The third in our blog series which looks at a purpose-led or purpose-driven business strategy unpacks the various components that inform such a strategy and why we strongly believe that it is the future of industry, globally.
Part one and part two offer a more in-depth look at purpose-driven business with many compelling studies to back up the argument in favour of this.
Aside the obvious ethical values that a purpose-driven business strategy can provide, and not discounting the business world wanting to do more to make the planet and the communities it serves a better place, there are some very practical reasons to pursue such a strategy.
Reasons that make even the most hardened executive or CFO start to realise that adopting a purpose-driven business strategy is unavoidable.
The face of every businesses’ customer is changing and fast!
What is average age of your customer?
The most targeted age group in marketing is still 18-34. These are your Millennials/Generation Y and a portion of Generation Z adults.
Notably Generation Y also extend beyond 34 now, up to 40 year olds.
So the market is sizable.
In many recent studies, results show that both these groups regard brand ethic as one of the primary reasons to support a product.
From loyalty to advocacy these customers want to support a brand who’s only goal is not the bottom line. They look for brands who create value from a For-benefit strategy which leads to a For-profit bottom line.
A Fortune survey by New Paradigm Strategy Group found that nearly 72% of the adults surveyed agree that public companies should be mission-driven, as well as focus on their shareholders and customers.
Studies have also revealed that Gen Y & Z customers are prepared to pay a premium price for products they feel are purpose-driven and ethical.
Your current and future employees are also Gen Y & Z and many studies reveal the different wants and needs of this generation.
In a nutshell Millennials want to work for companies that have a strong CSR policy and studies tell us that these employees were up to 83% more loyal when the company helps them contribute to social and environmental issues.
In fact one study revealed that ‘most millennials would take a pay cut to work at an environmentally responsible company.’
There have also been numerous studies suggesting that employee performance and engagement in the brand’s products increases when there is a sense of purpose to the brand.
The myth that an ethical, stakeholder-driven approach to business cannot lead to shareholder returns was dispelled by a 20-year study by the Torrey Project.
The study examined the long-term historical performance of companies that followed different business practices from conventional shareholder driven business model types to purpose-driven business models, both ethical companies and stakeholder-driven companies.
Notably, the data concluded that ethical business behaviour correlated with higher financial returns than conventional business and companies that went further, with a stakeholder-focused business model, even outperformed ethical businesses.
This study does not even factor in future investors since more values-driven investors from the Millennial and Gen-Z generations enter the market.
Coldwell Banker asserts that the “Great Wealth Transfer” will see an estimated $68 trillion passed down from boomers over the next 30 years, and by 2030, Millennials will hold five times as much wealth as they have today.
Purpose–driven business is the ONLY future we can consider.
Whether it’s from a financially driven motive or from a genuine realisation that business needs to positively impact on communities, the environment and global eco issues, the changing face of the world we live in is happening rapidly and we all need to change with it.
More great reads on the Bigger Than Me blog.
- Eight questions every purpose-driven brand should ask
- What is Conscious Consumerism and why we should care?
- Consumers are changing and so are their choices
- Purpose-led businesses are gaining relevance says Unilever CEO
- What are socially conscious brands?
- A Socially Conscious Brand business model is the future