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Why giving back is good for business

  • Opinion
  • April 7, 2016
  • Francesca Nicasio
Why giving back is good for business

Research has shown that 87 percent of customers consider CSR in their purchase decisions, and that “given similar price and quality, consumers (91 percent) are likely to switch brands to one that is associated with a good cause.”

Clearly, engaging in corporate social responsibility can earn you extra points (and sales) from customers. That’s why if you don’t have any CSR initiatives in place, you may want to cook up ways in which you can align your business with ethical practices and good causes.

Here are a few ideas to help you do this:

Donating revenue or products

One of the most common ways to engage in CSR is to support a charitable organisation. Look for a group that supports a cause you believe in, get in touch, and strategise on how you can support them.

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You can, for example, donate a portion of your revenues to that charity. That’s what the GAP is doing in its Give Twice initiative. For every gift card sold, the retailer donates 2 percent of the purchase to organizations such as CARE or Communities in Schools.

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Other retailers are opting to donate products. Take medical apparel retailer Figs, for example. The company has a programme called Threads for Threads where it donates a set of scrubs to a healthcare provider in need for every set of scrubs sold on its website.

There are also businesses that decide to set up their own foundations. Companies such as Starbucks and Chipotle have taken charitable giving into their own hands by creating organisations under their own brands. Of course, this route may be a bit more complicated, so for a lot of SMEs, it might make more sense to partner up with existing organisations.

Being conscious about how your products are sourced or manufactured

While trying to lower production costs is just good business, don’t do it at the expenses of labourers or the environment. More and more consumers are starting to care about how products are sourced or manufactured. In fact, a lot of them would be willing to pay more for merchandise produced responsibly.

As we cited in our post about competing with fast fashion, “an informal study of 390 consumers found that ‘over 75 percent of respondents agreed that they would be willing to pay more for clothing produced using responsible labour practices.’ Similarly, a YouGov poll found that 74 percent of shoppers ‘would be happy to pay an extra five percent for their clothes if there was a guarantee that workers were being paid fairly and working in safe conditions.’”

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Ask yourself, are your products sourced or manufactured responsibly? If you answered no or if you’re unsure, you may want to re-examine your suppliers. Get in touch and talk about their policies and working conditions to see if they’re upholding ethical business practices and working conditions.

Have a look at what Everlane is doing. The apparel retailer spends months finding the best factories and ensuring that they’re in line with the company’s values. “We visit them often, and build strong personal relationships with the owners,” says Everlane on its website. “This hands-on approach is the most effective way to ensure a factory’s integrity. As an added assurance we also require stringent workplace compliancy paperwork.”

Sponsoring a community initiative

There are likely plenty of CSR opportunities right in your backyard. Do some research on what’s going on in your community and see if there are any charitable initiatives or events that you could support.

Is a local non-profit organisation hosting an event? Are members of your community raising money for a new recreation centre? Do what you can to support these efforts. You could, for example, sponsor that local event or donate a portion of your revenues towards the fundraising effort. Doing so will not only enrich your neighbourhood, but it could also boost your image in the community.

Invest in your workforce

CSR isn’t just about external initiatives. The concept of giving can also be applied to your employees. Remember that it pays to treat and compensate employees well. Studies have shown that retailers who invest in their workforce not only have more motivated employees who provide better customer service, they also tend to be more profitable.

In a New Yorker.com piece about retail staffing, James Surowiecki cites a Wharton School study that found that “every dollar in additional payroll led to somewhere between four and twenty-eight dollars in new sales.”

One retailer that exemplifies this is Costco, which has reaped the benefits of paying and treating employees well.

As TriplePundit’s Leon Kaye put it:

While most big-box retailers insist on paying low wages with the claim that thin margins require reduced labour costs, Costco for years has been breaking the mould. Wall Street squawks that the membership warehouse giant should push for higher profit margins and reduced labour costs, meanwhile the company, led by its iconoclastic founder and former CEO, Jim Sinegal, constantly flicks his chin at The Street and its yammering analysts. The results: happy employees, enviable stock performance and a brilliant shopping model that, let’s face it, bludgeons consumers into shopping happily for more.

Already engaging in CSR? Here are tips to boost awareness (and sales)

If you already have CSR efforts in place, here are a couple of tips to help spread the word:

Include it in your packaging

Be sure to talk about your initiatives in your packaging. If revenues for a particular item would go to charity, see to it that this fact is mentioned in your packing. Doing so not only spreads awareness, but it also encourages shoppers to buy the product.

In a survey by Nielsen about CSR, they found that about 52 percent of global respondents “say their purchase decisions are partly dependent on the packaging – they check the labeling first before buying to ensure the brand is committed to positive social and environmental impact.”

Nielsen also saw “an average annual sales increase of two percent for products with sustainability claims on the packaging and a lift of five percent for products that promoted sustainability actions through marketing programmes.”

Actively market your efforts

When you launch your CSR efforts, market it like you would for an event or a promotion. Mention your initiatives to customers, put up in-store decals, posters, or signage, talk about them in your newsletter, and dedicate a few social media updates to your cause. If you have a website, create a dedicated page for it as well.

Celebrate the success of your initiatives

Once your CSR programme has gained traction, be sure to celebrate its success. Customers love to hear that their money is being put to great use, so update them on all the good that you’ve accomplished.

Document the results of your efforts (i.e. money you raised, number of people that you’ve helped, etc.) then spread the word through your site, employees, newsletter, and social media accounts. It’s always great to communicate good news and this move could also encourage customers to buy from you and support your cause even more.

 Francesca Nicasio is a retail expert and blogger for Vend, an iPad-based point-of-sale software that helps merchants manage and grow their business. This article was republished from Vend's retail blog, where Vend talks about trends, tips, and other cool things that can help stores increase sales and serve customers better.

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