Customers buy the why
It was 10 years ago, in 2009, that Simon Sinek talked to us about purpose in business with his TED talk ‘Start with why’ – a talk that has since been viewed over 42 million times. “People don’t buy what you do, they buy why you do it” is his mantra.
What he means is that people don’t just connect to a company’s products or services, but they buy into the reasons why the company exists. They buy into the idea that a company exists for something larger than themselves; a purpose. Your purpose, clearly articulated, can be communicated to both employees and customers and can really help drive competitive advantage.
Loyalty
An embedded purpose not only drives loyalty internally from your employees but also externally from like-minded stakeholders and customers. Companies that have a powerful purpose do better than companies that don’t. Their customers, suppliers, 3rd parties and all who interact with them become passionately loyal and engaged with their purpose and don’t want to take their business elsewhere.
Loyalty is particularly apparent from consumers of purpose driven companies. Your purpose gives a reason to your customers to choose your business and your products above someone else’s.
Even back in 2012, a global good purpose study by Edelman found that 89% of consumers were more likely to buy from companies that support solutions to particular social issues. More than 50% of them said that when quality and price are equal, purpose is the most important factor influencing brand choice. In spring last year Cone and Porter Novelli surveyed2 more than 1,000 Americans on their attitudes about purpose-driven companies finding that 67% of respondents said they felt companies with a purpose care more about them and their families and 79% of respondents said they were more loyal to purpose brands.
When consumers understand that your purpose is to create jobs, solve an ongoing local problem, provide outstanding customer service, address a health issue, or give back to the community, they are more inclined to support your business. They become loyal fans who only buy certain products or services from you, which is far better (and easier) than constantly having to sell features and benefits. However, this must be genuine, and consumers are quickly learning to discern those that are simply using purpose to sell and those for whom it is a true endeavour.
Performance
In survey upon survey, purpose driven companies have outperformed their peers. However, this should not be the main reason to integrate purpose in your business but is a probable outcome.
“The why is not about money or profit, those are the results. The why is the thing that inspires us and inspires those around us” – Simon Sinek
According to a survey by the Korn Ferry Institute1, they found that purpose driven companies posted compounded annual growth rates of 9.85% compared to a 2.4% for the whole S&P 500 Consumer Sector. “When an organization has a clear purpose, it unleashes the power and drive of the entire workforce, harnessing and focusing that combined effort in one aligned direction.” explained Elaine Dinos, principal of Korn Ferry’s Global Consumer Market practice.
To give a concrete case study; about 15 years ago, Unilever embarked on a journey led by Dove’s purpose: to make every woman in the world feel comfortable with her appearance, to boost her self‑esteem. Unilever’s sales of Dove brand products have grown over the last decade from less than US$2.5 billion to more than US$4 billion whilst operating in a crowded saturated market.
Conclusion
As consumers gain increased understanding of how our choices impact our planet, our communities, and those around us, they are increasingly looking for ways to make choices that will have a better impact on those around them. Businesses with a genuine purpose are needed not merely as a way to stand out from the competition but as a way to contribute to the whole.
Remember, a purpose is more than just marketing or positioning of brand image, it needs to be an integral part of who your company is. In fact, every decision should be looked at in terms of purpose. When purpose is fully integrated in all that you do, businesses have loyal and engaged employees, clear focus and direction, a passion for excellence and innovation with loyal customers and stakeholders and are creating a successful force for good.
