New P — Purpose-driven companies

5 min readNov 27, 2020

Tesla exists to “accelerate the world’s transition to sustainable energy”, Starbucks to “inspire the human spirit”, Dove to “help the next generation of women realize their potential” and Microsoft to “empower people to achieve more”.

Patagonia which is an American clothing company that markets and sells outdoor clothing, changed their product/purpose hybrid mission statement to a clearly purpose-driven one, “Patagonia is in business to save our home planet.”

The Body Shop’s (British cosmetics, skincare and perfume company with net revenue of £2.3 billion) Enrich Not Exploit Commitment includes 14 targets (enrich people, product and planet) for 2020.

The retailer has several lofty objectives: To invest 250,000 hours of their skills and know-how to enrich the biodiversity of the local communities; Develop a pipeline that incorporates innovation to deliver cosmetic ingredients from biodiversity hotspots; To protecting and regenerating 75 million square meters of habitat helping communities in sustainability; Reduce by 10% the energy use of all of their stores.

So, how is being purpose-driven working out for these companies?

Customers

The “Strength of Purpose” study of 8,000 global consumers and 75 companies and brands by New York-based Zeno Group suggests that when a brand has a strong Purpose, consumers were:

4 times more likely to purchase;
6 times more likely to protect that brand in a challenging moment;
4 times more likely to recommend (champion);
4 times more likely to trust

Are Customers willing to pay more to purpose-driven companies?

Nielsen found that 2 in 3 consumers is willing to pay more for products and services from brands that are committed to making a positive social impact.

IBM Research and the National Retail Federation reported that 70% of socially conscious shoppers pay a premium of 35% more for purchasing sustainable goods” (19,000 consumers, 28 countries)

Employees

Is the talent attracted to purpose-driven brands?

Inc reported that millennials, who will be 75% of the workforce by 2025, are seeking purpose-driven employers.

Cone Communications Millennial Employee Study found that 64% of millennials won’t take a job in absence of a strong CSR policy by the potential employer, and 83% would be more loyal to an employer that enables them to contribute to social and environmental issues

Investors

Are the investors reacting positively to purpose-driven causes?

Bank of America Merrill Lynch report predicted a “tsunami” of capital flowing to “good” stocks, fueled by high levels of interest among women, millennials, and wealthy individuals. They say over the next two decades, $20 trillion in assets will flow into sustainable funds and strategies, nearly equaling the market value of the S&P 500 today (some $24.7 trillion).

DeVere Group, a survey of Millennial investors found that some 77% of them say that environmental, social and governance concerns are their top priority when considering investment opportunities.

The Cancel Culture

According to a study by Edelman, 64% of consumers around the world will buy or boycott a brand solely because of its position on a social or political issue.

This so-called cancel culture was instrumental in making the #MeToo campaign reach mainstream media, making sure that #BlackLivesMatter has been used on Twitter and Instagram since 2014 and rallying millions of people globally to protest climate change.

Cancel culture can be legitimate criticism from groups, who until recently lacked the means to express their opinions or it can very well be a movement to intentionally bring down the brands to cancel the competition.

In March 2020, an advertisement by KFC in the UK featuring its catchphrase “it’s finger-licking good”, showed people licking their own fingers as well as those of their buddies after eating chicken.

Social media condemned KFC for promoting behavior that could result in the spread of COVID-19. KFC realized that its advertisement was against health norms and decided to temporarily suspend its popular slogan.

The Takeaway — How to build a purpose-driven brand?

So, in conclusion, being purpose-driven is important for brands and all the internal, as well as external stakeholders such as customers, employees and investors, are reacting strongly to this.

In the cultural movement of recent times, being neutral is not appreciated and the cancel culture can severely affect your brand if your strategy is not aligned with the opinions of the consumers.

So, to become a purpose-driven company here’s what you should do:

Before you can build a purpose-driven brand, figure out what that purpose is
Make sure that the purpose is integral to everything that the brand does, it drives the brand’s business and shapes the products or services.
Be creative in telling the story — think about how to convey the purpose and engage the targeted audience
Share it consistently with that audience
Take the action — demonstrate the impact that the brand has created via various touchpoints

Is being purpose-driven an imperative for all companies in recent times?

Do customers even care what impact the retailer has on society when they buy the latest fashionable apparel?

Do employees bother about checking the sustainable practices of a firm when they apply for a job?

Are investors interested in “good” stocks?

What is cancel culture and how does it affect the companies that are opinionated?

Are investors interested in “good” stocks?

What is cancel culture and how does it affect the companies that are opinionated?