Studies have shown that socially responsible companies can expect greater financial returns from their investments. They can make more sales as well, which could lead to a higher profit. But how exactly does corporate social responsibility (CSR) lead to such outcomes?
One of the ways CSR boosts profits is the positive reputation it gives to the brand. For example, a sustainable brand that donates parts of its sales to a certain charity can draw more attention. As a result, customers are encouraged to support the brand by buying from them. On the contrary, a brand that has been exposed to exploit natural resources or commit labor malpractices can be boycotted by customers.
Small businesses usually fulfill their CSR by having advocacy. It is the act of supporting a cause and openly promoting it. In this article, we’ll learn how advocacy can help your small business increase its profits.
Choosing an Advocacy
It is not required for businesses to donate to a specific charitable organization. In fact, their advocacy can benefit only their customers, and of course, the business. Such is called advocacy marketing.
One company executed this strategy, with their advocacy being: making their clients’ lives easier, so they can focus on what they do best. This advocacy draws more conversations than the actual services the company provides.
This advocacy is upheld through exceptional customer service. The more satisfied a customer is, the more likely they’d be to spread the word about their experience. In turn, the company can attract more clients and expect bigger profits.
If you’d rather take the charitable route, that would be beneficial as well, especially in this period. But with a multitude of causes to choose from, picking one can be difficult. To make your search easier, you can use an innovative CSR management platform. It will streamline the process and keep track of your donations once you begin advocating.
You can also let your employees choose a cause, which a CSR platform allows them to do as well. This way, you won’t be forced to choose only one cause to support. Your employees can self-organize around the causes they care about, and provide corporate matching funds. This strategy gives a voice to each of your employees and opens up an opportunity for your business to discover underrepresented communities or marginalized groups.
Researching the causes your customers support is another smart strategy. This would improve your reputation significantly. But there’s one caveat, which is the possibility of your brand values not aligning with the cause of your customers’ choice.
Organizing a Fundraising Activity
Other than donating a part of your sales, a fundraising activity can also help boost your profits. You can do this either by organizing the event yourself or sponsoring a charity’s fundraising event.
For a fundraising activity to succeed, it should have clear goals. For example, if you advocated for a group of medical frontliners, you’d most likely use the funds you collected to buy them more medical supplies or self-care packages. The event can also have multiple goals. But before finalizing them, consult your beneficiary’s board of directors, and get their approval. Needless to say, consulting your company’s board is a must, too.
Promote your fundraising event on the right channels, like social media. It will build awareness about your advocacy, and increase brand awareness, which a small business like yours could use. When someone hears about your brand because of your advocacy, you’d earn their positive perception. They’d possibly turn into a loyal customer. And as you keep that cycle going, your business can grow exponentially, and you can give back to your community without any impediments.
The Impact of Your Advocacy on Your Business’s Growth
Your advocacy can improve your profit margin because it demonstrates your ethical practices. For example, if you sell textiles and clothes made by indigenous workers, your customers can see that you promote the welfare of indigenous communities. It makes you cut out from big corporations that tend to rely on underpaid workers. Today’s customers are highly aware of social, national, and global issues, so seeing that your small business cares for the same causes they do will surely encourage them to buy from you.
In addition, your advocacy can make your small business more attractive to investors. Venture capitalists may use CSR as part of their criteria when looking for businesses to fund. Hence, by being active in the cause you support, you can catch their attention and encourage them to invest in your business. If you’re a public company, your advocacy can shoot up your stock prices, attracting stock traders.
They say that if you give back, blessings return to you tenfold. This appears to be true for businesses as well. Hard-sell tactics are now outdated. Being socially responsible is in, and will always be.