Real Roots

Posted on | March 1, 2009 |

Perhaps the most successful and widely known humanitarian efforts of our time are those of actor and philanthropist Paul Newman with his company, Newman’s Own. The company most popular for selling a line of salad dressings achieved business success while managing to give 100% of profits after taxes to charity. In 26 years Newman’s Own has raised over $250 million for many educational and charitable purposes. This figure exemplifies that corporate philanthropy is not only good for humanity, but if done right can also pave the way for success in business.

In recent years, many companies have picked up on the benefits that come with cause-related marketing. According to IEG Sponsorship Report, U.S. sponsorship spending on cause marketing will hit $1.57 billion in 2009, a number that has practically doubled since 2002. Be it a bi-product of the green movement or a reaction to consumer interest, companies are willing to spend to be associated with a cause. However, companies that build their business model around being socially responsible have an advantage over those that are simply using cause relations as a marketing tactic for financial gain.

NAU
NAU is a young apparel company that sits at the crossroads of fashionable outdoor clothing and eco-conscious living. Through their Partners for Change program, NAU gives an industryleading 2 percent of profits to a network of select partners including Kiva, The Breakthrough Institute, Ashoka, EcoTrust and Mercy Core. Ian Yolles, head of Marketing at NAU, speaks about their cause business model, “[The Partners for Change Program] is the foundation of our marketing budget. If you think about a consumer products company, it’s not unusual to spend 10 or 11 percent of revenue on demand creation. Our view was that a donation of revenue is a much more authentic, credible and efficient marketing stance than more traditional marketing choices.”

In their short existence, NAU has built up a very high level of customer loyalty, a direct result of the personal connections their socially responsible practices facilitate. This result is not something that just any company could achieve by simply running a cause marketing campaign. The authenticity of a brand plays a major role in how intentions are perceived by consumers. The intentions of a brand like NAU come off as authentic because social responsibility is second nature to them. They didn’t build marketing slogans and green philosophies around elements of their business; they built their entire business around a model of social responsibility.

TOMS SHOES
TOMS shoes is another example of a thriving brand that has built a business on a philosophy of social responsibility. Their one-for-one model is simple: for every pair of shoes purchased from TOMS, one pair is donated to a child in need. Since their inception, they have donated over 80,000 pairs of shoes and expect to donate a whopping 300,000 pairs through 2009. Without spending a dime on advertising, they have exhibited just how successful genuine companies can be with their cause-related strategies.

GOOD MAGAZINE
GOOD, the magazine for “people who give a damn,” immediately sets the tone with their “Pay What You Want” subscription model. Customers are given the option to spend anywhere from $1 to $1,000 on a subscription, 100% of which goes to a non-profit that subscribers choose from a list. This subscription model organically raises awareness of GOOD’s cause-inspired ethics and
practices.

Each of these companies has created a bond with their audience. Their philosophies and the ways in which they do business genuinely speak to their customer base. It’s no longer enough to have a good product; it’s also about the lifestyle and the meaning that comes with it. And when lifestyle and product are in sync, companies are able to achieve a genuine relationship with their audience that leads to word-of-mouth and loyalty, which inevitably leads to a bigger brand and more sales. According to PQ Media, by 2011 marketers will spend $4 billion annually on word-of-mouth marketing. Wouldn’t it be nice to just save the budget and build organic word-of-mouth into your business model from the get-go?

While there is benefit in any type of company engaging in cause-related initiatives, in the long run it is more advantageous to both business and consumer to be committed to the purpose and make social responsibility a theme throughout all aspects of the business. Socially responsible companies form strong bonds with like-minded consumers, which leads to long-term loyalty and organic buzz. While other companies invest heavily in contrived messaging to win over their consumer base, socially responsible companies are able to achieve the same, if not better, results by simply committing to the standards they set. Yes, it does pay to “give a damn.” Maybe we should all take a cue from the Paul Newman book on that one. RIP, Paul.

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