Tl:dr, donations aren’t only great for society and the environment, they’re great for your business, too!
As a modern day business owner, you may find yourself battling over whether your priorities are profit or purpose (or both, if that’s possible?!).
Gone are the days when we could pollute our rivers and oceans, exploit underpaid labour and throw plastic straws around like they’re going out of fashion all in the name of ‘good business’.
Unfortunately for those old-school company managers that chased profit at all costs, corporate responsibility, sustainability and purpose are here to stay; your customers will make sure of it, and even the regulators are starting to stir.
‘How much is this going to cost me?' I hear you say! Well, the good news is, the responsible world we now live in doesn’t necessarily need to affect your bottom line…
In fact, wait for it…
…it may even be good for profit! Here’s why...
A broader look at the benefits of adding purpose to your business
Believe it or not, customers care about your business’ impact on society and the environment. Here’s a few stats from Harvard Business School to back this up:
First, let’s look at what your customers and investors think…
- 78% of consumers are motivated to purchase from companies committed to making the world a better place.
- For those looking for investment, you guessed it, 73% of investors state that efforts to improve society and the environment contribute to their investment decisions.
- In the big old profit vs purpose debate, 70% believe it is important for companies to make the world a better place, compared to (whether you like it or not) just 37% that believe it’s important for a company to make money for shareholders.
Now let’s look at what your employees think…
- 90% of employees believe companies should lead with purpose and that it’s no longer acceptable (obviously) for companies to make money at the cost of society and the environment at large.
- Also, 90% of employees who work at companies with a strong sense of purpose say they’re more inspired, motivated, and loyal.
Employee donations is a whole other kettle of fish that we’ll cover in another blog.
So, what are the takeaways? Your customers, employees and investors all care about your purpose and the efforts you are taking to be a better corporate citizen; so what are you going to do about it?
Corporate Social Responsibility, or CSR to its mates
I am writing an article at the moment about corporate social responsibility as a whole with ideas on what ‘good’ CSR looks like, and what it definitely doesn’t look like (***COUGH Shell, Exxon, Total, Chevron ***COUGH). Unfortunately, some companies and industries are so far gone that perhaps the most socially responsible thing they can do is, well, cease to exist? (Fingers crossed that isn't you...)
Luckily for you, I’m assuming you’re not the CEO of a fossil fuel empire, so there’s definitely a few things you can do NOW to get started on your journey to be a good corporate citizen, whether it be reducing your carbon footprint, ensuring a fair and equitable supply chain, or by giving back.
For the sake of this article, I’ll focus on giving back and why of all the CSR strategies, donations, if done right, are perhaps a little different…
Are corporate donations in a league of their own when it comes to profit-focused CSR?
CSR activities can be split into two categories:
1. The things you should be doing regardless of whether CSR is good for business or not. This includes things like not being a net polluter, ensuring your supply chains aren’t rife with human rights violations and the big one, being carbon neutral. These are things you shouldn’t really be bragging about. Nobody is going to pat you on the back for no longer exploiting society or the environment for your own gain.
In essence, these things largely fall into the category of ‘sustainability’ i.e. you’re not compromising the needs of future generations, well done you!
2. The things you don’t have to do but do anyway (i.e. the things that set you apart from others). These are activities that go above and beyond what is expected of you, for example, donating money to help tackle pressing social and environmental challenges.
In some ways, these things can be seen as ‘impact’. Impact being anything that is net positive for society and the environment and the best bit is, you can definitely brag about these things.
Now, it’s interesting that Amazon, eBay, PayPal and Stripe have all added donations to the customer experience. Amazon lets you dedicate a portion of your sale via Amazon Smile, PayPal asks you to add a small donation whenever you make a purchase. They all use slightly different models, but the concept is the same.
Now, I have a question. Do you think that Jeff Bezos and the other CEOs of these companies woke up one day and suddenly decided that philanthropy and altruism was the way forward, or do you think they know something that you don’t?
In reality, Amazon and others do few things that would negatively affect their bottom line (rather awkwardly, Amazon Smile has also been blamed for exploiting the marketing power of charities for its own gain).
The conclusion is, yep, you guessed it, donations are good for business (it also helps that they’re good for those in need, too).
Quantifying the benefits of corporate philanthropy
Now, let’s take a look at the numbers. At twio, we recently ran a study backed by the UK's Innovate Fund, Innovate UK. Part of this study looked at assessing the influence that corporate donations have on consumer buying decisions. Here's what we found...
- 60.3% of customers are more likely to shop with you if you donate money. I know what you’re thinking: “Yeh, but they say that, but do they really mean it?” and to that I say “60.3%!!!!!!”. Even if just half of those customers are actually influenced by donations, giving away a few percent to keep a third of your customers coming back is a no-brainer.
- 72.1% of customers want you to donate to a cause that they care about. Now this is an interesting one. It’s a common misconception that businesses have that their customers are unique and are fully aligned with their values. This makes sense if you’re selling scented candles made with beeswax sourced from a bee colony that can only be found in the depths of the Amazon but, if you sell shoes, or drinks, or sports equipment, or dog toys, or jewellery, the chances are, your customer aren’t as aligned with your values as you think they are.
Think about it, how many people own a pair of shoes? Now, does this percentage reflect the market share that charities capture who provide shoes to those in need? It doesn’t.
Sorry to say, but your customers have their own values, interests and giving motivations that don’t necessarily align with your business. These values and interests are formed over a lifetime and are unlikely to be influenced by your business.
- 76.9% of customers are more likely to regularly return to a store that donates to a cause they care about over one that doesn’t. Yes, this is perhaps the same point, but it’s interesting to reiterate it. Donations don’t just help you acquire new customers, they also help you keep them. The e-commerce market is booming, with the global e-commerce market expected to hit $5.4tn (around £4tn) this year! There are also well over a million stores on Shopify alone, and hundreds of thousands more on other platforms like Wix, Squarespace, WooCommerce and Magento.
How are you going to make sure your customers stay loyal? Everyone has great products and great customer service, but not every store provides a personalised donation experience to each customer.
- 47% more customers value donations over other selling perks, like 'buy now pay later' or free returns. Again, on the theme of ‘standing out’, we now live in a world where things like ‘free returns’ and ‘buy now pay later’ perks are expected; they are no longer unique selling propositions.
In the words of Syndrome from The Incredibles, “With everyone super, no one will be”. Partnering with your customers and donating to the causes they care about keeps you super and unique, at least for now (no rush!).
Wrapping this all up...
Historically, donating money has always been seen as just a 'nice thing to do'. It is often an after thought for most businesses, perhaps a nice gesture at Christmas time or because your marketers have decided your business needs a more purposeful presence and so you've decided just to give a bit of money away to scratch the itch.
But donating is much more powerful than that, both for you business, and as a tool to actually solve pressing problems (I will be discussing this is a future post). Here's a few takeaways...
- It's 2022 - if you don't start thinking about ways to give back, your customers will force you to by not buying your products.
- Put some time into designing your giving strategy. Like most things in life, you get what you give. If donations are just a side thought, the results will be awkwardly underwhelming.
- Your customers don't care about your own personal values as a business owner - just because you want to plant trees, doesn't mean your customers do. If they don't care about your purpose, they will go somewhere else (of the 1000 people we surveyed recently, 2 mentioned tree planting as a priority).
- Asking your customers to give away THEIR cash, instead of your own, is not a cheat code.
- Personalisation is king - the donation experience you offer your customers should incorporate personalisation, no excuses.
I'm sure you're now thinking "Well sure, this makes lot's of sense, but how do I actually implement this?". Well, you're in the right place...
You can either:
1) Have a browse of our website and check out our explainer video or FAQs (if you need a little more convincing)
2) Jump on a call with twio's Founders here.
Online commerce is booming - how are you going to stand out?