Making the Case for Purpose
A RoundPeg Resource
The role of business in society is changing. Companies are now expected to be environmentally sustainable, or at least to have some type of corporate social responsibility program in place.
Thankfully, increasing numbers of companies are looking more holistically at how their businesses can be socially responsible. Some are making deep commitments to balance people, planet, and profit by certifying as B Corps and incorporating as Benefit Corporations.
The most dedicated of these social enterprises realize the importance and benefits of putting social impact Purpose at the core of their business.
Perhaps your company is one of these committed innovators. If you are, you’re likely feeling the positive impacts of Purpose. But maybe you need some third-party data to gain support for Purpose within your organization, with your board and investors, or with external partners.
Or if you’re considering beginning a Purpose journey for your business, you’re likely driven by a conviction that it’s the right thing to do. But perhaps you’re wondering whether pursuing Purpose can yield meaningful business results. Or you may even be getting pushback from other others within your organization.
No matter your situation, this resource provides validation for the incredibly practical benefits of social impact Purpose to help the skeptics and measurement geeks in your life understand why putting Purpose first is good for brand and business alike.
What is Social Impact Purpose?
Those capital Ps you see in Purpose aren’t typos.
All businesses have a purpose (lowercase p). For many, though thankfully fewer and fewer, their purpose is to make money above all else. For others, innovation and invention = purpose. And for others still, solving a specific problem is their purpose.
But not all businesses have a social impact Purpose (capital P). Companies with Purpose seek to make meaningful, significant social change that improves lives and communities, whether local or global.
If you want to know more about Purpose, check out our free resource, Purpose: What It Is… And Isn’t. It shows what makes Purpose so, well, purposeful and explains (with examples from good brands you know) what Purpose means for social impact companies.
Get What Purpose Is…And Isn’t now.
The Business Case for Purpose
The bottom line is that Purpose boosts the bottom line. Studies show that companies that have a clearly defined, articulated, integrated and activated Purpose perform better than those that don’t. Purpose creates value in almost every aspect of a business.
- Purpose-driven Companies Perform
- Purpose Matters to Consumers
- Purpose Boosts Brands
- Purpose Engenders Trust
- Purpose Promotes Loyalty
- Purpose Drives Sales
- Purpose Attracts and Engages Employees
Read on to learn how.
Purpose-driven Companies Perform
Thanks to multiple studies that have tracked various aspects of performance as Purposeful businesses have emerged over the past 10+ years, we know that Purpose is a performance enhancer for business.
- “Meaningful” brands have outperformed the stock market by 206% over the ten-year period from 2006 – 2016, with 137% of them increasing key performance indicators.
- Socially responsible brands accounted for 60% of Unilever’s growth in 2016 and grew 50% faster than the rest of the business.
- 75% of executives of Purposeful companies say that the integration of Purpose creates value in the short term, as well as over the long run.
- Over a three-year period when revenue dropped for 42% of non-Purpose-led companies, 85% of Purpose-led companies showed positive growth.
Purpose Matters to Consumers
Consumer expectations are changing. When consumers believe that brands have the power – and an obligation – to make the world better, what your company does and says matters more than ever.
- 88% of consumers believe that companies have the power to influence societal change and 78% of consumers feel that companies should address the issues facing us.
- 80% of consumers say it’s the responsibility of business to lead to solve societal problems such as environmental issues, improved access to health care and education and poverty.
- 87% of millennials believe that business success should be based on more than just profit.
- 80% of consumers buy based on their beliefs.
- 40% of “aspirational consumers” (the powerful middle class) want brands that “have a clear purpose and act in the best interests of society.” But 50% of them can’t name a Purpose-driven brand.
Putting Purpose first is good for brand and business alike.
Purpose Boosts Brands
Consumers want brands that inspire. We choose brands to reflect our values, to symbolize our beliefs and to build connections with others. So when a brand stands for a certain Purpose, the customer choosing it is living that shared Purpose to create their best self. The choice is not necessarily about your product, your price, your sustainability, etc. It’s what your brand means to consumers: their interpretation of – and experience with – your brand narrative.
It’s tough out there for brands, especially when most people wouldn’t care if 74% of brands disappeared yet consumers increasingly demand brand responsibility.
When 90% of consumers now expect companies to do more than make a profit, it’s clear that Purpose strengthens brands.
- 48% of Americans said brands need a strong identity and clear role and 51% of leaders of companies with an embedded Purpose say that Purpose preserves brand value and reputation.
- 59% of companies for whom purpose is of primary value say Purpose enhances the brand.
- 48% of consumers will advocate for your brand, defend it and criticize your competitors for a brand that speaks up vs. stays silent.
Purpose Engenders Trust
In an environment where Americans trust only 22% of brands and 42% find brands and companies less truthful now than two decades ago, it’s no wonder that just 41% trust business leaders to do what is right.
- 68% of people buy products and services from companies they trust, and 59% of consumers would recommend a company they trust to a friend. So businesses should be paying attention to the fact that high-trust companies are 2.5x more likely to be high performing revenue organizations.
- 89% of customers believe a Purpose-driven business will provide higher quality products and services.
- 45% of people say their trust in a business has increased if they believe it contributed to the greater good.
- 53% of companies for whom purpose is of primary value say Purpose promotes trust in the company.
Purpose Promotes Loyalty
Purposeful companies earn the trust of their customers and connect with them through their values. What follows is loyalty and retention that is foolish to ignore.
- 88% of customers will be more loyal to a company that aligns with what they care about.
- 48% of companies for whom purpose is of primary value say Purpose engenders customer loyalty, and 52% of executives at companies that have an embedded Purpose say that Purpose builds greater customer loyalty.
- 72% of global consumers would recommend a company with Purpose.
- While 51% of consumers will be loyal buyers, buying only your brand and buying it more often for a brand that speaks up vs. stays silent, inaction or silence on important social issues can erode loyalty. 65% of belief-driven buyers will not buy a brand when it stays silent on an issue they feel it should address.
- 73% of consumers would switch brands if a different brand of similar quality supported a good cause.
Purpose Drives Sales
Consumers are saying – and showing – that a brand’s Purpose and purposeful actions directly influence their purchase behavior.
- 45% of companies for whom purpose is of primary value say Purpose drives sales.
- 33% choose to buy from brands they believe are doing social or environmental good.
- 57% of consumers buy or boycott brands based on a brand’s position on a social or political issue. In fact, 67% will buy a brand for the first time based just on the company’s position on a controversial topic.
- Meaningfulness in brand marketing can increase share of wallet up to 9x.
- Consumers are willing to spend more (and more than once) on Purposeful brands. 23% of consumers will pay a 25% premium for a brand that supports their position.
Purpose Attracts and Engages Employees
Employees want work that is meaningful, and engaged employees have a real impact on the bottom line. In fact, businesses with “highly engaged” employees outperform their peers by 147% in earnings per share. Being Purpose-driven is a natural fit for attracting the best talent and keeping them engaged and productive longer.
- Employees at Purpose-led companies are 1.4x more engaged, 1.7x more satisfied and 3x more likely to stay.
- “Inspired” employees generate 225% of the productivity of employees who are merely “satisfied.”
- 54% of people say they prefer to work at a company with Purpose.
- 82% of employees at Purposeful companies would recommend their company as an employer.
- 71% of millennials believe that meaningful work is one of the three most essential factors that define a successful career. 88% of millennials feel their job is more fulfilling when they have the opportunity to make a positive impact.
- 76% of millennials consider a company’s social and environmental commitments when deciding where to work. In fact, 51% won’t work for a company if it doesn’t have strong social and environmental commitments and 75% say they would take a pay cut to work for a responsible company.
Making Purpose Work for Your Business
If most executives believe that Purpose is good for business, why aren’t more businesses pursuing a path toward Purpose?
Is it because the path to Purpose is full of hard, reflective work and founders and others in the C-suite are hard pressed to find the time to organize their staff to do this introspective and potentially disruptive work?
Or is it because change is hard for anyone?
We all know that nothing worth doing is easy. But the business benefits of social impact Purpose are clear.
We imagine that you’re reading this because you know your company can do more and be more—to your customers, yourselves and the world community. We encourage you to have conversations within your business about whether Purpose is right for you.
The good news: RoundPeg has the resources you and your company need to navigate your path to Purpose. Get started by taking our 4-minute quiz to test where your company is on the path to Purpose. It’s quick, free, and you’ll get your results right away. Then you’ll know the steps you need to take to unlock the benefits of Purpose in your company!