Ever wondered why customers prefer certain companies over others? It's not always about the products or services offered. According to Simon Sinek, people's association with a company is closely tied to its purpose. This idea has gained traction recently, especially as customers increasingly seek out businesses that share their values.
Defining Purpose
Purpose is a central theme that drives an organization. It blends hard and soft elements, like vision, strategy, brand, and culture. Academic thinking shows that purpose can be goal-based (linked to profits) or duty-based (connected to a company's social responsibilities). However, it doesn't always revolve around profits or society; sometimes, it promotes customers' interests and well-being.
There are two primary schools of thought on corporate purpose: one believes that the corporation defines its purpose, while the other sees society's expectations as the main driver. In any case, purpose is specific to a company's environment and problem-solving capabilities.
The Power of Purpose-Led Companies
Industry surveys have shown that customers prefer companies with a strong social purpose. In the 2018 Cone/Porter Novelli Purpose Study, 88% of consumers would purchase products from a company that leads with purpose. Moreover, 80% of respondents said that buying products from purpose-led companies contributed to their positive sense of self, effectively linking the company's social commitment to their personal contribution.
Additionally, the 2018 Accenture Global Consumer Pulse Research found that 50% of respondents choose brands based on how closely they support and act on social causes important to them. Purpose-led brands create more resilient customer relationships, leading to higher lifetime value.
Purpose During and After the Pandemic
While the pandemic has caused significant shifts in many aspects of life, customer attitudes toward purpose-led companies have remained relatively unchanged. However, geographic differences do exist. The 2021 Ipsos Global Trends Survey found that 66% of US consumers buy from brands that reflect their values, compared to 60% in the UK. Only 51% of US respondents agreed that business leaders should speak out on domestic social and political issues, while 68% of Canadians felt the same.
The importance of purpose in business has become increasingly evident. If your company aims to build strong, long-lasting relationships with customers, it's vital to have a clear and well-defined purpose. By aligning your business with customer values, you contribute positively to society and set yourself up for long-term success.