Business pays the price for having a conscience

Judging by the assorted ranks of blue chip brands such as Tesco, Kellogg, Barclays, Centrica, Lever Bros, Avon Cosmetics and First Direct speaking at Business in the Community’s recent Cause-Related Marketing conference, CRM has now reached the heights of respectability.

New research unveiled at the conference shows business embracing CRM as a potentially powerful marketing opportunity, with 58 per cent of executives saying the benefits are “obvious”. Case study after case study detailed the enormous win-win benefits that a well-designed and managed CRM initiative can deliver. It’s obvious that there’s a lot more mileage to be had out of this one.

As Research International deputy managing director Ruth McNeil, who conducted the research for BIC, commented: “Cause-related marketing is getting a niche and is getting more important all the time.” About two-thirds of chief executives and marketing directors believe it is becoming more important in helping achieve their marketing objectives, and a small but significant two per cent now say it is “vital”.

Nevertheless, the very respectability of CRM could pose a danger for brand managers. The danger is that it gets locked into a ghetto, as in: “Oh yes, we cover social concern through our link-up with so and so.” The reality is that CRM is just one facet of a much broader, deeper shift in the brandscape, and it’s this shift that brand managers really need to ride.

A number of factors are driving it. The demise of post-war social democracy is one. Big business may have hated the Nanny State, but it created a clear division of labour between the private sector (whose job was to create wealth) and the public and non-profit sectors (which were there to cope with the social side effects and help those who slipped through the wealth-creating net). The retreat of the Nanny State is ending this neat division of labour, forcing both the public sector to become much more commercial and the private sector to accept that the processes of wealth creation always have a social impact.

It’s not a matter of businesses deciding to be socially responsible. They are responsible.

A second crucial shift is public attitudes towards brands. Twenty years ago, brands were accepted at face value. Today, the sophisticated consumer (eagerly aided by the media) is only too aware that behind each brand lies a company, and that companies are run by people who make choices in the things they do – that brands are the creations of people, not just lifeless bundles of attributes.

This is a cross-the-Rubicon type of development. Once you see a brand in this light, a huge question begins to loom in one’s mind: “Are they the sort of people who would…?” The question can be completed in an infinite number of ways. The ideal is to be a squeaky clean, trust-angel-type of brand that gets a yes to questions like: “Are they the sort of people who would be on my side, even when they could take advantage of my weakness and ignorance?”

But a growing number of brands are being caught out by the reverse. If a company is exposed as exploiting child labour in the Third World, for example, the message this sends out is that these are the sort of people who would exploit children in their quest to make a quick buck. It’s not that consumers have suddenly become altruistic. What gets to them is that if these are the sort of people who would exploit children in that country, they are also likely to be the sort of people who would exploit children here as well. Therefore, I cannot trust them with my children. Therefore, I cannot trust them at all.

In this way, an issue of social responsibility in another part of the world that appears to have very little to do with the brand actually connects like a lightening conductor to the core issue of trust, and therefore brand management.

A third, related trend is the growing realisation that simplistic business maxims such as “our over-riding task is to maximise shareholder value” tend to be self-defeating. As John Kay, the business strategist points out, these attitudes generate a nakedly instrumental approach towards other people, which is an extremely good way of not winning friends or influencing them to be your brand ambassadors. Kay says: “If we treat others in an instrumental and calculating way, they are likely to respond in an instrumental and calculating way.”

These trends show that brands are now unavoidably acquiring a social dimension, a dimension that has to be managed as carefully as any other, and not as a side-show. And while CRM may be one useful tool for managing this social dimension, it cannot be the only tool.

The other side of the coin is that, assisted by the very growth of CRM, well-managed causes are becoming brands in their own right, highly commercialised passion brands which engage the emotions of their supporters and use all the paraphernalia of modern marketing to maximise the money they raise from them.

Companies which engage in cause-related marketing with these causes are, in effect, cementing brand alliances. Seeing CRM as a form of brand alliance is probably helpful. But looking forward, it could complicate things. On the one hand, many causes are still going cap in hand to companies. According to the BIC research, companies receive an average of seven proposals for CRM initiatives a month, but in cruel, cold branding terms, most of these brands are not worth allying with. On average, companies support two a year.

On the other hand, some passion brands are getting so powerful they don’t need CRM. Instead of striking a CRM deal with the likes of a L’Oréal, for example, the Great Ormond Street hospital has launched its own brand of babycare products in direct competition: why do a deal with another brand when you can take all the revenues for yourself?

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