Consumers around the world are expressing a strong preference for brands with a purpose (that is, beyond selling products and making money). Commitments to environmental sustainability, treating their own employees well, ethical sourcing, and an active charity profile have moved up dramatically in shoppers’ decision calculus, according to a new survey of nearly 30,000 consumers from Accenture Strategy. Nearly two thirds (63%) of respondents prefer to buy goods from companies that stand for a shared purpose that reflects their personal values and beliefs.
Having a purpose is much more than just a nice-to-have bonus, however. Brands that don’t have (or don’t communicate) a higher purpose run a significant risk of customer defection.
“Brands need to be more creative and ambitious than the typical approach to corporate philanthropy, simply listing all the charities they contribute to on the web site,” said Kevin Quiring, Managing Director at Accenture Strategy and a co-author of the report. “Our data says people are going to respond to a brand purpose, and that a good part of that response will be increased retention. A retailer might be in a secure place right now, but as soon as consumers find a competitor that has products they like, offering the right price, quality and customer experience — but with a better purpose than your company — 47% of them will shift. That’s a huge at-risk portion of your revenue if you don’t have a purpose.”
Other key findings from the Global Consumer Pulse Survey, titled From Me To We: The Rise Of The Purpose-led Brand, include:
• 66% of consumers are attracted to brands with a “great culture,” one that does what it says it will do and delivers on its promises;
• 66% prize companies that are transparent about issues such as sourcing and treatment of employees;
• 52% like brands that stand for something bigger than themselves that aligns with the shopper’s personal values;
• 50% prefer brands that stand up for societal and cultural issues they believe in; and
• 38% like brands that connect them to like-minded others and provides a sense of community.
“The real ‘a-ha’ for us was that, just as 10 years ago when we started seeing customer experience grow to become tantamount to price and quality for consumers, we’re suddenly seeing the same kind of growth around brand purpose,” said Quiring in an interview with Retail TouchPoints. He sees this new surge as a logical progression: “For years, customer experience has been a top priority of many brands, not just retailers but wireless companies, CPG manufacturers and banks. Just as price and quality were table stakes, customer experience has become table stakes for brands. And as soon as something becomes de rigeur, customers move on to higher-order expectations and higher-order values.”
Tips For Activating A Brand’s Purpose
Brands that lack a well-defined purpose need to have an inclusive process for discovering one, involving customers, employees and members of the larger ecosystem of stakeholders. Involving more people and groups allows brands to identify shared values and areas where the company can make a difference, according to the report.
Companies also need to establish emotional connections with their customers, and communication is key in this area: 64% of consumers find brands that actively communicate their purpose more attractive. It’s also vital to be sincere: 36% of customers have interacted with a brand that lied about what they stood for, but 42% of this group said they would give the company a second chance if the brand apologized.
Additionally, brands need to make sure that everyone in the organization is both walking the walk and talking the talk. The survey found that 65% of consumers are influenced to buy a brand, product or service by the words, actions, values and beliefs of a company’s employees — not just the CEO or marketing spokesperson.
Multiple Factors Influence The Importance Of Purpose
While almost any brand can benefit from establishing an authentic purpose, it’s more urgent for some companies than others. The study identified five factors influencing the importance of a brand purpose:
- Geography: In more mature markets, companies are likely to expand from individual experiences to collective values and shared experiences, while those operating in growth or frontier markets are more likely to align on traditional competitive differentiators rather than social, cultural or political issues.
- Product Categories: Purpose is less important for brands producing basic commodities like laundry detergent, than for brands offering an experience and engaging consumers directly in an ecosystem of activity and connections.
- Brand Maturity: New, smaller brands often use their purpose as a competitive strategy against larger rivals, but big brands can still compete using their built-in advantage: 29% of consumers prefer large brands, compared to 23% that prefer small, local or independent brands. Large brands that get their purpose right can further their lead.
- Demographics: Approximately 60% of Gen Z and Millennials believe it’s important for companies to stand a stand on issues such as human rights, race relations or LGBT equality, but barely more than 50% of Gen Xers and Boomers feel the same.
- Ecosystem Readiness: Companies will find it easier to activate a relevant purpose on a group scale when they engage a brand ecosystem. However, only 40% of executives feel they have what it takes to build an effective ecosystem, which could put these brands at a disadvantage.