Classical marketing has long-touted the concept of the 4Ps: Price, product, place, and promotion. But a 5th “P” is often overlooked in my opinion: philanthropy.
Not the “we donate 3% of our profits to X” kind of philanthropy, but rather, the companies that contribute a significant portion of potential profits or goods to charity. (Warby Parker, Green Mountain Coffee, Altruette, ShopKick, and Patagonia are all great examples) While companies like Wal-Mart technically give more money to charity than most others, many will argue that buyers are far more appreciative of giving based on percentage of profits, not on sheer volume. Why? Because the latter is seen as a tax-write off, not an act of ensuring that the company, customer, and society all win.
I’ve worked with many Fortune 500 companies on their corporate social responsibility (CSR) efforts and understand the motivations on both sides of the table quite well. There are huge pitfalls to approaching this business element the wrong way in terms of bad publicity (or lack of it). But, there are also huge opportunities if you’re one of the rare breeds that can turn corporate responsibility into more than just a checkbox or marketing gimmick.
Whether you’re a new startup crafting your business model, or a more established young business, you have a distinct advantage over the “big” companies you’re potentially trying to disrupt. A billion dollar company cannot suddenly convince its board and shareholders to radically change its business model in order to grow customers, but your smaller one can. And if you craft the perfect balance of social good and profit, there’s a great chance the market will reward you, and not the larger incumbent, with their business. Consumer sentiment has been moving in this direction lately, and it only stands to accelerate.
Think about my hypothetical 5th “P” and investigate how you can use CSR to position your company as superior to your competition. All things being equal, don’t be surprised if people spend money with the company doing more good for the world. While directing a substantial portion of your potential profits to social good and/or responsible operations may seem like a move that will stunt your early growth, think of it from the perspective of opportunity cost.
Want your business to thrive for decades, not years? Want to ride the wave of consumer’s shifting attitudes toward conscious capitalism? Want highly influential non-profits to be your brand evangelists?
Make money. And make the world a better place, too.
Image: Warby Parker