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Brand Purpose

How Purpose Is Driving Financial Performance

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How Purpose Is Driving Financial Performance

Marketers may worry that a social purpose will turn off consumers, or at least divert resources that could have been used to win over buyers directly. But brands on a mission are usually rewarded, not penalized, by their customers. Research on the world’s 50 fastest growing brands, from 2001 to 2011, found a causal relationship between a brand’s orientation to a higher purpose and its financial performance. Brand consultants Millward Brown and former Procter & Gamble marketing officer Jim Stengel developed this list, and they argued that a higher purpose helps brands build deeper ties with customers. They also found that investment in these idealistic companies – the Stengel 50 – over the 2000s would have generated 400 per cent higher returns over the S&P 500.

At Unilever, where I have spent much of my career, the most sustainable brands (brands that endorsed a social mission at their core) grew 46 per cent faster than the rest of the business and delivered 70 per cent of its revenue from 2017 to 2018. Most of this growth happened in emerging nations where achieving sustainable development goals is crucial.

CEO Alan Jope argues that: We are on the front edge of a new model of business where authentic purposefulness leads to better financial outcomes, better profits. Actually there’s no trade off. In fact, the more you do on purpose, the better your business performance will be.

Brands on a mission are a subset of the larger movement towards “shared value” – where companies create measurable business value by identifying and addressing social problems that intersect with their business. First introduced by Michael Porter and Mark Kramer in 2011, it has helped to unleash business to address fundamental global challenges. The idea is to do more than simple philanthropy. Rather than write a check (though writing a check has its value at times), companies can tackle challenges that benefit society and their businesses. A high-tech company, for example, helps provide high school instruction in computer coding, mostly by donating equipment and by encouraging employees to volunteer. Kids in the community benefit from an improved education in twenty-first century skills, while the company is boosting the supply of skilled workers for all companies (including their competitors). They share the value that they (often jointly) create.

The Role Of Shared Values

The concept of shared value focuses on the products and services that companies offer. With Brands on a Mission, I’m extending this approach to the special dynamics of brands. Products and services are important, but in so many cases they aren’t enough – we need marketing expertise and resources too. And not just to design better products, but to use advertising and pro-motions to encourage new habits. Marketers are also good at creating educational programs to drive the messages deeper, in a more concrete, hands- on way than is possible with advertising.

Marketers have a special challenge with shared value. Realizing the benefits of differentiation, some brands broadcast their social purpose before they do much actual good. Their marketers are using social purpose to boost the brand’s reputation, rather than embracing the purpose itself. Making a real difference with social problems is hard enough; to succeed, it has to follow from an authentic, company-wide commitment to the purpose. Otherwise the mission is just window-dressing, or what we call “purpose- washing” – similar to green- washing, where purpose- driven activities serve mainly for publicity purposes. We end up with what Anand Giridhardas describes in Winners Take All: “social purpose that just furthers the charade of elites disrupting the old order without giving much back”.

Purpose-washing brands gain one of the benefits of social purpose, differentiation, but only for a short while. They lose out on positioning for future markets, and they might even make employees feel worse about working for them. And they’ll lose the trust of consumers who find out.

Michael Porter points out that: A lot of consumer goods have ranked low on purpose and social impact. But this is changing with innovative products emerging that take on major societal challenges, such as micro-nutrient fortified foods that improve health outcomes. It is essential that purpose-based positioning and marketing deliver real social benefit. Today’s consumers are looking for true social impact, not mere hype and window dressing.

For a social purpose to be real, brands shouldn’t try to imitate charities. Marketers have to be transparent about their business model, how it both generates profits and addresses a social problem. It’s fine for them to occupy a moral high ground, but they can only sustain it by developing a successful business.

At the same time, marketers need to respect what governments and NGOs have already accomplished in the social sector – and acknowledge all sides of the story of reducing poverty, disease or other social ills. If marketers are going to pioneer new ways of addressing social justice, they do not need to start from scratch. For me, driving a social mission has been about making a difference in society through a brand aligned to the needs and aspirations of society. The core challenge is to bring the two together: a profit-oriented brand, and real suffering in the world. How do we translate our ideals into a sustainable part of our business? How do we develop business models that drive real social impact? Purpose-driven marketing is the art and science of infusing values in promoting a product to address a major social challenge – while still engaging with consumers and staying relevant to the core promise of the brand.

Contributed to Branding Strategy Insider by: Myriam Sidibe with the permission of Routledge. Excerpted and adapted from Brands on a Mission, How to Achieve Social Impact and Business Growth Through Purpose.

The Blake Project can help you define and develop your brand purpose and create a social movement.

Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Growth and Brand Education

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