We are always on the lookout for more ammunition when it comes to the issue of just how – it’s patently clear these days that it is no longer a question of “if” – a company’s do-good actions impact the bottom line. Why does that matter? For several reasons – first, of course, because companies are in the business of being profitable. No matter how much good they can or even want to do, if a company is not making money, it’s not long for the world. And then what good are its valiant efforts to improve society? Yeah, that’s right – nada. Second, metrics matter; in this data-driven day and age anecdotal evidence just doesn’t suffice.
So we were glad to learn of a recent study by a couple of smart profs at Dartmouth College’s Tuck School of Business. (check out the article from adweek: http://fuelthefuture.adweek.com/trends/corporate-social-responsibility-and-the-bottom-line/5169/). They studied CSR specifically in the retail setting and what they found was that there is a measurable positive correlation between CSR and improved customer loyalty and increased sales. That says it all – it means it’s worth it for a company to engage in meaningful corporate social responsibility. Meaningful, of course, is always part of the equation.
In their effort to quantify how much CSR can benefit a company, the Tuck profs measured “consumers’ perceptions of retailers across four CSR performance dimensions: environmental friendliness, treating employees fairly, community support, and sourcing local growers and suppliers.” What they found:
1. All four CSR performance dimensions positively influence consumer attitudes toward a retailer. Importantly though, consumers actually modify their individual purchase behavior only when the CSR domain actually affects their experience.
2. Improving consumer perception on a CSR dimension a little bit can actually have a significant effect on sales. They found that a 1 rating on a 5-point scale can actually increase sales as much as 10 to 15 percent. That’s a big bump.
3. They even found that consumers are occasionally willing to pay as much as 12-16% more for certain products that come with associated CSR benefits.
4. Consumers prefer CSR-oriented retailers because they see the actual personal benefit from those CSR initiatives,which are aligned with their specific values.
So – it’s true – there is a positive, measurable, quantifiable ROI for meaningful CSR efforts. And that doesn’t even count the improved reputation, enhanced employee retention and increased productivity that we also know comes from meaningful CSR. It seems the only question now is how soon do you get started?