysis also found that 2020 was the fifth consecutive calendar year ESG-focused funds received record cash inflows. (*Environmental-Social-Governance)
The growing emphasis on corporate social responsibility has caused many marketers to become enamored with purpose marketing. For several years, marketers have been inundated by research studies purporting to prove that customers and potential buyers place great importance on the social responsibility track record of the companies they do business with.
The findings of these studies are - on the surface at least - exceptionally compelling. Consider, for example, a small sample of the findings from a few of the more recent studies.
2022 Edelman Trust Barometer - 58% of individuals surveyed in 27 global markets said they buy from or advocate for brands based on the brands' values, and 52% said business organizations are not doing enough to address climate change.
Havas Media Group (2021) - 73% of surveyed global consumers said brands must act now for the good of society and the planet, 64% said they preferred to buy from companies with a reputation for having a purpose other than profit, and 53% said they are ready to pay more for a brand that takes a stand on environmental and social issues.
Barkley, Inc. (2021) - 53% of surveyed U.S. consumers said ESG issues are more important or much more important than before the pandemic, and 60% said they are willing to pay a little more or much more to support environmentally and socially responsible brands.
dentsu international and Microsoft Advertising (2021) - 87% of surveyed adults (18+) from 19 countries said they want to do more to combat climate change, and the same percentage said they'd be willing to change which products and services they buy to do so.
Zeno Group (2020) - 94% of surveyed consumers in eight global markets said it is important that the companies they engage with have a strong purpose, 82% said they have taken action to support a company when they believed in its purpose, and 76% said they have taken action when a brand did something they disagreed with, including no longer buying from the brand.
As these examples illustrate, large majorities of respondents in multiple surveys have expressed high levels of concern regarding environmental and social issues, and they have also voiced strong preferences for businesses that take an active role in addressing environmental and social challenges. So the research to date suggests that many - and probably most - companies would benefit from purpose marketing.
Carefully Assess the Benefits of Purpose Marketing
In reality, the decision to use purpose marketing is more nuanced than the existing research implies. Therefore, before marketers embark on a major purpose marketing program, they should carefully assess the benefits it will potentially provide to their company.
Despite the impressive volume of research findings indicating that people now want and expect companies to address environmental and social issues, marketers should not simply accept these findings at face value. Virtually all the existing research consists of surveys, and all surveys - no matter how well designed - have characteristics than can affect the relevance and reliability of the findings.
Most of the published studies regarding brand purpose/purpose marketing have been national or global surveys of consumers. In some of these surveys, the researchers took steps to make the respondent pool representative of the overall target population.
The data produced by such surveys may or may not be highly relevant for marketers in a particular company depending on how the company defines its target market. For example, if a company sells "luxury" autos or fashion accessories to a target market composed primarily of high income individuals over the age of 40, the findings of a general population survey may not accurately reflect the attitudes of that target market.
National or global general population surveys will also be less useful for many B2B marketers because the demographic attributes of the relevant business decision makers are likely to be different from those of the general population, and therefore their attitudes and opinions may also differ.
In addition, B2B marketers will need to consider the potential effects of policies relating to corporate social responsibility that their customers and prospects have implemented. For example, many large enterprises have adopted sustainable procurement programs that establish goals for working with suppliers that use sound environmental practices. If your company's target market includes a significant number of such organizations, the potential benefits of purpose marketing will likely be enhanced.
Reliability of Survey Data
David Ogivly, the legendary advertising executive and founder of Ogivly & Mather, once said, "People don't think how they feel, they don't say what they think, and they don't do what they say." Ogivly's insightful quip captures two issues than can make survey results less reliable.
The Social Desirability Bias - Researchers have long been aware that survey respondents don't always answer survey questions truthfully, and social scientists have identified an important cause of this behavior. The social desirability bias is the tendency of survey respondents to answer survey questions in the manner they believe will be viewed favorably by others versus the way they actually think or feel.
This issue is more likely to exist when survey questions relate to sensitive personal topics or "hot button" social or political issues. So when a survey asks participants whether companies have a responsibility to address environmental or social issues, or whether they prefer to buy from companies that have a good track record on such issues, some respondents are likely to perceive that "yes" is the "right" answer to these questions.
The social desirability bias can lead to the over-reporting of "good" or socially acceptable attitudes and behaviors, which can cause marketers to overestimate the potential benefits of purpose marketing.
The Intention-Action Gap - Experienced researchers also know that the actual behaviors of survey respondents are often inconsistent with the answers they give to survey questions, even when those answers reflect their genuine intentions. As a result, survey data regarding what respondents say they will or won't do may not be a good predictor of their actual behaviors. Therefore, the intention-action gap can also cause marketers to overestimate the real-world impacts produced by purpose marketing.
None of this means that marketers should ignore or dismiss the evidence in the large and growing number of studies that relate to purpose marketing. What I am suggesting is that marketers should evaluate survey findings with a critical eye and carefully examine how relevant and reliable the findings are for their company.
Is Your Company "Ready" for Purpose Marketing?
Once you've determined that purpose marketing can potentially deliver significant benefits for your company, the next issue you must consider is whether your company is ready to use purpose marketing effectively.
While some aspects of purpose marketing are still controversial, there is near unanimous agreement that authenticity is the most critical determinant of purpose marketing effectiveness. If your purpose marketing is not perceived to be authentic, it will be ignored or, even worse, your company may be accused of "green washing" or "woke washing."
Authenticity has become even more important as the popularity of purpose marketing has increased. Today, people are inclined to be skeptical of the "higher purpose" claims made by companies and brands. In the survey by Havas Media Group mentioned earlier, 71% of the respondents indicated they have little faith that brands will deliver on their promises.
So, what does it mean to be authentic? Marketing academics and other social scientists have developed rather complex constructs to describe authenticity, but the essence of authenticity is that the values expressed in your purpose marketing program are consistently embodied in your company's policies and practices. In other words, being authentic means there is no disconnect between what your company says and what it does.
From a practical standpoint, this means that your company isn't ready for purpose marketing until it has defined and articulated its brand purpose and imbued that purpose in its operating activities. In short, an articulated and activated brand purpose must exist before purpose marketing can be done authentically and effectively.
The absolute need for authenticity also impacts how your company should approach purpose marketing. In general, purpose marketing is more likely to be perceived as credible and authentic when it emphasizes specific actions your company has already taken or those that are currently underway. This approach is particularly important when your company doesn't have an established reputation for addressing environmental or social issues.
Purpose Marketing Is Not Without Risks
Marketers must also recognize that purpose marketing can carry significant risks for some companies. These risks take several forms, but two are particularly noteworthy.
First, when a company takes a public position on a divisive political issue, it is likely to face a backlash. Last year, for example, Coca Cola and several other large enterprises were criticized for their actions relating to an election law enacted by the State of Georgia.
The Georgia law was criticized by many liberal political leaders and civil rights activists as amounting to "voter suppression," while many conservative leaders argued that the law was designed to ensure the integrity of elections. Coca Cola announced its opposition to the law after it was enacted.
Liberals criticized the company for not publicly and aggressively opposing the law earlier, and conservatives criticized the company for the position it ultimately took. One county in North Carolina went so far as to remove Coke machines from government facilities.
A second type of risk is even more pervasive. When your company uses purpose marketing to highlight its position or activities regarding an environmental or social issue, every aspect of your company's operations can become subject to greater scrutiny.
Gillette (a Proctor & Gamble brand) felt the effects of this risk a few years ago when it launched a #MeToo-inspired ad tackling "toxic masculinity." While the ad received a significant amount of praise, the company also faced a firestorm of criticism on social media because it charged more for some women's personal care products (razors, razor blades and shaving gel) than it did for comparable men's products.
It's unlikely that Gillette's marketing team ever considered that its anti-sexism ad would provoke criticism based on the brand's product pricing.
The Gillette example illustrates why marketers need to look for areas of potential vulnerability in all of their company's operations before they begin a purpose marketing program.
Having a company or brand purpose and engaging in purpose marketing are distinct decisions that present different considerations. Having a purpose that embodies the company's values and describes how it contributes to society can provide important benefits for any company outside of marketing. For example, an authentic purpose can be the foundation for a powerful corporate culture that invigorates both leaders and employees.
Therefore, formulating a company or brand purpose should not be treated as a "marketing" exercise. This task should be led by the CEO and should involve the company's entire senior leadership team. On the other hand, deciding whether, when and how to incorporate a company's purpose in its marketing communications involves most of the normal marketing considerations, and it's entirely appropriate for marketers to lead that decision-making process.
Lastly, it's important to remember that purpose marketing can be implemented in a variety of ways. Most of the high-profile instances of purpose marketing have involved advertising. Examples would include the Gillette ad discussed earlier, Nike's Colin Kaepernick ads, and Dove's "Campaign for Real Beauty."
But purpose marketing isn't limited to advertising. For example, public relations programs can be an effective way to communicate your brand purpose in a less "out front" way that can be more credible.