When lockdown draws to a close, consumers will reward firms they feel have acted in a socially responsible way at the height of the Covid-19 crisis – that’s according to the latest Purpose Pulse report, from three, leading UK brand and reputation consultancies.
Published on 26 May, the report shows that socially responsible firms could benefit from a ‘purpose premium’, with a majority of respondents (63%) saying they would prefer to buy products or services from companies that have stressed social responsibility during lockdown, and almost four in ten (38%) expressing a willingness to pay such firms extra.
Of the latter group, 43% said they would be happy to pay 5% to 9% extra, while 8% said they would be willing to pay as much as 10% extra, or even more.
Interestingly, less than half of respondents (47%) thought it was either important or very important for firms to donate cash to charities. Instead, they are keener to see responsible business practices such as treating their staff fairly (87%), finding safe ways to provide goods and services (84%), adapting facilities to support the fight against Covid-19 (76%) and allowing staff to work from home for as long as necessary (74%).
Barry Johnston, COO and co-founder of report sponsor Purpose Union, said: “Consumers have increasingly high expectations that companies will deliver on a wider social purpose, beyond a single-minded pursuit of profit at all costs. The economic recovery from the coronavirus is going to be tough. It’s going to be even tougher for brands that have failed this test.”
He added: “Cheque-book philanthropy is no longer good enough. Consumers want to see companies think about their wider impact on society, and how their day-to-day operations are helping or hurting … It’s clear, for example, how businesses have treated their staff during the Covid-19 crisis will be a litmus test for corporate reputation for years to come.”
Phil Riggins, founder of fellow report sponsor the Brand & Reputation Collective, noted: “It’s clear that UK consumers are paying attention to how brands act and will reward or punish them accordingly. They expect businesses to do their share to get the country running again – whether that’s working in new, Covid-19 friendly ways, letting people work from home as long as they like or sharing more of the cost of the furlough.”
And Charline Merieau, co-founder of third sponsor Root Cause, stressed: “Brands that are perceived as acting in a socially responsible way during the Covid-19 crisis are more likely to benefit from customer goodwill in the long run. The results present yet another opportunity for companies to simultaneously drive social and environmental change as well as business performance.”
What should leaders implement within their business strategies to ensure they are in a strong position to harness that goodwill?
The Institute of Leadership & Management’s head of research, policy and standards Kate Cooper says: “The most important thing leaders can do to take advantage of this purpose premium is to act with purpose, and hold true to their values. Decide what those values are and commit to them wholeheartedly, rather than compromise and say, ‘Oh, we can’t afford to align ourselves with those principles.’ Because if you do end up making that sort of compromise, they were never really values at all.”
Cooper explains: “Values are what you prize irrespective of other factors. Treating people well doesn’t have to be expensive. It’s not all about providing financial rewards – it’s about caring for staff, doing the best you can for them and engaging their trust. I have argued right from the start of lockdown that people remember that type of approach.
“At this moment, reputations are being built, and indeed tarnished – and while it may not seem that consumers will make decisions along the lines of, ‘I refuse to purchase goods or services from companies that acted irresponsibly in the spring of 2019,’ memories of how firms behaved at this time will certainly influence their performance in the long term. And stories of poor behaviour don’t go away.”
She points out: “While brands were once directed at consumers in a top-down fashion, they are increasingly defined by what people think they mean. There’s an interesting analogy here with a completely different field: it’s often said that in online learning, there’s no ‘past’, as such, because you can always revisit the topic at hand. The same goes for reputation: all the stories about poor organisational behaviour that have emerged during lockdown will remain available on Google for as long as the search engine exists.”
Cooper notes: “Another good point that Purpose Union makes is the fact that shovelling money in the direction of charities isn’t the sum total of social responsibility. It’s better than doing nothing, I guess – but it doesn’t communicate anything about how the donating firm operates, or what it finds important, outside the very localised orbit of its charity choices. And in cases where those choices are aligned closely with corporate entertaining, they may not be as charitable as they first appear. Living your values is about what you do – from the senior team all the way out to the wider staff base.”
She adds: “For examples of what I mean, look no further than New Zealand company Perpetual Guardian’s successful shift to a four-day week (The Guardian, 19 July 2020), or US telecom firm Nextiva’s move to set up its own charity, thereby boosting job satisfaction and enabling staff to take part in volunteering days (Inc.com, 8 August 2018). They both show how social responsibility can be etched into a business’s DNA.”
For further insights on the themes raised in this blog, check out the Institute’s resources on social responsibility