To trace the origins of cause marketing, look no further than the 1983 partnership between American Express and the Statue of Liberty restoration project. Each time American Express cardholders used their cards, Amex donated a penny to the historic landmark’s restoration project fund. In addition, the issuer donated $1 for each new card application. The result: American Express raised $1.7 million for the fund in three months. They also increased card usage by 27% and drove up new card application rates by 45%. In board rooms around the world, thousands of mental light bulbs suddenly flickered on, as marketers suddenly realized that it was possible to do well by doing good.
Other early cause marketing pioneers included McDonald’s Ronald McDonald House in 1984, which evolved into an independent brand; Lenscrafters’ Gift of Sight program, which beginning in 1988 brought employee engagement to the fore; and Susan G. Komen’s For the Cure, which exploded in the U.S. in 1990 and now has more than 25 companies running their own related promotions. Today, most companies understand that doing good is good for business. Whether the cause is going green, fighting global poverty or finding a cure, socially responsible initiatives can be a powerful branding tool in an age where consumers can ignore marketing messages at will.
But it’s not simply a desire to drive sales that drives companies to embrace cause marketing. Many brands truly desire to do business in a more ethical, sustainable way—and what’s more, their customers are demanding it. That’s where loyalty marketing comes in. Loyalty marketers have long understood how to leverage data-driven insight and combinations of reward and recognition to effect profitable customer behavior change. Brands are now turning to these same tactics to help consumers make more ethical choices in their purchasing behavior, lifestyles and brand relationships. Loyalty marketers have long helped companies improve their bottom line—now it’s time to get off our butts and help save the world.
Cause and effect
That both businesses and consumers have reached the tipping point in their awareness of and commitment to cause-related issues, there is no doubt. According to the 2008 Edelman goodpurpose study, 63% of consumers think companies spend too much on marketing and advertising and should set aside more for a “good cause.” Even during a recession, the study adds, 80% of global consumers think it’s still important that brands and companies set aside money for a social purpose.
In particular, increasing awareness of climate change is resonating more with both brands and consumers. A recent survey of 9,000 consumers worldwide by Boston Consulting Group indicates that, despite the economic downturn, buying green products remains a priority—a majority of respondents in all countries expressed a willingness to pay a premium of 5% or more for green products, and 73% considered it important that companies have good environmental records. A 2008 Aberdeen Group benchmarking study, meanwhile, tied green initiatives in retail to bottom-line improvement—the study revealed that green best-in-class retailers realized a 20% decrease in energy costs and a 5% decrease in merchandise costs.
But cause marketing addresses more than just environmental issue. It now comes in every color of the rainbow—from eco-green and breast cancer pink to (Product)RED, ING orange shoelaces and LiveStrong yellow wristbands. The best cause marketing initiatives go beyond mere philanthropy to build mutually beneficial alliances between brands, nonprofits and consumers to increase sales, awareness, donations and customer loyalty. What started as a pioneering effort by forward-thinking companies in the 1980s has gone mainstream, as millions of consumers now choose brand relationships based on alignment with specific causes.
“There is an increased awareness of the efficacy of cause-related programs,” says David Hessekial, founder and President of the Cause Marketing Forum, a resource and educational center for cause marketers. “More and more forms of marketing, including loyalty marketing, are focused on having a strong core of cause-related elements associated with them.”
That focus on causes comes with big dollar signs attached. According to the IEG Sponsorship Report, cause sponsorship spending will rise to $1.57 billion in 2009, up from $988 million just five years ago and only $120 million back in 1990. That rise, experts say, is due to more companies embracing cause marketing to influence consumer behavior and brand loyalty. A 2008 survey by Boston, Massachusetts-based branding agency Cone, Inc., for example, found that 79% of consumers would switch to a brand associated with a good cause.
Many of those dollars have been funneled directly into loyalty-marketing programs, which have become an increasingly important way to link brands with causes. Building brand affinity, of course, has always been a crucial goal of cause marketing programs. The critical difference today is that marketers are incorporating customer databases and loyalty tactics to get the right cause-related message to the right customer—and in many cases, are using those tactics to change customer behavior in socially responsible ways.
“Cause marketing is largely about taking a brand and adding emotional character and empathy to it,” says Hessekial—and today, “You’d be hard-pressed to find a frequent-flyer or hotel frequent-guest program that doesn’t have at least some element of cause.”
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The Company Cause
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A study by Boston based branding agency Cone, Inc. shows that Americans’ opinions of what causes companies should support have shifted toward education, economic, health and other issues. The study notes: “In 1993, Americans ranked crime/violence prevention, the environment and homelessness as priority issues. In 2004, education, health and disease and the environment were
paramount.”
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“Companies have really begun to look at engaging with nonprofits in more comprehensive way,” says Alison DaSilva, Executive Vice President of Knowledge Leadership at Cone, and right now, “loyalty promotions are huge.” She points to campaigns from Macy’s, Gap and Jiffy Lube, which have used savings passes and coupons to reward consumers who donate to a cause. “With discounts off future goods and services, it ties right back to ROI,” DaSilva says.
Dan Kowitz, Vice President of IEG Sponsorship Consulting, suggests loyalty and rewards programs as tactics for nonprofit clients as they approach brands about partnerships. “In fact, we push it often with causes we work with and get them prepared to go out and pitch,” he says. “This is a direction that will provide a better win-win-win for all three groups.”
In other words, if you can accomplish ethical behavior change while making consumers feel good about themselves—and make a buck while you’re at it—then you’ve done a good day’s work.
Banking on behavior change
Take a survey of cause-related loyalty-marketing initiatives, and you learn quickly that what separates best-in-class cause marketers from the rest of the pack is that the former have chosen causes that reflect their brands and made them central to their loyalty value propositions. A few examples:
RecycleBank: One new model of an innovative, rewards-based program designed to make a buck while doing good has attracted such top brands as Coca-Cola, Kraft and Sears to its ranks: New York City-based RecycleBank, a loyalty program designed to help consumers earn rewards by increasing their recycling behavior. The program employs proprietary RFID-based technology embedded in large recycling bins placed outside of member homes to weigh their recyclables and reward them with points based on their weight. The points can be redeemed for rewards and discounts on products from more than 2,000 national and local partners.
In this case, “good” includes not only helping consumers become recycling pros, but also helping their redemption partners realize bottom-line benefits. A leading supermarket chain, for example, more than doubles its basket size when RecycleBank members use a $15 discount off $100 of groceries. For major RecycleBank partner Kraft, meanwhile, the partnership makes both business sense and aligns with its company values.
“Conducting business in a way that respects the intersection of environmental, social and economic responsibility is the right thing to do, and it makes good business sense,” says Jeff Chahley, Senior Director of Sustainability at Kraft Foods, which began its RecycleBank partnership in 2007 and became its Official Food Sponsor in 2008. “We partnered with RecycleBank because the program rewards the right behaviors and reduces the amount of waste going to landfills.”
RecycleBank now services over one million members in over 20 states and in the U.K. The program is also expanding to reward consumers for other green behaviors such as using renewable energy, reusing products, recycling your electronic waste, and more.
“Our entire business philosophy is that you can do well by doing good,” says Morley Ivers, RecycleBank’s Chief Rewards Officer.
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If You Can Read This…
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US Airways gives a customized children’s book to those who join
in the airline’s support of Reading Is Fundamental. Maisy
the Mouse takes to the air from a popular children’s book series by Lucy Cousins.
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US Airways: If you are a recycling agnostic, then you can always take advantage of US Airways’ estimated $1 million partnership with Reading Is Fundamental, which has proven a popular way for the airline to connect with its loyalty program members. The partnership includes a “Read With Kids” challenge with prizes including a grand-prize vacation package; the publication of a custom children’s book, which all donors receive; and rewards for donations in the form of Dividend Miles. This year’s three-month program raised over $92,000 in donations for Reading Is Fundamental, and Dividend Miles members logged over 10.3 million minutes reading to their children.
“We’re always looking to ensure value for our members and expose them to things they find of interest beyond just earning miles,” says Fern Fernandez, Director, Dividend Miles at US Airways. “We’re also giving them the opportunity to explore organizations such as Reading Is Fundamental. We’re expanding our program beyond simply earning currency to using that currency for bettering someone’s life.”
American Express: American Express didn’t end their commitment to cause marketing at the Statue of Liberty. From their Charge Against Hunger program, which generated $22 million to address third-world hunger, to their recent cardholder-driven Members Project, American Express has positioned itself as an innovative leader in cause marketing. The company has made Cause a core brand value.
“What was exciting is that we tapped into something that we continue to tap into time and time again—and that is our cardmembers feel connected to one another as part of a community, and they are passionate about many things,” says Leslie Berland, Vice President of Online Communications at American Express. “Our focus is on driving impact around the causes that are important to our cardmembers and consumers. We found that this is a great way to both connect with our customers and do good in the world.”
Considered highly innovative—and often copied today—because of its focus on customer choice, the Members Project invited cardmembers to submit project ideas in five cause categories, including arts and culture, environment, education, community development and health. Other cardmembers could then log in and vote on their favorite ideas, and the winning causes received a total of $2.5 million in funding from American Express—a clean drinking water initiative in 2007 and Alzheimer’s research in 2008. Berland says that the concept was based on a fundamental Amex goal—increasing cardmember loyalty by focusing on causes that they care about.
“There was risk involved, because there was so much unknown—we were bringing ideas to life that were not our own,” says Berland. “We didn’t anticipate how much online buzz there would be—there were hundreds of bloggers leveraging their networks, people with signs standing outside Costco, and high school kids doing a letter-writing program. It grew into something much bigger than we had anticipated.”
Seventh Generation: When it comes to promoting environmental causes, green consumer products company Seventh Generation doesn’t have to worry about authenticity in its environmentally-friendly initiatives—after all, its environmentally-savvy products have already attracted a cult customer following. The company’s heart is green. Still, the company views its Seventh Generation Nation loyalty program, launched last year, as essential to building customer engagement.
The program’s first phase provides coupons, special offers, member-led panels, and a social network with forums and blogs. The next phase, due to launch before the end of the year, will offer a points program with a twist—instead of tying points to purchases, customers will earn points for making greener consumer choices.
“We’re a passion brand, so we wanted to reach out to our consumers and give them an easy way to interact with us,” says Robin Kamen, Seventh Generation’s Web Director.
The Cause Manifesto
RecycleBank, American Express and Seventh Generation are prime examples of the next evolutionary phase of cause-related loyalty marketing—programs that build loyalty by helping consumers make more ethical, sustainable choices in their lives. Whether your cause is green, red, pink or some other color in the spectrum, consider adapting the following precepts from COLLOQUY’s Cause Manifesto.
Walk the Walk Planning, design and follow-through are all essential parts of putting together a cause marketing program that works, experts agree. However, there is one can’t-miss, bottom line element that no company can ignore if they want their initiative to succeed: Authenticity. Does the program ring true as a part of the company’s core values? Will consumers see it as fake or phony?
Skeptics will pounce on companies careless about how programs are designed and framed and what messages consumers receive, and charges of “greenwashing” become hard to refute. One recent example: An announcement in February that General Mills would remove a cancer-linked hormone from Yoplait’s yogurt products, in response to protesters who accused Yoplait of “pinkwashing,” thanks to their decade-long “Save Lids to Save Lives” partnership with breast cancer charity Susan G. Komen For the Cure.
“Cause marketing can backfire if you don’t do it right, it’s not conducted well, and most of your target segments don’t care about the cause,” Says Aradhna Krishna, professor of marketing at the University of Michigan.
The first and most crucial step in building authenticity is to get your own house in order by instilling cause-related values in your organization. Consumers expect that brands who incorporate cause marketing in their loyalty efforts will walk the walk. Building cause marketing initiatives out of enterprise-level drives to increase corporate responsibility has become a prerequisite for success.
At Netherlands-based bank ING Group, for example, efforts around environmental issues have always been an important corporate goal. Today, the company knows that any marketing messages or programs it builds around cause-related initiatives are backed up by its “Orange Goes Green” program, which includes such corporate sustainability initiatives as buying emission-free energy credits for every kilowatt of energy it uses and planting trees to offset business travel.
“These days, to say you’re a responsible company isn’t just nice to do—it’s a staple in order to grow your business,” says Rhonda Mims, President of ING Foundation and Senior Vice President, Office of Corporate Responsibility and Multicultural Affairs. “Consumers expect that companies show how serious they are about managing their carbon footprint.”
ING’s commitment is fueled by their employees, who form Orange Goes Green teams to partner on sustainability initiatives with community organizations. That effort has lead to ING’s rating of 75 out of a possible 100 on the Dow Jones Sustainability Index.
“[Orange Goes Green] is instrumental in keeping employees engaged and getting new employees to come through the door, especially younger employees,” says Mims. “But it also helps us retain customers and appeal to potential customers. We can be vocal about it because we are living it.”
The next most critical step in building authenticity is to make sure that the cause you market is closely related to your brand values and resonates with both your customers and your stakeholders. This can be a more challenging proposition than some companies realize, says Aradhna Krishna.
“If there is no obvious relationship, then you start to wonder,” she says. “For example, breast cancer research is generally associated with female products. What if a more masculine product decided to adopt breast cancer research as a cause? On the one hand, you say, ’Wow, they care about women.’ But on the other hand, men might say, ’What is this?’ It can be a total disconnect.”
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Paying Your Weigh
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Points earned by recycling through the RecycleBank program can be redeemed for rewards from partners both national and local. The program bases rewards on the weight of recycled materials collected from members.
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Focus on Behavior Change
One of the most cutting criticisms of cause marketing is one that also bedevils loyalty marketers everywhere: Cannibalization. High-profile cause marketing efforts such as (RED) and the pink-friendly partnerships with Susan G. Komen For the Cure have endured a backlash from critics who say that selling products—whether red, pink or green—can shift consumer behavior away from giving directly to the cause. Does cause marketing siphon money away from worthy causes and into corporate pockets?
“We don’t know if people buying these products are shifting, saying, ’I bought the pink thing so I don’t have to give here,’” says Angela Eikenberry, Assistant Professor at the University of Nebraska, Omaha and author of a recent paper titled “The Hidden Costs of Cause Marketing.”
It’s that “feel-good” factor that pushes consumers to buy the product, rather than a true understanding of what goes to the charity, according to Aradhna Krishna. “Consumers feel good about themselves because they feel that the purchase helps the cause,” she says. “Very often they buy products that they wouldn’t have bought otherwise.”
But Dan Kowitz, Vice President of IEG Sponsorship Consulting, points out that “these arguments are based on the huge assumption that those same people would give the same dollars to the same cause.” That isn’t happening, he says, and it didn’t happen in the past. “I don’t believe that if you got rid of Yoplait’s ’Save Lids to Save Lives’ program that everyone who gave to that program within the past 12 months would go on the Komen web site and give money themselves.”
Still, such criticism should remind loyalty marketers who incorporate cause into their value propositions to isolate and publicize positive behavior change. One increasingly popular best practice is to leave the choice of cause in the hands of your customers—whether that choice happens through loyalty cards, in-store, in bill stuffers or via member cardholder options. Target offered choice with its 2009 “Bullseye Gives” program, a two-week-long May campaign on Target’s Facebook Page that encouraged consumers to help decide how 10 different charities should receive $3 million in donations. And Capital One’s “No Hassle Giving” program, launched in September 2008, allows consumers to choose from a vast database of 1.5 million nonprofits and make donations using their Capital One credit card or rewards points.
Another way to isolate behavior change is to focus on Millennial consumers. Income-constrained teens and twenty-somethings often have limited means to contribute directly to their favorite causes, and are thus eager to contribute by consolidating purchases with like-minded brands. Cone, Inc. research reveals that 88% of Millennials would be likely to switch brands if doing so would help a good cause, and 51% have bought a cause-related product sometime over the past year, compared to 38% for all adults.
According to Cone’s DaSilva, Millennials don’t necessarily want to be associated with corporate brands. Cause marketing, therefore, offers a powerful way to connect with this group through issues they care about.
“This group of people who have intrinsic priorities [that reflect] who they are and what they stand for, so you see a lot of companies targeting them,” says DaSilva. “They might not stand for Nike, but they’ll stand for helping girls succeed.”
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Laying Out Green for Green
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In a recent Boston Consulting Group (BCG) survey, consumers who had recently purchased green products indicated the level of extra spend they were willing to devote to green products. Respondents in China, for instance, were both more willing to pay a premium, with 14% saying they were willing to pay upwards of 20% percent more, and less willing to pay that premium, with 41% saying they were unwilling to pay anything additional at all.
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Don’t forget the ROI
Too often, companies jump into cause marketing promotions with the expectation of a jump in sales, but they don’t market it properly with a goal of increasing loyal behavior or getting ROI. Cause marketing without measurable ROI is simply philanthropy—a noble goal in itself, but one that probably shouldn’t be listed as an expense item in the marketing budget. And the impact of the recession has forced everyone to return to marketing fundamentals—including performing the required due diligence on cause marketing efforts and analyzing the results.
“Every spending dollar is being considered more seriously,” says David Hessekial, “which leads to more well-thought-out campaigns.”
For Capital One, for example, creating a real business—a sustainable program that offers measurable results—is what makes their Card Lab Connect initiative a good cause marketing program, rather than simple philanthropy. The program, launched in 2009, is a credit card affinity program that provides local nonprofits with a way to encourage more consumers to easily donate using personalized credit cards tied to a particular community cause.
“We are committed to giving back to the community, both in terms of money and volunteer hours,” says Shane Holdaway, VP of Marketing at Capital One. “That’s all part of who we are. But that alone doesn’t create a sustainable business for us. Our goal with these credit card giving programs is to solve a problem for our customers and create a perpetual win-win-win.”
The company’s Card Lab Connect program fills all three requirements: It’s worthwhile for the nonprofit, satisfies a real customer need, and makes money for Capital One. In addition, the marketing plan must include the research and testing required to secure the proper measure of corporate resources, says Holdaway.
“If you’re launching some squishy, hard-to-measure, hard-to-define operation, you’re likely to get a pretty tepid response from the resource allocation within your corporation—you’re not going to get what you need to get it off the ground,” Holdaway says. “A cause marketing initiative—like any other marketing effort—must have a decent ROI or it will die on the vine.”
The Cause Imperative
Today, cause marketing is more than just a trend—it’s an imperative. What began as a simple way to build brand affinity has become a consumer expectation in an era in which sustainable and ethical consumer choices are more important than ever before. And within that framework, loyalty marketing tactics are at the heart of creative innovation. The challenge, says Amex’s Berland, is for companies to stay true and authentic.
“Consumers are more loyal to companies that do good things in the world,” Berland says. “For us, a long history and heritage is the key to being authentic. It’s OK if you haven’t done it in the past, but you have to show you have passion and care about what your customers care about. It’s about the meaning behind it. You don’t have to have been doing it for 30 years.”