"Mixing commerce and politics can be dicey. The Skittles brand got dragged into the current election debate in a way it didn't want, and the company posted a smart and strong response that left it the winner.
But often CEOs are the ones who willingly put their companies into the political spotlight. Crisis communications may become necessary, at the very least. At worst, it could mean waving goodbye to customers.
Trump drives off some customers
Donald Trump the politician and his polarizing effect in the country may be having an impact on Donald Trump the businessman. Some customers have begun to avoid Trump properties and businesses, as the New York Times reported. Location tracking company Foursquare estimated that customer traffic to Trump properties was down 16.5 percent in September compared to the previous year. And real estate sales of his properties were down 13.8 percent and median sales price off by 4.2 percent according to a Realtor.com analysis.
Trump's companies are privately held, so any estimates are without access to actual financial statements. Furthermore, assuming direct cause and effect would have to account for macroeconomic factors and compare the performance differences to competing real estate and hospitality businesses. The Trump Organization told the Times that the company "remains incredibly strong, and we are seeing tremendous success across business units." Though the statement doesn't address performance over time or whether business is off compared to the previous year.
What is clear is a good argument that when CEOs or entrepreneurs decide to involve themselves in politics, particularly controversial positions or actions, they run the risk of pushing customers away. This can even happen unintentionally.
Silence is golden
When the Land's End catalog featured an interview with women's rights activist Gloria Steinem, the company clearly hadn't expected a backlash. But it received one, according to the Washington Post. Some vocal customers complained because of Steinem's support for abortion rights. Land's End tried to back away with an apology, distancing itself from the interview, and then another set of customers complained about the apparent lack of support for gender equality.
The Land's End situation, or the boycott calls that faced Chick-Fil-A from gay marriage supporters over the CEO's opposition, show that political backlash is complex and depends on a number of factors:
- How closely associated the stand is. The connection between the company and the stance must be clear. Any statement or action must come directly from the company or through a figurehead, like the founder or CEO. This can get tricky. PayPal co-founder Peter Thiel's donation to the Trump campaign has resulted in calls for boycotts of companies or organizations with which he's associated. So, even if your organization wouldn't agree, the beliefs or contributions of a major investor can become problematic.
- How public the stand is. No one had connected Chick-Fil-A until its CEO was quoted about the "biblical definition of marriage" in an interview. The position has to become public knowledge. That doesn't necessarily mean in a splashy way. For Chick-Fil-A, the news came out through the Baptist Press. In an internet world, obscure information has an easier way of coming to light.
- Demographics and segments count. As Land's End learned, what is anathema for one group may be praiseworthy to another. The potential trouble depends on who your customers are. For example, if Vietnam veterans are a significant audience, tying your brand to Jane Fonda, and the historical impact over her position on the war had, probably means you're in for trouble.
- You can also have problems with investors. Aside from customers, a company may find that the people who have money invested in it can become displeased. A few years ago, Starbucks CEO Howard Schultz faced shareholders unhappy because of the company's support for marriage equality and trying to tie the decision to financial results. As Schultz said, "Not every decision is an economic decision." He also said that people who disliked the stance and who could get better than the 38 percent return the company offered that year were free to sell their shares.
In other words, entrepreneurs are also human beings who might want to be able to look at themselves in the mirror. There are times you may feel the need to speak up, and so you should. Just be aware that everything comes with a price you must be willing to pay.