Is there a Proxy for Purpose?
Proxy: Noun: “A figure that can be used to represent the value of something in a calculation.”
Purpose is a buzzword right now in marketing circles, but it’s not new. Brands with purpose have understood for some time that they have a role to play in society. They have a reason for existing. Something that means more than selling things and making profit. Purpose is the reason for doing something, not what you do or how you do it. Brands that can clearly articulate their purpose in a believable way make stronger connections with customers and other stakeholders. So, how do you measure purpose?
Examples of Purpose
Whether or not you agree with these statements, these brands claim to have a purpose:
Nike: to move the world forward through the power of sport – breaking barriers and building community to change the game for all
Coca Cola: to refresh the world and make a difference
The Body Shop: We exist to fight for a fairer, more beautiful world
Virgin Atlantic: To embrace the human spirit and let it fly
In these statements there is no mention of what is being sold – sports goods, fizzy drinks, beauty products or flights. The purpose statement speaks to a higher set of values and is about where the brands see your place in the world. If purpose is at the heart of an organisation, the brand values, mission statement and positioning will relate to it.
Which stakeholders care about your purpose and why?
CUSTOMERS: According to Edelman, at a time when businesses are more trusted than governments, 68% of individuals think that CEOs should fix societal problems, and they expect the brands they buy to do more to contribute to society. The same number also believe that they have the power to force corporations to change.
In the 2020 Strength of Purpose study which surveyed 8,000 global consumers, respondents said they were 4 times more likely to purchase from a brand with a strong purpose. Unilever have long said that purpose is behind the growth of some of their biggest brands. Their Sustainable Living Brands grew 69% faster than the rest of the business in 2018.
INVESTORS: Investors also value the importance of Environmental, Social and Governance factors. Black Rock’s survey of 400+ investors in 27 countries showed that 54% of respondents consider sustainable investing to be fundamental to investment processes and outcomes. In his 2021 Letter to CEO’s, Larry Fink, Chairman and CEO of Black Rock, called on businesses to “create enduring, sustainable value for all of your stakeholders”.
EMPLOYEES: Employees want to work for an organisation that is ethical and fair, that limits it negative impacts on the environment, and does positive good for society. These factors matter even more to millennials. The Center for Creative Leadership acknowledges this trend. Whilst social responsibility might not trump job satisfaction, it does contribute to feelings of pride and engagement, which ultimately drives staff loyalty and cuts recruitment costs.
COMMUNITY: Making a positive impact in the community generates affinity for your brand. A recent study by Connect2 showed that 76% of consumers say they are more inclined to buy from a brand that genuinely supports the local community than ones that do nothing.
Making a positive impact in the community can be anything from sponsoring the local football team, to donating to a local charity. Brands can look beyond the local area and target communities such as parents, dog-lovers, or religious and cultural groups both online and offline.
A Proxy for Purpose?
While there is no straight-forward way of measuring the value of purpose, we can look at different data sources across stakeholder groups to understand:
Do they understand your brand purpose?
Do they find it believable?
Do they have an affinity with your brand because of it?
Do they buy more?
Does it increase their loyalty?
We can use existing metrics and measures to determine if the various groups recognise you as a purposeful brand and attach a value to that. For example:
- Brand loyalty
- Brand engagement and affinity
- Donations for supported causes
- Shareholder value
- Reputation tracking studies
- Employee pride and loyalty
- Reduction in hiring costs
- Awards such as Great Place to Work Award
- Social Impacts
- Positive sentiment in the community
- Employer of choice
It’s a worthwhile exercise to reach out to other stakeholders (eg suppliers, partners, industry associations) to get their feedback on how well you’re articulating and delivering on your purpose.
Can you measure purpose?
We would recommend looking at the metrics you currently have across the business – commercial and social, then identifying any data gaps that you can fill in the future. Perhaps data exists but is not measured in the context of purpose? If you appreciate that purpose is not a marketing strapline but a series of actions, you can implement a process to measure these actions. Boards can be held accountable for these actions. Ultimately, when you state your purpose you need to be able to evidence the impact you have on customers, the business and wider community.