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Cause Marketing: Supporting a Cause is Good Business

Posted by | May 24, 2011

What if I told you that you could increase sales, differentiate your brand, foster brand loyalty, generate favorable public opinion and attract and retain good employees with just one approach to marketing? Sound impossible? It’s not…

Cause Marketing or Cause-Related Marketing is Affinity Marketing. The Affinity in this case is consumers’ belief in certain worthy causes and the nonprofits that support them.

Affinity marketing can involve either nonprofits or for-profits cooperating for mutual benefit. To learn more about “Affinity Marketing” you can read my last post on this subject:

What’s the Difference between Affinity Marketing and Niche Marketing by Affinity?

The Foundation Center defines “cause marketing” or “cause-related marketing” as “the public association of a for-profit company with a nonprofit organization, intended to promote the company’s products or services and to raise money for the nonprofit.”

Actually, nonprofits participate in cause marketing relationships for other reasons than just the revenue generated from that relationship. Only a small percentage of the income of nonprofits' involved in cause marketing come from corporate giving, including cause marketing. Nonprofits understand the larger picture. Cause marketing can be of great value in reinforcing and extending their brand. The result can drive giving and volunteerism from other areas.

Why is it a good business strategy to be associated with a good cause? The answer is consumer expectations! There are a number of studies that measure consumer expectations and attitudes regarding corporate social responsibility. Below is summary data from the more prominent of them.

For the last 17 years, the Cone Cause Evolution Study has been monitoring American consumers’ expectations and beliefs regarding private industry’s support for worthy causes. Some of the results of the 2010 study include:

  • 83 % want more products, services and retailers they use to support causes
  • 88% find it acceptable for businesses to engage a cause or issue in their marketing
  • 90% want companies to tell them how they are supporting causes
  • 85% possess a more positive impression of a product or brand when it supports a cause they care about
  • 80% are likely to switch brands to one that supports a cause if similar in price and quality
  • 41% have purchased a product in the last year because it was associated with a cause
  • 61% are willing to try a new brand or one unfamiliar to them that supports a cause
  • 46% would try a generic or private-label brand if it supports a cause
  • 19% would be willing to purchase a more expensive brand if it supports a cause

As can be seen from the above, “cause branding” is a powerful differentiator. Not only will 80% of American consumers switch brands between equally perceived quality and price products, but they will do this even if it means trying new, generic or more expensive brands.

The numbers are even more impressive for “Mothers” and “Millennials” (18 to 24 years of age). More than other demographic segments, they believe in spending their money on brands that support causes.

Businesses target these particular segments for a reason. Moms control about 80% of household shopping expenditures. Millennials of college age are estimated to have about $40 billion in discretionary income.

These two segments are most amenable to cause marketing. Consider these numbers:

  • 95% of “Moms” and 94% of “Millennials” say cause marketing is acceptable compared to 88% average for all groups
  • 61% of “Moms” and 53% of “Millennials” bought cause-related products in the last year compared to 41% average for all groups.
  • 93% of “Moms” and 85% of “Millennials” are likely to switch brands compared to 80% average for all groups.

Buying a cause-related product (81%) continues to be the leading way consumers want to support a company’s efforts, but they also seek other higher-touch opportunities, such as lending their voices through ideas or feedback (75%) and volunteerism (72%).

The Cone Study is reinforced by the Edelman Goofpurpose Global Study. The 2010 study is the fourth annual study by Edelman, the world’s largest independent public relations firm, concerning American consumer attitudes and commitment regarding social issues and their expectations for brands and corporations.

The 2010 Study of American consumers found that:

  • 74% believe brands and consumers could do more to support good causes by working together.
  • 79% find it acceptable for brands to make money while supporting a good cause
  • 72% indicate that they are more likely to give their business to a company that has fair prices and supports good causes than to a company that provides deep discounts but does not contribute to good causes
  • More than half say that they are willing to pay more for a product that donates a portion of its profits to a good cause
  • Social purpose is more important to them than design/innovation or brand loyalty as a reason to purchase when quality and price aren’t significantly different

Impact beyond the Checkout Counter: These and other studies show the impact of a company supporting a cause goes well beyond the act of purchasing a cause-marketed product or brand. It also impacts brand loyalty, attracting and retaining good employees, investment decisions and building good will in the minds of consumers and regulatory agencies.

Take for example

  • 87% of Millennials and 69% of all segments say it influences where they work
  • 79% of Millennials and 59% of all segments say it influences where they invest

Companies that support a social or environment cause and who engage their employees in that cause are more likely to have loyal employees. For example: Employees who are engaged with their company’s cause are more likely to agree with the following:

  • I am proud of my company’s values (79% for those engaged versus 68% for those not involved in the cause
  • I feel a strong sense of loyalty to my company (79% for those engaged versus 61 % for those not involved in the cause
  • My company’s commitment to addressing social/environmental issues is one of the reasons I chose to work there (57% for those engaged versus 39% for those not involved in the cause

Aligning your company and brand with a cause that resonates with the public leads to good will termed the “halo effect”. Surveyed consumers rate such companies more highly than others in trust, endorsement, bonding and innovation. Digital media and social media can spread that “halo” quickly. For example, 53% of Millennials (largest social media user group) say that they would promote a socially responsible brand on social media such as Facebook and Twitter.

Studies by faculty of the Sloan School of Business at MIT show that the fit of the cause with the brand of the organization is not important (for the brands studied). What is key is the importance of the cause with their targeted consumers and how the company supports it.

Authenticity” is important in supporting a cause. Consumers will see through weak support for a cause that the organization really doesn’t care about over the long run. So is “transparency” in both the financial and other ways the company supports the cause.

I could go on and cite other studies and other reasons why supporting a cause is both a good business decision and a good corporate social responsibility decision. It all comes down to this:

Consumers want companies to support causes. In turn, they will support them.

Hopefully you get the point.

Topics: Strategy, Lead Generation

    
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