H&M recently announced they are asking their customers to decide where the company should spend their charitable donations (around $80 million annually) through crowdsourcing. This falls on the heels of other "customers choose" initiatives over the past couple of years, like Pepsi Refresh and Target Gives. Great idea, you say? Think again.
What if we told you that choice in charitable and cause marketing initiatives aren’t a good thing, but rather a signal that companies aren’t serious about social impact? And worse, that it demotivates consumers, leads to regret, and lowers perceived value?
With increasing attention being focused on cause marketing and charitable initiatives, companies often turn to choice as a means of engagement. They do so in the belief that offering choice will increase consumers’ perception of being able to help a cause they’re passionate about, which in turn will increase their participation. And since 92% of global consumers say they would purchase products from companies with a social or environmental benefit (according to a recent Cone Communications Echo Research survey), companies believe that offering choice makes them more appealing to a wider audience of consumers who care about social issues.
This positive view of choice also leads companies to believe that when customers help choose where their philanthropic dollars go, it will help to increase their brand image and consumer loyalty.
Here are four reasons why this may be wishful thinking.
It may seem counter intuitive, but when a company offers a wide variety of "charitable choice" it signals to customers that they have a low commitment to making a real social impact. Research suggests consumers prefer companies that have made a long-term commitment to a focused issue. According to the Cone survey, only 39% of consumers support companies that offer cause marketing with choice of cause compared to 61% of consumers who support companies that make a long-term commitment to a focused issue over time.
Consumers rightly perceive that companies who make a long-term commitment to a single cause are the only ones that can have a real impact. Combine this reality with the limited resources companies generally have to support charitable activity and it makes it difficult to argue why money should be spread thin.
Having too many options actually leads people to stall and avoid choosing. Think of your own experience when ordering from a restaurant with a large menu. How often have you found it exasperating trying to decide? This is because individuals find it difficult to process large amounts of extraneous information. Studies have shown that consumers are more likely to buy when faced with a smaller range of choices than when faced with a large range of choices.
And yet companies are increasingly offering a wider range of choices for their charitable initiatives. For example, Working Assets, a San-Francisco-based telecommunications service provider, offers consumers the ability to choose from a selection of 40 causes that can receive support. Cause marketing campaigns only have a few seconds to engage consumers, and offering more choices may make consumers disengage and move on to something else.
Perhaps the most surprising reason is that choice can lead to regret and second-guessing, ruining people's experience of charitable campaigns. While people typically say they prefer choice when making decisions, they do not realize that having no choice in a decision is often more satisfying than having choice. A Harvard study (PDF) found that even though photography students believed that an opportunity to change their minds about which prints to keep would not influence their liking of the prints, students that had a choice on which prints to keep liked their prints less than students that had no choice.
The students with choice tended to second guess themselves and regret the choices they made, leaving them less satisfied. Offering choice can also force consumers to second guess their decisions, causing regret, and lower satisfaction. For example, buyers of a watch made by Mirza Minds called 1face are asked to choose between helping starving children or providing treatment for AIDS. Which is more worthy? And does the consumer want to make such a choice? Or does it lower their participation rate in the campaign creating the opposite effect?
Cause marketers should also be aware of the fact that the success of charitable marketing campaigns is greatly influenced by the perceived fit between the company and the cause. Research shows that products with a donation to a high-fit charity are perceived as having a higher value than the same product with the same amount of donation to a low-fit charity. High company-cause fit becomes more difficult to achieve the more cause choices that are offered, leading to low cause-company fit. Therefore, consumers may perceive (consciously or not) cause marketing campaigns with choice as a lower value proposition and as a result be less likely to contribute.
Companies and consumers want to find meaningful mutually beneficial ways to create social impact. But doing so can only happen if companies resist the temptation to crowd source and crowdfund the decision and instead, establish the type of social impact they want to create in the world. It is our belief consumers will reward such an approach, creating a win-win for all.