How Giving Back Can Help Your Company Grow
The holiday season is a critical time of year for businesses of all types. For many retailers, fully half of all sales occur over the last two months of the year, as consumers purchase gifts for loved ones or spend their holiday bonuses. But the holidays are also a critical time of year for another group: nonprofits. Americans’ giving habits are weighted heavily toward the end of the year – in 2014, 31% of all donations were received in December and an astonishing 12% were received in just the last three days of the year (an average of over $14B on each of those three days!). The reason for this could be driven by spirituality, tradition, or even tax implications, but regardless of motivation, it is clear that many Americans are thinking about charity this month. Growing up, the holidays were a time when my parents would insist that we spend a day working at a soup kitchen together, or delivering food to the homeless through organizations like Meals on Wheels. Judging from crowds at similar charities today, my family is not the only one where this is an annual rite of passage.
Charity and the spirit of giving, however, does not need to be limited to individuals. In fact, for many companies, giving to charity is a key component of their marketing message. TOMS Shoes is a classic example. For every pair of shoes TOMS sells, they donate a pair to a child in need. TOMS takes this so seriously that their slogan has nothing to do with the comfort, price, or stylishness of their products and is instead a simple reminder that their sales help others: One for OneTM. This approach has helped make TOMS an improbable success story, building from nothing to a $625M company, in a low-growth industry, in just a few years.
Why Millennials like TOMS, Starbucks, Warby Parker, and BookBugs
TOMS isn’t the only one using this approach to build a strong brand. Ben and Jerry’s has been a leader on many social issues for years and used that reputation to build an extremely loyal following. Starbucks is well-known for its influential stance on issues like fair trade coffee. Newer companies like Warby Parker and startups like BookBugs (a company I helped found) have largely copied TOMS’ model and guarantee that each purchase leads to benefits for those who are less fortunate.
As the holiday season picks up, these sorts of messages resonate very loudly with customers, and especially with millennial shoppers. Of all the labels millennials have received, the label of “charitably-minded” has been perhaps the stickiest. According to studies, 4 in 5 millennials are more likely to buy from companies that support a cause they believe in, and 3 in 4 think more highly of such a company. This attitude has contributed to record-breaking charitable giving in recent years and the rise of the B Corp movement, which focuses on companies that give back to society. As Millennials like me progress in their careers, companies that embrace these values are positioned to maximize on the generation’s increased spending power.
How Your Company Can Demonstrate Social-Mindedness
Start by thinking about the core values of your company. A critical component of any social responsibility message is that it needs to make sense within the context of your business’s mission. For instance, climate change may be a really important issue to you, but if you run an accounting firm, it just doesn’t make a lot of sense for you to focus your charitable mission on the environment. Instead, customers might be more impressed if you do pro bono work helping a local nonprofit to simplify their tax return so they can focus on helping the community. A social responsibility message, though, does not necessarily need to involve a direct donation of goods and services – sometimes monetary donations are the best way to help, and can send the best message. A toy store in my neighborhood recently announced that it would be giving a portion of its profits to help fight childhood cancer. This message fits perfectly with their mission to help kids live life to the fullest. Customers at this store can clearly see that the owners care deeply about this mission. If they were giving that money to a different and equally worthy cause, customers might still approve, but it would not do nearly as much to demonstrate the store’s commitment to children.
As a typical millennial who aims to make a difference with my purchases, I would urge all business owners to think deeply about how their company can make a positive impact on the world around them. As a consultant trying to help those businesses maximize profits, I would point out the significant brand-building benefits of such a strategy, and advise them to focus on charitable messages that demonstrate their deeply held dedication to their company’s mission. With the holiday season upon us, there is no better time to embrace this movement. Bill Gates may have said it best: “If we can find approaches that meet the needs of the poor in ways that generate profits for business…we will have found a sustainable way to reduce inequity in the world. This task is open-ended. It can never be finished. But a conscious effort to answer this challenge will change the world.”