Recently we’ve seen several reports of listed Australian companies embracing the idea that purpose is good for business. One CEO even went so far as to call purpose “the ultimate profitability strategy”.
It’s great to see business at this scale get on board with purpose and there’s plenty of evidence globally that shows purpose-driven businesses generally outperform their peers - often significantly. It’s at the core of what we do here at GrowthCatalyst and we firmly believe purpose should provide the validation of everything that happens in a business, large, small and all those in between.
In the eyes of your customer, purpose is the core reason your business exists beyond making money. With that in mind, from the perspective of a business owner or leader purpose should:
Inspire your vision;
Guide your strategy; and
Provide the decision framework for your business and action planning.
As much as we believe all businesses should be demonstrably more purpose-driven, including the largest of the large, there’s a reality that must be dealt with - the larger a business gets, the more challenging it is to make the shift to “profit with purpose”.
That's a real opportunity for smaller and medium sized businesses that want to take the initiative here and win market share from their bigger competitors.
In our last Insights post we included some of the research that exists that highlights consumer attitudes when it comes to dealing with purpose-driven businesses. There’s surely no remaining doubt that faced with a choice between more than one product or service provider, consumers are likely to steer toward the one that’s demonstrably committed to purpose.
If you’ve not seen that post, it’s probably a good idea to have a quick read. It also sets out some of the steps a business needs to take to become more purpose-driven. It’s a challenging process to go through and the reality is the bigger the business, the bigger the challenge.
Put simply, if your business finds itself up against larger, perhaps more established competitors (re)defining your purpose and embedding it in your business is a great way to become relatively more attractive to prospective customers.
The reality is, your larger competitors (in the small/medium business world) would quite probably find it relatively more challenging to embed purpose. Dare we say they’re unlikely to be as agile as you are. They may also simply be comfortable with where they’re at, doing what they’ve always done, not particularly perceiving you as a threat.
But their customers? They’re a different story altogether.
Customers of larger, dominant players in a market can be ripe for the picking.
Research firm CoreData here in Australia has asked people who had switched their business from one provider to another why they did so. The most common response given was that the business they left behind never gave them any particular reason to stay.
That’s telling. And it’s probably going on in your industry right now.
Purpose is that reason to stay.
Purpose provides your customers with an emotional connection to your brand and your business. It’s now well accepted that the traditional economic definition of the “rational consumer” is somewhat flawed. Rather than making decisions rationally, consumers are driven much more by emotion and will pick and stick with a brand and business based more on how they feel about it.
Once made, that emotional bond is tough to break. Think as objectively about the brands you’re loyal to and you’ll soon realise that’s the case
If customers see you’re in business primarily to address their challenges and not just to make money, they’ll be more inclined to deal with you. As we’ve said, the research proves that - specifically:
66% of consumers are willing to switch from a known brand to an unknown purpose-driven brand (Cone/Porter Novelli, 2017).
Let’s put all this in the context of the current health and economic challenges we’re facing. Businesses that will thrive - rather than just survive - as we slowly emerge from the crisis will be those that give existing customers a reason to stay and prospective customers a reason to switch. Again, that reason is purpose.
While the natural inclination in the midst of a crisis is to take a “wait and see” approach, there’s a strong case to be made for some measured risk taking at a time like this. To paraphrase Albert Einstein, in every crisis lies opportunity. Defining (or redefining) your purpose and embedding it in your business is a wonderful opportunity to provide a foundation for growth into the future.
How strong is purpose in your business?
We'd of course welcome the opportunity to discuss your needs with you and invite you to contact us to arrange a meeting - face-to-face or virtual.
If you're keen for some immediate feedback on the strength of purpose in your business, please follow the link to our "Strength of Purpose Health Check".
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