66% of consumers are willing to pay more for a purpose

build purpose into your brand

This is the eighth of 10 ‘BEST OF THOUGHTS’ from the more than 200 THOUGHTS published in 2018.

This ‘thought’ was part of a series examining the trends in marketing in 2018 and beyond.

A TED talk viewed by more than 41 million people talks about the importance of ‘WHY’ – and the importance of positioning ‘why’ as the priority consideration. Simon Sinek agrees that what a business does is important but believes that how it addresses its ‘why’ is more important, and that its ‘why’ should be its primary consideration. The ‘why’ he is referring to is ‘why it is in businesses’ – its ‘purpose’.

Every business has to make money and create wealth for its shareholders and stakeholders. However, Sinek points out that truly great businesses (e.g. Apple) have a ‘higher purpose’. They are driven by something more important than money. Sinek, like many writers and researchers in this area, suggests that if a business focuses on its ‘purpose’ profits will follow – and, indeed, will be maximised.

I find Simon Sinek to be overly simplistic, but I believe he is 100% right in this contention. The same contention was made in the 1980s by Roy Spence in his book – ‘It’s not what you sell, it’s what you stand for’.
The point is that consumers will buy into a higher purpose. Having a higher, nobler purpose drives:

  • Sales
  • Margins
  • Referrals

Research and anecdotal evidence suggest that consumers are very suspicious. They are not attracted to businesses that are motivated by profits alone.

A recent US study found that 66% of consumers are willing to pay more for a product if they can relate to the higher purpose of the business. This same research found that 73% of millennials are prepared to pay more if they relate to the higher purpose of the business.

Having a higher purpose and having that purpose understood can deliver a number of benefits including:

  • Increased staff attraction, engagement, performance, and retention
  • A point of differentiation to attract and retain customers
  • Deeper customer relationships resulting in higher repeat purchasing and referrals
  • Stronger customer and community relationships contributing to lower cost of marketing
  • Greater stakeholder support – especially in the case of listed businesses

Research suggests a growing awareness of the importance of a higher purpose. For examples of businesses with a higher purpose, consider:

  • Body Shop – Manufacturing ETHICAL beauty products
  • Starbucks – fighting hunger, encouraging service, and helping the environment
  • Apple – to enrich people’s lives

INSIGHTS

What is the ‘higher purpose’ of your business? What is it about your business that your staff, shareholders, stakeholders, and customers can believe in?

Truly great businesses are in it for more than money. Sure, money is important, but great businesses know that building profitability and wealth is better served by having a higher purpose – a reason for being.

Having a higher purpose is also more rewarding for the owners of the business.

SOURCES OF CORE DATA

Smart Insights, The Drum, Social Media Week, CSR matters, Louder Milk, Forbes, Quicksprout, Wider Funnel, Trends and Insights, Core DNA, Digital Current

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