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Are purposeful brands more likely to be commercially successful?

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3 Monkeys Zeno x PR Moment report.

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Are purposeful brands more likely to be commercially successful?

  1. 1. Introduction This report, written in partnership with 3 Monkeys | Zeno, asks whether purpose-led companies are likely to outperform their competitors. But does having a business purpose even matter? That’s not meant to be a rhetorical question. All businesses have a commercial purpose, but do they also have a wider purpose driven by society’s need? Will Spiers, chief communications officer at GE Healthcare, believes that “a well-defined and understood purpose will help guide a brand’s capital allocation decisions, hiring strategy and approach to new business. It will act as the cultural north star for the brand.” British Land’s marketing director Dave Stevens adds that a purpose is “a value or values that enable clients and consumers to trust and connect with it on an emotional level.” Society’s breakdown in trust of the establishment has accelerated the trend for businesses to attempt to define the connection between their purpose and sustainable profit. In the market economy in which we operate, previous logic has identified profit and shareholder value as the drivers for company performance, but have changes within our society over the last 15 years created a need for businesses to have a deeper purpose to enable them to prosper? Are purposeful brands more likely to be commercially successful? Zeno’s purpose philosophy and unique Human Project™ Methodology pushes a brand to transform random acts of CSR into a more thoughtful, strategic and meaningful approach with mutually shared values at the centre of the equation. It’s less about checking the box than checking the corporate conscience. A purposeful brand reflects a human organisation that is in touch with the people and communities in which it operates, and is able to demonstrate value creation beyond just monetary terms. Essential for credibility with today’s consumers and stakeholders. To realise the full commercial opportunity, brand-led thinking rooted in purpose needs to continue to break out of the ‘marketing box’ and become the unifying glue that keeps organisations honest, authentic and properly connected to people. From suppliers, employees, communities to customers, influencers and everyone in between. The age of veneer purpose branding or siloed CSR thinking is over. To learn more about 3 Monkeys | Zeno’s unique brand approach and Human Project Methodology contact us at rebecca.wagstaffe@3monkeyszeno.com or on 0207 009 3158. Sarah Ogden Director, 3 Monkeys | Zeno 1
  2. 2. 2 Is Purpose a re-incarnation of CSR? To what extent has a purpose-led approach become the CSR of today? Is it the latest reincarnation of greenwashing? GE’s Spiers believes “CSR should tie into corporate strategy and relate to the purpose of the brand. A purposeful brand may have a foundation or philanthropic CSR arm, but that does not define the brand. Purpose is the underpinning of the brand values. CSR is one of a number of corporate levers that a brand can use to reinforce and show its purpose. A brand with purpose may have no CSR at all.” Is this trend towards companies having a deeper purpose providing significant and measurable results, both for society and for the companies themselves? British Land’s Stevens points out that these are by no means mutually exclusive objectives; the objectives of the company’s purpose is “Trust and connection… so if done right there will be benefits for sales, loyalty, recruitment and retention.” 3 Monkeys | Zeno’s Sarah Ogden says “Companies with a defined brand are more likely to be commercially successful because it reflects an organisation that is strategically aligned and connected inside and out.” “Common purpose drives belief and behaviour. These things underpin customer and employee actions and the success of all corporate functions from HR to sales, customer experience and product R&D.” Real ‘purpose’ is not easy There is no denying that the word purpose has become the latest corporate buzzword. That said, if ‘purpose’ is to have impact it must be implemented thoroughly, with thought and with care. Defining a company’s purpose across all of its brands, supply chain, marketing communications, the communities it operates and across its workforce is quite an undertaking. The transparency created by today’s digital and social media-led world means that to be successful, a deeper, integrated and transparent approach to company purpose is not only vital to succeed, without it the whole approach can backfire badly. If a company is able to align its business brand and product propositions with a meaningful purpose it is likely to increase its integrity from the perspective of all of its stakeholders including wider society. There are a number of challenges when it comes to defining and implementing purpose within a business: 1. Defining an appropriate purpose 2. The activation of that purpose 3. Obtaining and retaining the necessary board-level support to maintain that purpose 4. Demonstrating the value and impact of a purpose-led approach Developing a purpose-led approach Every business is unique so it is likely that the purpose of the organisation comes from the DNA of the firm. The most successful purpose-driven businesses have evolved their purpose over the long term, rather than defining a purpose as a result of a repositioning or rebranding process. That said, a successful purpose may begin as an isolated business tactic which, if properly shepherded, can grow into a promise, then a strategy and then may become a business-led movement. As defined by this graphic outlined from Kantar: ARTICULATION MATTER MORE IMPACT MORE INFUSION AMPLIFICATION PURPOSE AS AN ISOLATED TACTIC PURPOSE AS A SOCIETAL BRAND PROMISE PURPOSE AS AN ALIGNED COMPANY WIDE STRATEGY PURPOSE AS A BUSINESS- LED MOVEMENT
  3. 3. 3 Becoming purpose-led is not easy - it’s hard to get to the “purpose as a business-led movement” stage. Very few brands, arguably only the likes of Patagonia, have reached this point. Even the likes of LEGO are probably only at the purpose of a brand-promise stage. Kantar Consulting identifies five criteria that articulate how to develop a purpose-led approach: Meaningful: Purpose must have a strong, relevant meaning if it is to resonate True: Purpose must be true to a brand’s character by moving in territories only where a brand has permission to do so Unique: Purpose must be connected to something that is distinctive about a brand in its category Coherent: Purpose must be aligned not only with the brand, but the whole company Business proof: Purpose must be integrated with business goals Is activation of purpose more difficult than defining a purpose? How many brands have a well activated purpose? According to research undertaken by EY, only 37% of businesses that have defined a purpose believe that it is “well activated.” Most of this 37% have a dedicated “sustainability function that works closely with other functions.” One-third (33%) of firms believe they have a purpose and are currently in the process of trying to activate that purpose, whilst 17% have a purpose which reflects what they are about, but plan no activation specifically. Interestingly only 4% of firms believe they have no purpose. Is purpose creating value? Do CMOs believe that purpose is impacting the brand? According to EY’s research the answer is yes, although admittedly this is the perspective of CMOs not the customers of those businesses. 94% of CMOs believe that having a purpose is having a high impact on the brand value, whilst 17% believe having a social purpose is having “no impact” on the brand value. Shown in the graph below. 1% 2% 2% 1% 1% 1% 1% 1% 1% 1% 3% 20% 20% 8% 6% 7% 6% 7% 3% 2% 4% 2% 33% 9% 4% Total = 100% 17% 37% Level of activation of organizational Purpose 5. We have an organizational Purpose, and it is well-activated. 4. We created an organizational Purpose and are actively working on further activating it. 3. We created an organizational Purpose reflecting who we are and what we’ve always done. 2. We don’t have an organizational Purpose defined. 1. I’m not sure if we have an organizational Purpose. Maturity of the sustainability function Our sustainable company works closely within our entire value chain or business system to create shared value. We have a grassroots effort spearheaded by some passionate individuals. Our sustainability function is a separate function operating as its own silo. Our sustainability function works closely with other functions to drive value in our organization. Our core business is sustainability, and we are in business to drive environmental and social progress. 5 4 3 2 1 Source: EY Purpose led brands survey insights Aug 2017
  4. 4. 4 Do you have sufficient resources to drive value against your company Purpose? No impact Low impact Moderate impact High impact 83% 17% 57% 43% 77% 23% 94% 6% Yes No Perceived impact of environmental and social sustainability performance on brand value Perceived impact of environmental and social sustainability performance on brand value Source: EY Purpose led brands survey insights Aug 2017 Source: EY Purpose led brands survey insights Aug 2017 What are the advantages of having a purpose? There are a number of potential advantages to having a social purpose, as described in the chart below: Provides strategic clarity Demonstrates brand authenticity Builds customer loyalty Challenges innovation Enables collaboration with suppliers and other partners Engages and inspires employees Attracts talent 0% 100% 43% 25% 41% 21% 38% 20% 35% 21% 35% 16% 33% 21% 30% 15% 5 − Great extent 4 − High extent 3 − Moderate extent 2 − Low extent 1 − No extent Small Medium/Large Small Medium/Large Small Medium/Large Small Medium/Large Small Medium/Large Small Medium/Large Small Medium/Large Interestingly, the CMOs of smaller firms are more likely to believe that having a social purpose has a greater impact on their brand than their medium/large firm peers. For example 43% of smaller firms believe having a social purpose “provides a strategic clarity” to their business, compared to 25% of larger firms. The reasons of having a purpose are similar between large/ medium-sized firms and smaller operations, but smaller companies are more likely to believe that it will have a greater impact on their business.
  5. 5. 5 Consumers do not rate purpose as a high motivator to purchase The other side of this debate is whether customers are more likely to purchase from brands with a social purpose, compared to a competitor who is seen to have a less significant social purpose. PRmoment commissioned Opinion Life to ask its consumer panel to rank their priority of influence on purchase. Consumers ranked price, a special offer, the brand’s overall reputation and a new product variety as more important than a brand’s social purpose in their purchase decision. A brands support of a social cause is ranked fourth (out of five). However, having a social purpose to your brand is still very valuable. 8 in 10 consumers are influenced by a brand’s social purpose (8 in 10 at least a little, 2 in 5 some or a lot, and 1 in 10 a lot) and social purpose is ranked above new packaging. There are also some interesting trends across age groups - with younger people more likely to be influenced by social purpose. How much would each of the following influence you to decide to purchase a different brand from the one you normally buy? (A lot, Some, Only a little, Not at all) 48% 99% 98% 97% 94% 80% 54% 88% 84% 73% 61% 43% 23% 41% 26% 11% 10% 4% Source: Opinion Life Omnibus Survey of 1,100 UK adults between May 25th and 28th 2018
  6. 6. 6 Opinion Life also asked consumers which brands they associate with a social purpose. Retailers and ‘fair-trade’ brands dominate unprompted awareness of social purpose brands and over two-thirds (67%) of consumers can name a socially conscious brand. Over half of consumers believe at least one of the brands have a social mission, but there are differences by age and gender. Thinking about brands who support a social cause, which brands come to mind? Prompted responses Which of the following brands do you believe support a social cause? Unprompted Responses Source: Opinion Life Omnibus Survey of 1,100 UK adults between May 25th and 28th 2018
  7. 7. 7 Research from the Ipsos Global Reputation Centre on whether being a responsible brand is an important driver to a purchase is shown below. In total 45% agree with the statement “I don’t care if a brand is ethically or socially responsible, I just want them to make good products.” There are some interesting countries towards the top of this graph such and India, Russia, China and the US, compared to the likes of Japan, Germany, Peru, Argentina and the UK where a more ethical approach is prioritised. Looking forward, the Ipsos Global Reputation Centre research asked whether brands which make a positive contribution to society will be more successful and interestingly consumers from Indonesia, India and China ranked the highest in this question. I don’t care if a brand is ethically or socially responsible, I just want them to make Ipsos Global Trends Survey, 18,180 adults across 23 countries, online, 12 Sep – 11 Oct 2016 good products Total India Russia Turkey China US Poland Brazil S Africa Belgium Canada France Italy Spain Mexico Australia Indonesia Sweden GB Argentina S Korea Peru Germany Japan 45% 63% 54% 54% 53% 53% 52% 50% 49% 47% 44% 44% 44% 43% 42% 41% 41% 41% 41% 40% 40% 37% 35% 28% 47% 34% 32% 43% 41% 39% 39% 44% 48% 45% 47% 46% 47% 48% 54% 51% 54% 52% 50% 50% 55% 58% 57% 47% AGREE DISAGREE Are responsible brands important to me Total Indonesia India China Turkey S Africa S Korea Brazil Peru Argentina Mexico US Canada Australia Germany Italy Russia France Sweden Poland Spain GB Belgium Japan 68% 86% 83% 80% 78% 77% 77% 74% 72% 68% 68% 67% 66% 65% 65% 64% 64% 62% 62% 61% 61% 60% 55% 49% 20% 10% 13% 12% 17% 16% 17% 16% 20% 22% 22% 21% 23% 20% 23% 22% 22% 23% 22% 23% 25% 24% 29% 26% AGREE DISAGREE Future importance of brand purpose In the future, the most successful brands will be those that make the most positive contribution to society beyond just providing good services and products Ipsos Global Trends Survey, 18,180 adults across 23 countries, online, 12 Sep – 11 Oct 2016 Source: Ipos Global Trends Survey, 18,180 adults across 23 countries, online, 12 Sep - 11 Oct 2016
  8. 8. 8 Conclusion Any purchasing decision will have numerous touchpoints for a customer and it seems pretty clear that the modern customer is persuaded to purchase from a brand with a social purpose. That said, there are a number of other elements which are likely to be more or less impactful - such as the price of the product, the reliability of the product and the wider reputation of the brand in the customer’s mind. As GE’s Will Spiers says “Purpose helps build goodwill and mutual understanding with customers. Products and services still have to deliver quality and value for money, but will likely outperform competitors without clear purpose with all other elements being equal. I don’t have evidence, but I definitely believe a clear and positive purpose will attract like-minded external talent. It is also likely to retain talent, assuming competitors don’t share similar purpose.” In terms of which department within a business should lead a social purpose proposition, British Land’s Dave Stevens simply says, “It needs to be led from the CEO.” 3 Monkeys | Zeno Sarah Ogden sums up the future need for firms to define and live their social purpose: “Cultivating purposeful brand-led thinking across the entire c-suite will keep corporations living, growing and audiences believing, as they continue to unlock new value through better products and services that anchor the business as relevant and connected to what people want. A brand with purpose can outlive the founders that created it. Purposeful brands build belief. This in turn leads to sustainable commercial success. Because, quite bluntly if we don’t believe the product, we won’t buy it. And if we don’t believe the business we won’t want a relationship with it.” Report written by Ben Smith, Founder, PRmoment To learn more about 3 Monkeys | Zeno’s unique brand approach and Human Project Methodology contact us at rebecca.wagstaffe@3monkeyszeno.com or on 0207 009 3158.
  • NicoleIoannidi

    Jan. 22, 2019

3 Monkeys Zeno x PR Moment report.

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