2013-04-23

Co.Exist

Social Enterprises Must Move Beyond Purpose

Now that every marketing campaign involves a slice of giving back, what can businesses for good do to set themselves apart?

Once upon a time, it was easy for a social enterprise to stand out and get noticed. Early entrants to the space were rewarded handsomely with attention and accolades because of their higher calling and charitable business models. But if you’re a social business trying to differentiate in today’s marketplace, purpose is no longer a golden ticket. Here’s why:

Purpose is pervasive

While “green” was one of the hottest buzzwords of the last decade, it is quickly being surpassed by “good." Purpose and social responsibility are bordering on ubiquity in marketing campaigns and mission statements. It’s getting really crowded in the “stand for something” line.

Purpose can be perplexing

Consumers want to vote with their wallets, and they honestly desire to support purposeful organizations, but the fact remains there are many false, inaccurate and misleading claims out there. Amidst the green washing and window dressing, today’s consumer is understandably dazed and confused and isn’t likely to take your declaration of purpose at face value.

Purpose does not equal purchase

The reality is that you can’t compete on doing good if you’re not doing good for the customer first. Edelman’s goodpurpose study shows that when quality and price are equal, social purpose ranks as the most important trigger for selecting a brand. To be clear, the study states that if you’re able to successfully compete on price and quality, then you can try your hand at competing on purpose.

So if you can’t stand out by purpose alone, what’s a social enterprise to do?

Share your passion

Everyone might have a purpose. But not everyone has passion. That’s what sets social enterprises apart, at least from other corporate entities. While many organizations view purpose as a cause marketing initiative, or a creative way to build brand equity, social enterprises are wired differently. They exist first to address a societal need. Social enterprises spend so much energy communicating their purpose, they sometimes miss out on the opportunity to share their passion.

From how you design and deliver your products and services to how you answer your phone, you must wear your passion on your sleeve.

Also consider how your passion relates to consumers. Based on our recent survey on socially responsible spending, individuals view themselves as the most likely catalysts of positive change. In this growing community of conscious consumers, you have to remember that you aren’t the hero. They are. At least that’s how they view it. So when sharing your passion, make sure you also demonstrate how you are aligned with your customers and the role they play in the success of your mission.

Etsy has masterfully cultivated a community of artisans who connect with the company and each other because of shared passion. The company is focused on “restoring community and culture to commerce”. They back that up in every interaction with entrepreneurs and consumers. Applegate is just as effective at bonding with moms and farmers. The company frequently receives “love letters” as proof their passion is resonating.

Show your impact

In a recent discussion in Harvard Business Review, Paul Carttar points out that there is “an astonishing dearth of reliable evidence on the performance of different programs, practices, and approaches for solving social problems,” which leaves funders and investors, and I’d add consumers, “making decisions in the dark.” It’s a pressing challenge for nonprofits, and it’s a pending challenge for social enterprise. As more consumers funnel spending toward do good businesses, it won’t be long before they will expect to see proof that you are actually making a difference in the world. They already are looking for evidence that you are acting in a way that’s consistent with your mission statement. It’s a short leap from asking if you are honest to asking if you are effective.

When communicating impact, think broadly. When rating whether your organization is a positive social force, your societal impact is only part of the equation. Consumers are even more interested in how you treat your employees and the environment, and they are equally interested in your ethics and transparency. Sometimes social enterprises have a myopic view of what makes them a better business, and they talk too much about their societal mission while not talking enough about other aspects of their organization.

Not for Sale, for instance, which fights human trafficking, is an organization that does a tremendous job of relaying it’s success as a positive social force. They consistently highlight, showcase and reiterate why they do what they do, and how they are making an impact. They balance the celebration of accomplishments with an aggressive future vision that builds momentum and optimism among their supporters.

Surprise and delight

As stated earlier, your customers only allow your purpose to be a factor if you meet other criteria, including price, quality and value. You must commit your organization to being excellent, to delivering a differentiated product and creating a unique, refreshing and surprising customer experience. In the end, you actually don’t want customers; you want engaged communities that believe in, and advocate for, your brand. You need a delighted tribe that can’t believe how awesome your product or service is and what a great mission you have. Don’t make consumers choose between a hot product and a cool purpose, or you may find yourself left out in the cold.

Speaking of hot and cold, consider the story of high-design thermostat Nest. It’s no surprise that the mastermind behind the iPod would be driving another product that is simple, fresh and effective. The company is off to a very fast start with its learning thermostat and is quickly building a loyal following because they deliver on their motto of “making things that work for people” while also making a difference.

Spread the love

As an industry, social enterprises must rally together to educate the public. In this, I would include established brands that have made a substantial investment in social good and are thriving because of it (i.e. Patagonia and Method). Many consumers don’t fully understand the ins and outs of social enterprise models and triple bottom lines. They need to know there are companies where purpose is built in, not added on.

Social pioneers such as Whole Foods, Patagonia, and Seventh Generation are great examples of companies who have been diligent in promoting broader understanding and adoption of “good business” among corporations and consumers while generating deeper trust in social impact models.

We are steadily marching toward a tipping point, with 60% of consumers prioritizing conscious shopping and almost 30% increasing the amount of goods and services they buy from socially responsible companies. To build on this momentum, we have to provide consumers with clarity, help them discern which claims are truthful, give them reasons to believe in the model and ultimately close the gap between attitudes and actions.

Social enterprises are poised to fuel a seismic shift in the way that both corporations and nonprofits operate. But to capitalize, social enterprises must take a holistic view of their positioning and communication plans, incorporate passion and impact, and successfully compete on all levels. Purpose is but one part of a social enterprise’s story, and quite frankly its power to sway consumers is diminishing over time. That’s not necessarily a bad thing. After all, aren’t we trying to transform our economy into one that views purpose as a necessity instead of a novelty.

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9 Comments

  • JeffMowatt

    I begin to understand. This comes from the positon of social entrepreneurship where purpose is typically supported in part by foundation funding, It's saying they must build relationships with customers who won't buy just because they're doing good.
    I'm coming from the opposite direction, a self-sustaining business which has established such a relationship, by delivering a product and service in which customers see value in its own right. We make the call for moving beyond profit to purpose. Most of our own customers, GE and BASF are examples, have no idea what we do with our profit, which is invested in a social purpose we determine, rather than via a nonprofit channel.
    This is something our US founder introduced in 1996 and has since become something of a norm  in the UK where we operate and most define social enterprise as business which re-invests profit primarily into the community or back into the business. It is a definition approved by government  That at least is the intention, where many still have at least a partial dependence on grants..       

  • JeffMowatt

    I'll echo what Jim Armstrong says. The article must have been written by someone with little real exposure to the world of social enterprise  

  • JeffMowatt

     I make a distinction between social entrepreneur and social enterprise, a self sustaining rather than foundation funded entity, with a primary goal of social purpose before profit. 

    As pioneers of this approach we've argued consistently for the application of profit for social purpose, such that humanity becomes the new bottom line. We survive as a business by virtue of delivering a commercial service which is valued by costomers. not because we do good. Corporations like GE and Honeywell continue to use our product without having any awareness of our social commitment.

    http://www.p-ced.com/1/node/91   .
     
     

  • Guest

    Hi Jeff, actually was written by a social entrepreneur, and while I won't claim to be a two-decade veteran of the space, I feel very confident in the content. I didn't read Jim's comment to be an indictment on the points of the article. Maybe I need to go back and read again! The entire point of the piece is that social enterprises are competing with all types of companies, many of which claim the same higher calling. It's important for social enterprises not only to be true to themselves but also to communicate that in meaningful ways. You still have to market. You still have to brand. You still have to engage customers, prospects and others. You still have to educate the public on how you are different. And you have to offer a high quality, competitively priced product along the way. I'll politely disagree with the critique, but appreciate you taking the time to comment! 

  • Brian Sowards

    Heath, great conversation piece. As a social startup founder, two points of struggle.

    First, being a social startup is not a brand strategy. It can be leveraged as one, but as someone who fights this misconception, it's discouraging to have it propagated. I created my startup to have a social impact. It's smart to include that in my brand because it is both authentic and useful, but that's not why I decided to do it. It feels trite to reduce the value of being a social startup to a marketing tactic. To me, it is the next evolution of commerce.Second, a social startup is one that has designed a business model that transcends the mission vs profit question. Three cheers for encouraging social innovators to create impact metrics. I'd further suggest their impact metrics and their operating metrics must by synonymous or directly tied. Otherwise, I'd classify them as a socially conscious or social good company -- cool companies that make a difference with a responsible company, but different than a social venture. 

    Since you inspired the post, I'd be curious to hear your thoughts on my attempt to express who we are as a social startup: http://briansowards.com/social...

  • Traci Failla

    Your final point about educating the public on social enterprise is so important. Consumers who are interested in making informed decisions on the products and services they buy will be in a better position to support genuine efforts if they understand how socially-responsible business works.

  • Jim Armstrong

    A real purpose-led business or organization doesn't need to focus on cause-related marketing, or green initiatives or socially-responsible branding programs.  The purpose of the business transcends traditional branding and goes deep into to reveal  why in fact the business exists.  If a social business is addressing societal need that cold be why it exists, than that is a purpose.  Profit is the fuel for achieving purpose.  Peter Drucker said it well way back in 1954:

    "If we want to know what a business is, we have to start with purpose.  And its purpose must lie outside of the business itself.  In fact, it must lie in society since a business enterprise is an organ of society . . . Profit is not the explanation, cause or rationale of business behavior and business decisions, but the test of their validity.'

  • Tracy Lloyd

    I think this is a great article. I agree with everything you have to say. We have authored a paper you may appreciate. Purpose Beyond Profit http://www.emotivebrand.com/th... - Let me know what you think. In the meantime I'll share this with our LInkedin Group Brand Transformation Movement - they will appreciate it.