Social responsibility is the new trend, and marketers need to prepare. I will confess that until recently, the North Star of my professional journey has been growing shareholder value. On the positive, this prime directive has allowed strange bedfellows to conduct business across ideological, racial, and political lines. In many cases, the drive to grow shareholder returns has broken barriers where cultural change was still trailing. It has also simplified objectives and brought clarity in critical business decisions.
But there seem to be some noticeable cracks developing in the shareholder value model. After all, what good is wealth in a world with growing income disparity (revolution, anyone?), polluted oceans, record heat waves and social isolation? The more we read about current events; the more doomsday prepping seems like a sane activity.
Recently, the Business Roundtable, a grouping of 192 large company CEOs declared that business should take a broader view of who they serve, beyond customers and shareholders, and include employees, suppliers and the communities they operate in. (Before you get overly excited, comrade, let’s not forget that CEO compensation is still primarily liked to profitable growth and stock value.) Nevertheless, businesses are starting to make changes.
Marriott, along with other large hotel chains, is announcing a transition away from single-use plastic toiletry bottles. We have also seen employee pay or benefits increases at Amazon, Walmart, and Target. There are also companies, like Nike and Patagonia, who are taking social stands in very visible ways. For some companies, social responsibility has been a part of their DNA for any years; for others, it is now becoming an existential imperative.
As a result, the statement from the Business Roundtable is not visionary thinking; rather, it is an acceptance of growing consumer discontent. There is a change in the zeitgeist, driven by consumers and citizens, against business as usual.
As marketers, this might feel liberating. We can finally be free of the oppressive “bean counters” who lorded the principle of shareholder value over every creative idea. No, no, we can’t. The marketer’s job has actually gotten harder and even more metrics-based.
While calculating metrics, such as cost per click, costs per conversion have become routine for most marketers, the measurement of marketing and experience decisions will become more complex. Take the simple example of eliminating plastic shampoo bottles in hotels. The ROI of this decision is not just about plastic bottle costs. For some hotel brands, toiletries are an important touchpoint in delivering a premium experience.
- Does a bulk shampoo dispenser convey the same premium experience?
- Are there better alternatives and what are their costs?
- How will it impact brand positioning?
- Does the average consumer understand the change, and will they see it as a benefit or a loss?
The recommendation from the Business Roundtable will require a business to think more holistically about how they derive profitable growth, but the drive for profitability is not going away. Marketers will now need to speak for more than just the customer and justify the costs of making socially responsible decisions. In some cases, the customer will not be a direct beneficiary of business decisions. Rather, they will be a partner who is asked to pay more or get less in the interest of the “greater good.”
The “easy” news is that customers are asking for these changes. The “tough” news is that profits still matter, and balancing that with the needs of customers and the society at large will be a more complex equation.