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By now, the data that supports the thesis that ‘Purpose’ (the catch-all term for ‘business as a force for good’) is good for business is overwhelmingly clear. As a helpful guide, I’ve listed all the most salient and current data points in this article, and I’ve also collated the various studies, surveys, and reports in one online folder.
Please feel free to send me any new insights to include at [email protected] and also feel free to share this article.
I’ve broken down the data into the three main areas where purpose is manifesting itself in business: consumers, employees, and investors.
CONSUMERS
By pretty much every measure of brand health, consumers are more likely to try, stay loyal, pay more and advocate for brands that genuinely do good.
Trial
The Cone/Porter Novelli survey found that 66% would switch from a product they typically buy, to a new product from a Purpose-driven company. This figure goes up to 91% when Millennials (born 1980–1994) are polled.
And this isn’t limited to the developed world: According to the Edelman Earned Brand study, 50% of consumers across 14 major markets, including the U.S., China, India, Mexico, UK, The Netherlands, Germany, Brazil, Japan and more, are belief-driven buyers, and they skew younger, with higher percentages among millennials (60%) and Gen Z (53%).
When it comes to Gen-Z (born 1995–2015), the next wave of consumers entering the market after Millennials, the trends are even more pronounced. According to Fuse Marketing, after learning a brand supports a social cause or is socially responsible, Gen-Z consumers are 85% more likely to trust a brand, 84% more likely to buy their products, and 82% likely to recommend that brand to their friends and family.
Loyalty
Sustainable Brands and Harris Poll found that ‘80% of people say they are loyal to businesses that help them achieve the Good Life’ (defined by four major components: balance and simplicity, meaningful connections, money and status, and personal achievement.)
The same poll found that 76% believe making a difference in the lives of others is necessary for living the Good Life.
Advocacy
The Cone/Porter Novelli survey found that 78 % of consumers would tell others to buy from a Purpose-driven company and that 68% are more willing to share content with their social networks over that of traditional companies. 73% of consumers are also willing to stand up for a Purpose-driven brand if it is spoken badly of.
Accenture found that more than half (53 percent) of consumers who are disappointed with a brand’s words or actions on a social issue complain about it, with 47 percent walking away in frustration, with 17 percent not coming back.
The Wall Street Journal found that “Almost 60% of Americans said last year that they would “choose, switch, avoid or boycott a brand based on its stand on societal issues,” compared to just 47% in 2017.
The 2018 Edelman Earned Brand study found that ‘nearly two-thirds (64 percent) of consumers around the world will buy or boycott a brand solely because of its position on a social or political issue.’
Price Premium
Nielsen found that 2 in 3 consumers will pay more for products and services from brands that are committed to making a positive social impact.
IBM research developed in partnership with the National Retail Federation (NRF), polled nearly 19,000 consumers from 28 countries, across all demographics and generations, from Gen Z to Baby Boomers (ages 18–73) and found that ‘on average, 70 percent of purpose-driven shoppers pay an added premium of 35 percent more per upfront cost for sustainable purchases, such as recycled or eco-friendly goods.’
Strategic Clarity
The Harvard Business Review found that purpose helps ‘redefine the playing field’ in a way that opened up new territories for growth, and ‘reshape their value proposition’ in a way that broadened their mission, created a holistic value proposition, and delivered lifetime benefits to customers, all strategies that contributed to long-term growth.
Reputation Management
A Fortune survey by New Paradigm Strategy Group found that nearly 72% of the adults surveyed agree that public companies should be mission-driven, as well as focus on their shareholders and customers. In that same poll, 64% of respondents say that a company’s primary purpose should include ‘making the world better’.
The Edelman Trust Barometer reports that ‘80% of consumers agree that a business must play a role in addressing societal issues; they want a company to take actions which increase profits, improve social conditions, and make the world a better place.’
Deloitte’s Retail Trends 2020 report, which outlines the top six retail trends for the coming year, found that an “authentic purpose is now as important as digital to the next generation of customers”.
Accenture Strategy’s ‘From me to we: The rise of the purpose-led brand’, their most recent global survey of nearly 30,000 consumers, found that 62 percent of customers want ‘companies to take a stand on current and broadly relevant issues like sustainability, transparency or fair employment practices.’
Innovation
The Harvard EY Beacon Institute survey found that ‘companies with a strong sense of purpose are able to transform and innovate better’. Executives from companies that treat purpose as a core driver of strategy and decision-making reported ‘greater ability to drive successful innovation and transformational change’.
The survey said that half (53%) of executives at companies with a strong sense of purpose said their organization is successful with innovation and transformation efforts, while less than one-fifth (19%) report success at companies who have not thought about purpose.
Deloitte Insights 2020 Global Marketing Trends Report also found that purpose-driven companies report 30 percent higher levels of innovation.
Diversity and Inclusivity
According to the Harvard Business Review, companies with above-average diversity have 19% higher innovation revenues and 9% points higher EBIT margins.
And also according to Harvard, when Fortune-500 companies were ranked by the number of women directors on their boards, those in the highest quartile in 2009 reported a 42 percent greater return on sales and a 53 percent higher return on equity than the rest.
Growth
The Kantar Purpose 2020 study demonstrates that over a period of 12 years, the brands with high perceived positive impact have a brand value growth of 175%, versus 86% for medium positive impact and 70% for low positive impact.
In Part Two of this article, we turn our attention to how purpose helps with employees and investors.
