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Cause Marketing: Giving Back Pays Dividends

Company A is selling a product. Company B is selling a product and donating 25% of your purchase to the Haiti relief fund. Company A is selling some tasty coffee. Company B is selling equally delicious brew that is 100% fair trade organically grown. Which one do you buy assuming all other factors to be identical?

I don’t know about you – but I’d say ‘Company B’ in both of the examples above. Why? Because, beyond making a purchase that satisfies my needs, I’m doing something good for someone else. Even if it’s indirect, we (collectively) feel good about doing good.

Tapping into the “feel good” philosophy

Over the past few years, the idea of ‘Cause Marketing’ has really been on the upswing. And it’s extremely fascinating to me because, amongst a younger consumer demographic who already has very little expendable income, during a recession, we are still willing to pay a bit of a premium and go with ‘Company B’ if we’re supporting a good cause – if we’re supporting the added ‘community’ bottom line.

Lauren Fernandez wrote a great piece about Cause Marketing a few months ago in which she cites the Edelman 2009 Goodpurpose(TM) Consumer Study. The study presents some pretty incredible statistics that paints a clear picture of the buying habits related to cause marketing:

  • 83 percent of people are willing to change consumption habits if it can help make the world a better place to live.
  • More than twice as many people (67 percent) would rather drive a hybrid car than a luxury car (33 percent).
  • Considerably more people (70 percent) would prefer to live in an eco-friendly house than merely a big house (30 percent).
  • 64% would recommend a brand that supports a good cause – up from 52% last year globally.
  • 59% would help a brand promote its products if there was a good cause behind it – up from 53% last year.
  • 44% are aware of brands that actively support good causes through their products and services – up from 33% last year.

“People all over the world are now wearing, driving, eating, and living their social purpose as sustained engagement with good causes becomes a new criterion for social status and good social behavior,” said Mitch Markson, Edelman’s chief creative officer, president of its brand consulting group and founder of goodpurpose. “This gives companies and brands associated with a worthy cause an opportunity to build long-term relationships with consumers that, in turn, allow them to feel valuable within their communities.”

Giving back gives back

It’s clear in today’s economy that there are considerable more profits and earning to be had by those companies who are genuinely giving back and proving that they care about more than JUST their own bottom line.

Note that I used the word ‘genuine’ – this is key. Any and every company can tell you they’re making a donation to the “Human Fund” ala George Costanza. And with the rise of ’cause marketing’ there are going to be plenty of companies who try to burn a hole in your wallet by convincing you they’re doing good, even when it may not be true.

But for those businesses and organizations out there who have a clearly defined ‘social purpose’ (MANY companies are bringing on an in-house sustainability and social-cause crew) – there is a lot of success to be had and money to be made. If you’re business feels good about what they’re doing to ‘make the world a better place’ – that will almost always translate over to the consumer.

In my mind, if you’re a running a company out there who isn’t giving back, you need to jump on the wagon like, yesterday.

  • Where do you see ‘Cause Marketing’ trending in the future?
  • Would you pay more for a product or service if you knew they were supporting a good cause?
  • How can companies use cause marketing to effectively target Gen Y?

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21 Comments

  1. Hey Matt,

    Interesting post! I think 'Cause Marketing' can be a great thing and it is certainly a huge trend. The only thing that saddens/concerns me is the true motivates behind “doing good.”

    It shows when a company/an individual genuinely cares or just wants to make a profit.

    My questions for companies using 'Cause Marketing' are:
    - Why do you care about the charity you are “giving” to?
    - What percentage of the profit is actually going to the charity?
    - Would you support the charity if partnering with them did not benefit you?

    I did a report and video about the 'green movement' two years ago. I am going to have to find that and share it with you.

    Thanks for the wonderful post!
    Katie

  2. Great post and great questions. I see CRM (cause-related marketing) continuing to grow. Where I work, it's not slowing down anytime, and businesses continue to see the impact of what a product showing a little nonprofit love can to do for their business.

    Even though I work in the nonprofit field, I still find myself supporting charities I have no direct connection to. I think it's all about the good will of the individual. The kicker is whether it's actually supporting a reputable cause or just for research/awareness. You never know what the company is actually supporting when it says a percentage is going towards whatever and whatever instead of an actual cause. But yes, I would pay more for a product or service if I knew it was going to a legit nonprofit.

    I work at one of the world's largest nonprofits that has over 200 corporate partners, and on the flip side of this, I can't tell you how much flack we get for having so much CRM out in the market place. If it weren't for CRM, we wouldn't be able to fund the many uninsured health programs we currently fund. If it weren't for CRM, we wouldn't be able to fund many many research programs in order to find a cure for the disease. And if it weren't for CRM, we wouldn't be saving lives.

  3. You need money in order to do good on a large scale (in most cases). So for the people that are questioning whether or not businesses are doing good for the right reasons, I say…at least they're doing good. You can't ridicule them for trying to make a living and pay off their overhead costs at the same time.

    I think if you have a good idea to sell a product that gives back at the same time, then go for it. It's an amazing business model because as you pointed out Matt, people are more willing to support brands that have a benevolent focus. Make money, and help others. Nothing wrong with that.

    David, Scribnia

  4. I don't know if I dislike cause marketing but a lot of it rubs me the wrong way.

    Most of these promotions with proceeds going to a charity have hard caps on them. So not only are you typically paying an inflated price, but the amount they are donating is already set. So if you bought all of those products with a pink label on it for breast cancer, great. But if you simply bought cheaper products and donated the money you saved directly to breast cancer research, they would actually be better off.

    If you're a company, I don't think there is anything wrong with starting a foundation versus a cause marketing campaign.

  5. Matt! You're killing it this week with good advice. This is actually built into a new venture I am developing that is more financially driven than my current blog. 10-25% of all income will go to the charity of the month.

    I feel that this provides a lot of inspiration while also teaching a few things to readers:
    - Giving back is important and should be built in.
    - Raises awareness about different causes.
    - Changes the world just a little bit, and helps others do the same.

    Can't wait to share it in the near future!

  6. Matt you're on a roll this week. I think Cause Marketing is great. Just yesterday I paid $2 extra for some random Odwalla fruit drink because all profits were going to Haiti relief. Like David said, even if we take a cynical approach and say the company is doing it for purely marketing reasons, as long as the money is going to the cause I don't care what their motivations are. I think Lance makes a good point – but just the fact that a product on a store shelf (or an American Idol episode, etc) can make the average person simply THINK about giving back to the community in my opinion is a GREAT thing. It's planting a seed in many brains…and the more people who can afford to give actually get in the HABIT of giving back to the community, the better.

    Cause marketing even works on a local level and can trend this way more in the future: I sit on the board of a cancer research charity called Concern Foundation. We recently tried a new thing that worked for us: We partnered with a local new restaurant-bar who wanted to help fight cancer. They mixed up a new drink, tacked a premium on to the price…and for one month promoted the “cure cancer drink” and the full premium on the drink went to Concern Foundation, where we give 95% of all funds raised to carefully selected cancer researchers around the world. A few hundred dollars was raised via this 1 drink at 1 bar!

    If I may make a shameless plug, this weekend in L.A. is our annual fundraiser block party at Paramount Studios which raises around $1.5 million or so. Anyone in the area who would like to volunteer should give me a shout! I'll be volunteering all day tomorrow and Saturday.

    Great post,
    Marc

  7. First, I'd love to see that report/video so if you find it, please do stop by and share a link here.

    Second – I see exactly what you're saying – it does seem a little backwards, making a profit off of a cause, but…I think you can be profitable AND 'do good'. There are for-profit companies out there who are genuinely committed to giving back. They don't give it all back, they want to add revenue to their bottom line, but there is still a bonafide commitment to serving the greater good.

    Then, of course, there are those who say they're in support of something simply go earn that emotional attachment from buyers in order to turn a bigger profit. There's a fine line between what's ethical and what's not.

  8. Good point Lance – and I agree – some of it does rub me the wrong way. It's very difficult to tell what's legitimate and what's nothing more than a marketing scheme.

    I think for the sake of this discussion, I had in mind those purchases that you're going to make anyway. For example, I'm about to go grab a drink with a friend. I could get something cheap like Bud Light – or I could buy a brew from a local micro-brewery knowing that 50% of the proceeds goes to the local Nashville relief fund. I'm going with the latter even though it's more expensive because I'm satisfying one of my wants, but also feeling good because I'm doing something that 'betters' the world around me. It's a win/win in my mind.

    That, and the latter tastes way better. But then again, to your point, would it be better if I bought the cheap beer and used the extra cash I saved by buying cheap to make a direct donation myself?

  9. Agreed 100%. This is the direction I am trying to go with my business. I want to develop a business model that serves an additional bottom line (working out the kinks of this now). So, even in my field of consulting/design – I think there's something I can offer that goes beyond me simply making a profit. I think there's something every business, big or small, can be doing to serve the community. And if I can continue to make money AND support the greater good, why wouldn't I?

    We can question the validity of the 'do-gooders' – I mean, is Starbucks CRM plan really about helping or about making profits? Of course it's both. And as you said, who are we to question the motives of a company who's giving back? Simply by making that commitment, they're doing more than a lot of companies out there…

  10. I love this idea – I just replied to David above about how I am trying to model something similar myself into the business plan. I REALLY like the 'charity of the month' idea – and think there is really a lot of good that can come from forming those partnerships with outside organizations.

    I'm looking forward to seeing what you come up with – this entire concept is extremely interesting to me.

  11. Promoting the good stuff you're doing is always welcomed here, Marc.

    I spoke at a nonprofit conference today and we really had a great conversation about all of this (it's not a coincidence that this post went up on the same day). There is a LOT of value in doing things on a local-level, even if you're a big business. People take pride in their communities – that was apparent here in Nashville after the city went through an insane flood a couple months ago – my buddy Sam and his company Cool People Care was able to raise over $100,000 by selling “We Are Nashville” t-shirts – in which 100% of the proceeds went to charity.

    This shows the pride and initiate people had in supporting a local cause that focused on bettering their home-town community. You're example is very similar. Great stuff and I think there is a lot of value to those organizations who may be reading through this comments section…

  12. I guess that's my apprehension. I wouldn't rule it out wholesale across the board but I would be leery about using it a ton. I also think it can do more harm than good in some instances. So you want to do something for breast cancer and instead of donating time and money, you buy $25 worth of CPG products that donate a small portion of your sale to the cause.

    I don't know if that happens a ton but if a person thinks they really did a great thing by drinking a beer or buying shampoo and it really doesn't have a ton of impact, couldn't that hurt a non-profit.

    Personally, I would buy the local beer because it is local and it tastes better. I drink the Kool Aid on buying local for the most part (just not for the environmental reasons). But that's a completely different topic.

  13. One thing I'd like to add that Katherine's question made me think of: Very often corporations have strict guidelines as to what types of causes they will support. Why they care about certain charities often come down to whether those charities fall within their guidelines. I've often called corporations to solicit sponsorship support for Concern Foundation events….only to learn from the company that “our guidelines only allow us to support charities that help women” or “we only support family farmers” or “we support education” or “we support causes helping fund diabetes and obesity research”. Sometimes these guidelines are on a corp's website but not always. So for those wondering how charities are selected, falling within the guidelines is step #1. Relationships would probably come next.

  14. I totally get where you're coming from Lance, but all do respect, I think you're looking at it too negatively. Not all CRM programs have caps. Some have minimum donations, and anything beyond the minimum is typically given to the charity still. From a business perspective, you kind of have to have to cap before you can actually determine the program is successful.

    I also have to disagree with your statement about buying cheaper products and just donating money you save to research. Logically, yes, that makes total sense. Why can't we all just proactive and donate directly to the cause of our choice? It's pretty black and white. But CRM is another way for the general public to help a cause. It makes it easier for the consumer to show their support, and it also provides an awarness outlet to areas who would otherwise go without.

    Sorry, I come from the nonprofit world, so this topic is a little close to me. :)

  15. Lots of friends in the non-profit world here in Portland that I'll defer to on most of your points. Most of those non-profits aren't big names and don't get dedicated CRM program money though.

    I don't deny the reality of business capping. But as an informed consumer, I think it is your job to think about what the real impact of your purchase is going to be on the cause. If it fits into your buying pattern, I don't really have a problem with that. But if you're going out of your way, or budget to assuage some sort of need to contribute to the cause, I say step back and think about where your dollar can best impact it.

  16. Hey Matt,

    cause marketing is powerful, because it's emotional. Your articles is really good, and stresses all the important stuff.

    In my local shop, I always buy Fairtrade tea and chocolate, because they have that inspirational story on the back of the product: Natives who get a large share of the revenue.
    Sure, it costs more, but the emotional satisfaction I get from supporting a cause is sooo intense.
    Plus, it makes the chocolate taste so much better.

  17. When you put it that way, its totally understandable and you bring a very valid point. Personally, I don't make an effort to buy something that goes towards a cause, unless it's placed right in front of me. Or if it's something I need and it says the brand supports a legit cause, then I figure, why not. Even if it's a cause that I am directly or indirectly connected to.

    Now how all of this correlates with using CRM for targeting Gen Y, I'm clueless. I have not figured out the Gen Y puzzle, but I know it's definitely necessary from a nonprofit perspective.

  18. Marc – It could be because the charity they have chosen to work with has contractually requested exclusivity with the brand/company. It sounds silly when you type it out as it's a charity situation and no charity should be left behind, but it's something that happens with some charities dealing with big brands and big brands dealing with smaller charities.

  19. Katherine, you bring up very good points here. The issue of ethics definitely crops up whenever Cause Marketing is discussed. I suspect that most companies will not be transparent if asked those questions, so my rule of thumb is: how memorable are they?

    Patagonia is a great example. I am not an outdoors person by any standard, but when i think of a commercial venture that genuinely cares about about specific causes, I think Patagonia. It's easy to fake concern but it's difficult to fake genuineness. Genuine companies will usually be much more memorable than those that are just trying to make a quick buck and that's how you know where to spend your Cause dollars :)

  20. I couldn't agree more… I, along with most I imagine, would totally prefer to shop and make purchases from the company that: (i) goes the “extra mile”, (ii) uses better materials/ingredients, or (iii) donates a percentage of the proceeds to charity. Great read, thanks for taking the time to share with us.

  21. I think generally I would pay more for a product or service if I knew it was supporting a good cause. I think there's definitely exceptions, like if I was strapped for cash or some family emergency situation.

    But I feel most people, given the resources, would pay more to give back a little.