By Steph Silver, President and Director of Brand Experience at Vine Collective
When you think of a purpose driven business, do you think of a non-profit? Do you envision someone who works tirelessly, yet is drastically underpaid, leading a team of well meaning kids just out of college and relying on volunteers for the crunch times and main fundraising initiatives? There are plenty of those out there but did you also know that some of the most profitable businesses are driven by purpose?
- Kendra Scott has donated over $50 million dollars to causes supporting women and youth.
- Whole Foods created Community Giving Days where 5% of that day’s net sales are given to local non-profits and their purpose driven culture is one of the founding business concepts for conscious capitalism.
- Zappos innovated ways to “deliver happiness”—their mission—through untraditional benefits like surprising 80% of customers with free overnight shipping and has an entire division dedicated to spreading happiness and celebrating the good in everyone.
- IDEO created IDEO.org to solve poverty related challenges by offering their talented designers to communities who need them the most.
Find out more about these and other programs at Forbes.com.
It’s clear that there are a growing number of businesses that publicly show their willingness and ability to give back, but why? Why would they put so much time, effort, man power, and money into a purpose that may or may not be clearly connected to their actual product or service offering? Here are a few reasons.
1. Employee Recruiting and Retention
Most people who work in developed nations have moved up Maslow’s hierarchy of needs and are not simply looking for a paycheck to survive. In fact, according to this article in the Harvard Business Review nine out of 10 people are willing to earn less money in order to do more meaningful work. These people also tend to work harder and stay loyal to their employer when they believe their values and purpose are aligned.
2. Customer Loyalty and Engagement
According to research and years of sales and coaching experience inside fortune 500 companies, Lisa Earle McCloud has found that “When the majority of employees believe the primary purpose of the organization is to make money, the organization is destined for mediocrity. Organizations driven by a purpose bigger than money outperform their competition in terms of customer loyalty and employee engagement, which ultimately lead to greater long-term revenue.”
Mrs. McCloud isn’t the only one. In 2015, according to another article at Forbes.com a study sponsored by the EY Beacon Institute and conducted by the Harvard Business Review Analytic Services (HBRAS) globally surveyed 474 executives of various sectors on what makes purpose effective for their companies. Eighty-nine percent of executives stated collective purpose motivates employee satisfaction, while 84 percent linked purpose with transformation and 80 percent revealed that it boosts customer loyalty.
According to Jenny Magic, author of Change Fatigue, “Innovations launch on passion, enthusiasm, good planning, and a vision for the future; innovations are sustained by a collaborative community bound by a compelling purpose.”
When an agreed upon, overarching, and compelling purpose is at the core of organizational operations, product innovation is inspiring and geared toward customer success, not just company profit. The result of this is brilliant innovation that leads to company alignment and customer loyalty.
4. More Effective Marketing, Branding, and Sales
According to Vine Collective, marketing isn’t merely a series of advertisements; it’s an ongoing dialogue – a relationship between customers, vendors, employees, and partners.
Organizations that are focused internally tend to push media and marketing campaigns that are focused on product features and new releases. With this approach there is little to no chance of viral reach or tribal connection. When marketing is more than combinations of images and words to push a product, it can be a multi-sensory engagement that promotes participation, transformation and evolution – all of which can be linked by brand purpose and tied into every thread of the business. Once past a certain financial threshold, many people are as motivated by a shared purpose and the sense of contributing to something meaningful as they are by financial returns or status. This means that a clearly defined shared purpose could be the hinge that determines the buying decision and empowers your customer not only to purchase, but to proudly promote for you.
So what are the results of a clearly defined purpose driven organization?
- Passionate and dedicated employees
- Loyal and engaged customers willing to pay higher prices
- Better innovation
- Effective sales and marketing
When all of these elements come together, the result is higher profits.
A compelling company purpose is more than just your personal “why”. It’s the glue that brings your company together.