Today, companies that are investing in CSR, are more and more alarmed by the ROI than ever before. One can notice and feel this whether in the market or with the clients. Many factors are behind this, among them:
- Companies are investing big amounts of money in corporate philanthropy. As a result, shareholders, CEOs, CMOs and CFOs will ask for answers about value and return and for accountability.
- It has become tolerable to expect a financial return from “doing good.” New philanthro-phenomena like social entrepreneurship and micro-lending have made it adequate to mix capitalism and charity. And businesses are more and more aware that social impact can be a great product differentiator and sales booster.
- Businesses are more and more interested in the importance of CSR because consumers are questioning about the value of CSR. Since the late 1990s, a growing class of “socially conscious consumers” emerged and it represents two-thirds of consumers around the world. This class prefer to buy products and services from companies that have CSR programs. And nearly half (of all consumers intend to pay more for products and services from these companies.
But according to the marketing professor, Philip Kotler, in his latest book Marketing 3.0, “consumers are now not only looking for products and services that satisfy their needs but also searching for experiences and business models that touch their spiritual side.” He later clarifies that “supplying meaning is the future value proposition of marketing.”
So what should a business do if it wants to attract these consumers?
Companies should know that any CSR program, campaign or commitment will provide little to no consumer value if they don’t tackle the consumer known and latent behavioral drivers. In order to measure and improve their Social Value Propositions, companies have to do the following:
1) Define the primary business metric you want to move. Start by identifying the consumer behavior you want to influence.
2) Mark the consumers as your primary “stakeholders”. Many studies showed that many of the factors that were most important to traditional CSR shareholders like LEED certification, charity, animal welfare, employee volunteering, were not relevant to consumers. Companies need to analyze what consumers want before defining any CSR policy.
3) Understand the link between social and more traditional value drivers. Researches that have been conducted to analyze the social value drivers along with traditional value drivers showed that businesses that just test social value drivers will likely get twisted results.
4) Measure the performance of current strategies in delivering social value drivers. Businesses should conduct a Social Value Proposition strategy to focus on the benefits consumers want rather than the strategies that companies hope consumers will value. Once social value drivers have been developed, companies should assess the performance of their existing sustainability/CSR/cause-marketing/philanthropy programs to see how good they are at delivering these benefits. This will definitely provide you with a true measure of value by which to define social investments.