I’m looking forward to attending Sustainable Brands ’09 on May 31 in Monterrey CA. This conference sits at the intersection of brands and ethical business, an area that is essential for marketers but can dominated by CSR departments in many companies. If building a values-based brand reputation is on your to-do list, I hope to see you there. Here’s the current attendee list; pretty impressive.
Don’t Cut CSR Spending; Reallocate to Build Your Brand
As consumer expectations rise and trust in corporations decline, the need for ethical business practices is greater than ever. Yet in a recession, companies seeking to cut costs will likely postpone important CSR initiatives or cut spending in favor of core business initiatives.
But it doesn’t have to be either-or. Companies that consider social and environmental initiatives as potential innovation platforms and brand builders — not expenses — will come out ahead.
The Opportunity Audit helps prioritize and inspire
To aid businesses in evaluating initiatives, (re)allocating resources and exploring white-space opportunities, we’ve developed the Fruitful Opportunity Audit. This tool maps what a company does, not what it says. That means you won’t see cause marketing programs on this audit, mainly because the Brand/Customer quadrant could hypothetically be filled with greenwash. (click to enlarge)
The columns represent the locus of initiative; whether it primarily resides with your suppliers, employees or internal operations, community or customers.
The bottom row shows tablestakes initiatives that most businesses are undertaking regardless of industry. These include basic blocking and tackling like sustainability initiatives in energy, water, waste, IT, supply chain, employee volunteerism, fair labor practices, and so on. Note that it also includes philanthropy efforts that are not directly aligned with the category or brand.
The middle row represents activities that are industry-specific. Now we’re getting into actions that are more strategically in line with your business and therefore could be more effective in reputation-building. Electronics recycling (Community/Customer), industry-related training and job creation (Employee/Community) or Fair Trade efforts among coffee and tea manufacturers (Suppliers) are a few examples.
The top row is where it gets really interesting… this is where you’ll see social-impact initiatives that directly support the brand promise. The most effective initiatives often span most, if not all columns in this row; think Plan A from Marks & Spencer, GE’s Ecomagination, Timberland, Clorox GreenWorks, and specialized ethical brands like Whole Foods and Seventh Generation. Other examples might include Best Buy’s Geek Squad Summer Academy (Community) or Fairmont Hotel’s Green Cuisine (Supplier/Community/Consumer) that aligns with their authentically local brand pillar.
Now is the time to kill sacred cows
If you plot your CSR initiatives on this chart using bubble size to approximate relative spending, you’ll see where most of your dollars are going. Is your chart weighted more heavily at the bottom or the top? If the former, how much could be shifted to brand-building without compromising on the essentials? If the latter, good job; just make sure you’re covering your bases at the bottom to eliminate risk of goodwashing claims.
This process will inevitably generate some controversial discussion around cutting philanthropic programs that aren’t aligned with your brand. NCR, a former client of mine that I helped reposition their brand around self-service technology, supports a wide variety of charities completely unrelated to their business through the NCR Foundation; buried on the last page of their Citizenship Report is a brief mention of how they are improving access to technology for disabled and areas with low literacy. That’s a fantastic example of triple-bottom line innovation driving the brand, but it’s being communicated like an afterthought. Imagine what a powerful ethical brand NCR could build if it reallocated its CSR investments in favor of value creation at the intersection of self-serve technology and social needs.
Please note that this is not intended to decrease the amount of funding that any particular non-profit should receive from corporations. Rather, if all corporations were thoughtful about which non-profits to support, then everybody wins. The non-profit could benefit from their corporate partner’s lobbying power and investment in ethical brand-building; the corporation benefits from the strategic alignment with the right non-profits. 1+1=3. The recession is a good opportunity to justify such shifts.
Finding competitive opportunities – a retail example
When you plot your top competitors on the same chart, you’ll start seeing patterns that give insights into opportunity areas for the brand. You might also want to plot related but non-competitive companies on the same chart to bring new ideas to the table. Below is an illustrative example from the retail space; you’ll see that Marks & Spencer in the UK has done a great job creating ethical brand drivers across all columns. Retailers in the US can borrow ideas like branding internal initiatives similar to Plan A. Likewise, M&S could borrow an idea or two from Best Buys’ branded Employee/Community initiatives. (BTW, don’t get hung up on circle size; I don’t have enough info to map to investment levels. Just take it for the illustrative example that it is.)
You can push the innovation potential even further by mapping completely unrelated companies or industries for inspiration. For example, what could micro-finance teach the retail industry? If I’m Target, perhaps I combine “enabling individual potential” of Kiva.org with my “design/value” brand promise to create a program that gives design students (or employees!) an opportunity to be discovered, promoted and funded for their product design ideas. That’s a program that spans all four columns of Brand-Builders.
I’m interested in your feedback. Is this a useful framework? What are the roadblocks to adopting this approach in your company? Who would actually drive this… CRO or CMO? CEO? And of course, if you see anything big that I missed in the retail audit, let me know.
Five strategies for building your ethical brand
There’s been a lot of discussion about elevating corporate responsibility to become a strategic driver of your business. Most companies would like to benefit from their ethical efforts in the form of increased customer attraction and loyalty, yet few have figured out how to do it successfully. When marketing and PR are relied on, it can often backfire in accusations of greenwashing. The secret is to apply brand-strategy principles to build your ethical reputation.
Brand: Who you are, not what you say
First, let’s back up and define what a brand is. More than a logo, tagline or campaign, a brand is a promise delivered. It’s no longer about marketing; it’s about co-creating your reputation with your customers and managing perceptions through your actions. That means your brand could be favorable or unfavorable, depending on how you interact within your ecosystem and whether you’ve actively managed your brand or not.
A brand strategy is, in essence, a focused strategic platform that guides every aspect of the business. It should incorporate 4Ds: desirable by customers, deliverable by the company, distinctive from the competition, and durable over time. It’s a blueprint for how you do business, as well as for the entire customer experience.
Since brand is inherently about building a reputation, it’s not a stretch to say that strategic CSR is all about brand-building… not philanthropy or community programs. The latter are among the tactics to be judiciously identified and tailored to support a desired outcome, which should be to build a clear, consistent and believable reputation among your constituents that engenders preference and loyalty. That desired outcome informs the entire customer experience as well as how you do business.
Five strategies for aligning brand with values
There are five brand strategy approaches that are directly relevant to building your ethical reputation.
Align with Brand Differentiator
Ideally your ethical initiatives will directly support your brand promise. Remember, a brand is a promise delivered… so consider what makes your brand unique from competitors and develop key initiatives to support that. For example, one of Target’s philanthropy programs is to support the arts and design, which directly supports Target’s “affordable design” brand differentiator. Instead of cutting your CSR programs during the downturn, consider shifting resources from generic programs to those that support and drive not just your category, but your brand.
Create an Ingredient Brand
Think Westin’s Heavenly Bed or, in the CSR space, Marks & Spencer’s Plan A or GE’s Ecomagination. This is the ‘special sauce’ that makes your brand preferable to values-based buyers and employees. Creating a brand for your ethical initiatives accomplishes several important objectives:
- Helps clarify for employees and customers your ethical value proposition
- Makes it easier to allocate human and financial resources to your initiative (hint: assign a brand manager to own, drive and measure)
- Serves as a growth platform for customer experiences, products and services
- Elevates your social and environmental initiatives above me-too commodity status.
There are a few risks of goodwashing with this approach, so be sure that everyone is committed to creating something of unique value that’s completely aligned with the vision and values of the parent brand. And any misstep by the parent brand may end up discrediting the hard work done to build the ethical ingredient brand.
Create a Product Brand
If there are values-driven buyers in your category (highly likely), consider launching a product just for them. Clorox GreenWorks and BP Solar are good examples. Note that these brands are tied closely to their parent brands, so don’t consider this option unless the parent company is doing its part on the ethics front. But a product brand is an excellent opportunity to help customers experience your values and simultaneously boost the profit part of the triple bottom line. Case in point, GreenWorks has now captured 42% of the natural cleaner category in a little over a year.
Create a New Sub-Brand
A separate brand (with its own customer experience, distribution channels, etc.) that’s completely anchored on the triple-bottom line puts a bit of distance between it and the parent company. Good examples include Starwood’s Element or, through acquisition, Unilever’s Ben & Jerry’s. Why use a sub-brand strategy?
- To lead your category in capturing hearts and minds of values-oriented consumers without being saddled with baggage of the parent company
- To minimize claims of greenwashing, as all actions of the sub-brand are (should be) congruent.
- To help “turn the Titanic” and reposition the parent company as an ethical brand. The parent company can “borrow” the positive brand equity from the sub-brand while going through the process of cleaning up its act.
Acquisition is the easier route, but often the ethical brand gets flack for “selling out” if it’s not handled carefully, and core values still need to be aligned. Building it yourself is harder, but the benefits could easily outweigh the effort required.
Reposition the Brand
This option is especially important for companies with a history of contributing to the problems of the planet rather than the solutions. Formerly “evil” companies like Wal-Mart, McDonald’s and BP have made great strides in redefining their brands as more responsible. With a very large company, this is a process that takes years and top-down dedicated effort to fundamentally change the essence and ethos of the company. For a smaller brand it’s definitely easier.
No hard and fast rules
Please note that there are no easy answers or guidelines here. The most appropriate approach for your company depends on the unique combination of your customers, their expectations and perceptions of your brand versus other options, the progress you’ve made in the ethical realm, whether or not you actually have a clearly defined brand promise, the commitment level from your executive team… I could go on, but you get the point.
I’m happy to have a preliminary discussion with you about the right approach and key considerations for your business; just contact me at jennifer@fruitfulstrategy.com.
Building the Ethical Reputation: Strategic CSR in Hospitality
When building a reputation as an ethical company, actions speak louder than words. Yet in most businesses, these actions are happening behind the scenes through employee, philanthropy and supply chain initiatives. If customers can’t see these actions, there’s minimal impact on perceptions, purchase and loyalty.
If you want your good intentions and efforts to be recognized and appreciated by customers, you have to show them. And we’re not talking cause marketing. Customers give credit for experiencing goodness in the customer experience… in the ways in which they interact with your company every day. And the most powerful and memorable reputation-builders are those ethical experiences that are unique and support your brand promise.
The Fruitful Opportunity Audit below shows at a glance the social-impact initiatives of a handful of players within the hospitality industry. This is an illustrative chart based on available information, so don’t get too hung up on the details. What’s important is to see the overall macro-trends, which in this case shows that Fairmont Hotels and Resorts is doing a very effective job aligning CSR initiatives with their brand promise and integrating them into the customer experience relative to Marriott and Intercontinental Hotels. (click image to see full-size.)
Let’s first back up and discuss the chart structure. The columns represent the locus of initiative; whether it’s primarily targeted to your suppliers, employers, community or customers. The bottom row shows tablestakes initiatives that most businesses are undertaking regardless of industry. These include basic blocking and tackling like CSR reporting, employee volunteerism, sustainability initiatives in energy, water, waste, IT and supply chain, and so on. Note that it also includes philanthropy efforts that are not directly aligned with the category or brand; while these efforts are admirable, they’re not aligned with brand and business. It’s likely that redirecting those funds into more brand-relevant programs will generate more bang for your buck.
The middle row represents activities that are industry-specific. Now we’re getting into actions that are more strategically in line with your business and therefore could be more effective in reputation-building. IHG offers the Innovation Hotel, an educational online tour through a prototype green hotel. It’s not yet a brand builder because none of these hotels (and therefore customer experiences) currently exist in the IHG portfolio, but it’s a great start. Green meetings, combating sex tourism, developing hospitality talent and ensuring diversity among hotel owners are all examples of hospitality-specific CSR.
The top row is where it gets really interesting… this is where you’ll see social-impact initiatives that directly support the brand promise. This specific comparison I’m doing is a bit unfair, as Fairmont Hotels has a more tightly defined value proposition than the master brands of Marriott and IHG. But you’ll see that Fairmont’s done a great job filtering their CSR activities through their brand lens of turning moments into memories through unrivaled presence (a large percentage of their properties are historic landmarks), authentically local experiences, and engaging service. One authentically local CSR initiative is supporting local farmers – the menus always reflect local, organic cuisine, and a unique travel package called “Shop with Chef” enables travelers to tap into the head chef’s knowledge of the local farmer’s market. They have private-label organic, free-trade tea for guests, numerous eco-travel packages, and hybrid cars available for guest use. Fairmont also has the largest number of hotels located in UNESCO World Heritage Sites, national and provincial parks and biosphere reserves of any major North American hotel company, so their partnership with World Heritage Alliance reinforces the brand.
Again, it’s possible that I’m missing some brand-building efforts for Marriott and IHG, yet the challenge is that they have very undifferentiated brand positions for the parent companies. For example, Marriott defines itself as “a leading lodging company.” IHG is “an international hotel company whose goal is to create Great Hotels Guests Love.” There’s not much that’s differentiating about either proposition, which makes it hard to create distinctive programs that are uniquely identified with either brand. Many of their sub-brands, like the luxury JW Marriott brand, have much more tightly defined positions and therefore would be easier to use as a filter and a guide for strategic CSR.
One next step for either of these corporations is to borrow an idea from Starwood and create a brand that is positioned entirely in a social or environmental impact space. Starwood’s Element brand is the company’s green hotel chain. Another example is Joie de Vivre’s Good Hotel which is anchored on doing good for people and planet. Or, take a cue from Fairmont Hotels; revise the vision/mission for a sub-brand to better incorporate strategic CSR and begin building a branded experience to match.
So to summarize: to build the ethical reputation you first need a strong brand position that can serve as a strategic lens for CSR initiatives. Next, think about how to embed social impact into the actual customer experience. Show, and you won’t need to tell. Stand out from your competitors. Be a company worth experiencing, and your customers will applaud you.
To discuss the implications for your own company’s brand and customer experience (along with how to measure shifts in customer perceptions), feel free to contact me at jennifer@fruitfulstrategy.com.
Maslow and corporate responsibility
I’ve always been interested in leveraging Maslow’s hierarchy of needs to inform development of customer-based brand strategies. A couple years ago I wrote several posts about each of the stages (summary here).
Recently I’ve been thinking about how it applies to CSR and sustainability efforts, especially in light of the economic downturn. As the economy grew, more consumers and businesses could be found at the top of the hierarchy… going beyond the “me” focus and expanding into greater awareness of social and environmental issues. I would theorize that in an economic downturn that many consumers and businesses that aren’t firmly anchored in the top part of the pyramid would drop back down to the base, focusing primarily on security and safety.
But here’s what’s happening: the recession is slowing CSR efforts among businesses, yet consumers are continuing to purchase green products at the same rate as last year. So while businesses are dropping to the bottom of the pyramid, values-driven consumers remain at the top.
Bottom line? Smart businesses will continue to invest at the top of the pyramid (TOP), capturing preference among TOP consumers and building equity for future growth in this segment when the economy improves.
