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?
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.
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.
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.
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.