Businesses are finding that being socially responsible can be great for the bottom line, as well as good for employee morale.
Of course, a company still needs to make a profit to survive, but supporting a worthy cause can be the most profitable brand building you can do. Witness the growth and popularity of Patagonia in outdoor clothing, and Ben & Jerry's ice cream.
Both of these are incorporated under the new structure of a Benefit Corporation (B-Corp), now offered by 30 states in the U.S. For example, Patagonia donates one percent of their sales to environmental charities, and Ben & Jerry's awards five social change grants annually.
In fact, most of the advantages can accrue to any business type practicing corporate social responsibility (CSR).
Zappos, owned by Amazon and selling shoes online, has dramatically enlarged their business by donating shoes to charitable organizations, and by fostering an exciting internal culture through a focus on the well-being of their employees.
As an advisor to many new businesses, I see a host of advantages for every new business by being socially responsible today:
1. Expands the potential customer target market size
Social contribution and sustainability are features that appeal to a whole new class of customers for any solution. These features are extremely important in penetrating customer sets in different cultures around the world, and more discerning customers in every geography.
2. Incentivizes customers to pay a premium price
Sustainability and social responsibility are ways to extend your exclusivity and added value, thus lowering risk, improving profitability, and justifying a premium price.
All stakeholders see this as an advantage, encouraging new investors and raising the valuation of your business.
3. Increases customer advocacy and loyalty in all markets
These days, existing customer advocacy is a key attractor of new customers. In addition, according to recent statistics, the cost of bringing a new customer to the same level of profitability as old ones is up to 16 times more.
Loyal customers post great reviews and bring in many new friends.
4. Is seen by customers as a competitive edge
Most Millennials and customers of all ages these days strongly believe that all businesses must be socially responsible, and make that a top criteria for selecting a solution source.
It's a message that you can use both indirectly and directly in your brand positioning and marketing.
5. Improves your team motivation and productivity
Sponsoring social initiatives and providing time for employees to support their own initiatives builds loyalty, pride, and motivation among team members and disparate organizations within the company.
This makes everyone in the company more engaged, more responsive, and more productive.
6. Improves employee retention and attracts better candidates
Company success is driven by the quality of the team members they can attract and retain.
If your business is recognized as providing a socially responsible culture for employees, as well as comparable initiatives outside the business, the best and the brightest will join you.
7. Provides governance flexibility and financial grant opportunities
B-corps are given relief from the sole directive of maximizing shareholder profits, to reduce investor suits.
With targeted social initiatives, they may also qualify for government grants, alternative energy rebates, and philanthropic initiatives in support of their efforts.
8. Makes your business more attractive to investors
Investors look for teams with real passion, integrity, and an attractive message.
They see a commitment to social change as great positioning for the long-term, with sustainable value to customers and owners alike. They look for that balance between maximizing profit and expanding the market.
A potential offset to all these advantages is that balancing act that is required between social initiatives and the focus on making more money for survival. It takes a strong and adept business leader and entrepreneur to make the right tradeoffs.
It's time to take a hard look in the mirror to see if you are ready to take your business to the next level. The opportunities are endless.