The Case For Purpose Driven Brands

Kevin KeohaneSeptember 9, 20164 min

What evidence is there that Purpose-driven brands do any better than others?

There are numerous data sets, publications and studies you can discover on the topic of Purpose-driven brands. We’ll cover a few here to establish the point:

  •  87 percent – informed people who believe business should place ‘equal weight’ on society’s interests and their own business goals. (Edelman Good Purpose Survey, 2012)
  •  94 percent – CEOs who say that their company is ‘increasingly held responsible not only for our own actions, but also for the actions of others in our value chain’. (Corporate Philanthropy CEO Conference 2010)
  •  61 percent – of recent graduates that are likely to factor a company’s commitment to sustainability into their decision if choosing between two jobs with the same location, responsibilities, pay and benefits (2011 Deloitte Volunteer IMPACT Survey)
  •  62 percent – of the public across 20 countries ‘say they trust corporations less now than they did a year ago’. (2009 Edelman Trust Barometer)
  •  42 – the number of academic studies showing positive correlations between social enterprise and financial performance. (Harvard Business Review).

Havas Media Group published a global analytical framework that looked at more than 700 brands in 23 countries and found some remarkable insights:

  • Meaningful brands outperform the stock market by 120 percent. Since 2004 the share prices of the top 25 companies on its Meaningful Brands Index (BMI) have increased faster than companies who are not seen as being meaningful by consumers.
  •  The Top 10 brands all scored above 50 percent when asked if people would miss the brand if it disappeared tomorrow. The average across all brands was just 38 percent.
  •  70 percent of people think that companies and brands should play a role in improving our quality of life and well-being.
  •  However, just 24 percent of people agree that companies and brands are working hard at improving this.
  •  This is mirrored in Western Europe (29 percent) and Eastern/Central Europe (31 percent), Europe and the United States (28 percent), but less so in Japan (46 percent) and developing markets such as Latin America (48 percent) and Asia (51 percent).
  •  Just 32 percent of people trust companies and brands.
  •  54 percent trust those that are socially and environmentally 

Forbes magazine published figures that support this as well:

  •  87 percent of global consumers believe that business needs to place at least equal weight on society’s interests as on business’ interests.
  •  20 percent of brands worldwide are seen to meaningfully and positively impact people’s lives.
  •  Only 6 percent of people believe the singular purpose of business is to make money for shareholders.

Brand Valuation consultants Millward Brown and former P&G global marketing officer Jim Stengel developed the list of 50 brands, which they say built the deepest relationships with customers while achieving the greatest financial growth from 2001 to 2011. To arrive at the Stengel 50, they valued thousands of brands across 30+ countries. The list included both B2B and B2C businesses in 28 categories, ranging in size from $100 million in revenues to well over $100 billion. 
Investment in these companies – the ‘Stengel 50’ – over the past decade would have been 400 per cent more profitable than an investment in the S&P 500. Havas Global CEO (and co-founder of One Young World) David Jones provides three simple rules for Purpose-driven brands:

1. Forget ‘Image Is Everything’ And Embrace ‘Reality Is Everything.’ Brands need to create a reality around what they do – it does not need to be perfect, but it does need to be honest.

2. Do Good To Do Well. Old-world Corporate Social Responsibility saw companies ‘give back’ to society without a lot of concern about what they ‘took out’ (and how they took it out) in the first place. In the new world of Purpose-driven brands, how the business impacts its stakeholders internally and externally is baked into the operating model. Success generates profits that allow the organization to continue operating so long as its purpose remains relevant. Doing well is a by-product of doing ‘good’.

3. Out Behave The Competition. Eighty per cent of brand building is through behavior, not marketing. People want to know what a company stands for, and they want to see evidence that the company is delivering on that promise.

What Purpose-Driven Brands Do

Creating a strong, clear, compelling and credible Purpose for an organization that defines why it exists is critical for any organization that wants to enjoy longevity and relevance, not to mention resilience that leads to sustained performance. While an organization may or may not choose to explicitly use its purpose as its external positioning, it is worth considering. In any event, this Purpose should provide a clear compass that should guide the organization in:

  •  how it operates;
  •  what products and services it provides (and doesn’t provide);
  •  what sectors and geographies it will (and will not) operate in;
  •  who it hires;
  •  who it fires;
  •  who it develops and how it develops and promotes them;
  •  what businesses it acquires;
  •  what assets it disposes of;
  •  how it manages its corporate responsibility efforts;
  •  how it markets and sells;
  •  how it engages with what stakeholders, when, why and how often;
  •  how it manages its supply chain;
  •  how it selects, manages and operates its facilities;
  •  who it lends to;
  •  who it borrows from;
  •  … and so on.

Contributed to Branding Strategy Insider by: Kevin Keohane, excerpted from his book Brand and Talent, in partnership with Kogan Page publishing.

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