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Does Corporate Social Responsibility Matter?
Business Journal

Does Corporate Social Responsibility Matter?

Many companies identify with causes hoping to make an emotional connection with customers. But does this really have an impact?

by William J. McEwen

The turmoil in today's financial markets bears compelling testimony to the fact that emotions truly do matter. Behavioral economists like George Akerlof and Robert Shiller have come to the fore, underscoring the absolutely critical role of human psychology in determining what, when, and where consumers will be spending.

Companies don't need to be better at everything. They need to be better at the things customers feel are important.

Of course, companies such as Disney and Tiffany have long evidenced a deep appreciation for the part that human emotions play in consumers' decision making. But it's now clear that emotions are also key factors when consumers are making decisions about investments, insurance, or credit cards.

For the past decade, Gallup has been digging into the world of emotional connections, shedding new light on how these connections can be reliably measured and effectively managed. We've learned that emotions have a profound influence on consumers' decisions about everything from automobiles to grocery shopping and, in the case of business customers, about things like cargo shipping and industrial adhesives.

Emotional connections have a well-defined structure, one that builds on an essential foundation of "confidence." Perhaps most importantly, these emotional connections can be enhanced. But they can also diminish.

We've noted that some companies are a lot better than their competitors at creating and sustaining emotional bonds with their customers. And our research shows that the companies that generate "fully engaged," emotionally connected customers sell more, make more money, and are better able to withstand the stress of economic downturns.

So, wouldn't every company want customers who are emotionally connected to them? They would. The question, though, is just what it takes to create that emotional bond. It's not easy. It requires outperforming the competition on the important points of customer contact: better products, superior service, more attractive locations, lower prices, more generous policies. But what company can afford to do all those things?

Actually, companies don't need to be better on everything. But they do need to be better at some of the things that customers feel are important, and they must be at least at parity on anything else that customers deem to be critical.

Corporate social responsibility

Many companies seem to recognize this. They take pains to build emotional connections that can help ensure customer loyalty. They spend money on product development in search of unique and innovative offerings. They make it a point to communicate with their customers and listen to what they have to say. They hire talented customer service employees and empower, energize, and manage them to leverage their abilities to personally connect with their customers.

And companies also invest in corporate social responsibility (CSR) efforts, sometimes establishing departments to more aggressively pursue opportunities to affiliate with pro-social causes or with outside organizations that convey positive emotional overtones. There's obvious appeal in this. After all, if a company wants to enhance its social reputation and strengthen its own emotional bonds, why not associate with another organization whose brand/image already enjoys a degree of esteem? Presumably, both will benefit. The cause/organization enjoys an influx of capital from licensing its endorsement, while the company benefits from the positive rub-off and goodwill implied by its partnership. After all, the reasoning goes, birds of a feather flock together.

That's the theory. However, there are additional considerations for this seemingly win/win relationship.

Customer engagement is increased only when the company provides something or addresses an issue that truly matters to the customer. Improving the seat fabric on a cabriolet may not be a matter of much importance to a customer, especially one vexed by the car's mechanical malfunctions. Similarly, affiliation with an organization that supports the preservation of the tiny snail darter may be deemed of little or no concern by a company's customers. The cause may still be laudable, but the reputational benefit to the company is in direct proportion to the degree of passion the customers -- not the company -- feel for the particular cause. Key question: How many of your customers care about the affiliated cause?

Affiliation with a well-regarded cause can never compensate for failure to deliver on the basics that customers expect.

Affiliation with a well-regarded cause can never compensate for failure to deliver on the basics that customers expect and require. Regardless of how passionately a customer might embrace some affiliated cause, the company can't provide her with shoddy products and rude service and still expect to generate emotional attachment. CSR merely represents a tie-breaker, a "sweetener" that can help enhance a customer's feelings of connectedness with a company. That's certainly important in today's rather commoditized world of parity products and parity performance. Affiliation with a cause may provide a bit of an emotional edge, but it can't remedy a company's subpar performance in other areas. Key question: How are you performing on the basics?

To gain any sort of emotional edge, the affiliation must be unique, and the relationship must be obvious and regularly reinforced. Much as with celebrity connections, if tennis player Andy Murray endorses 30 different brands, there's far less competitive benefit to any single one of them. Key question: Can you "own" the affiliation relationship?

Today's consumers are skeptics -- and becoming increasingly so. That's partly because companies have been far better at making big promises than they have been at keeping them. And consumers aren't just leery of the performance claims that companies make. They're also hesitant to accept the company's statements regarding its altruistic motivations. They're wary of the wizard behind the curtain of Oz. Key question: Can you overcome the credibility hurdle?

However, where there's an apparently evident fit between the values espoused by a company -- the ones demonstrably being "lived" by its leaders and employees -- and the images and values associated with a potential affiliation/endorsement partner, there's an opportunity for a meaningfully enhanced emotional connection, one that reinforces the attachment between customer and company. When those conditions of mutual fit are met, CSR activities represent not just doing something good for society, but also doing something good for the company's business.

This article is adapted from one originally published on Reprinted with permission.


William J. McEwen, Ph.D., is the author of Married to the Brand.

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