"Cause marketing" is a current buzzword in corporate circles. It stands for a simple idea: that you can convince more people to buy your products if you promise to give some of the proceeds to a social or environmental cause.
Consumers get to buy something they like and do good at the same time. Businesses fork over some of the profits, but get a halo effect (hopefully), for encouraging a greener planet, end to poverty, cure for breast cancer and the like.
Product Red may be cause marketing's most conspicuous recent example. It is a brand licensing effort started by U2's Bono and Bobby Shriver. Companies including Gap, Apple, American Express, Microsoft and Dell have participated, creating specially branded "(Product) Red" items and contributing 50% of the gross profits to the Global Fund for AIDS, Tuberculosis and Malaria. It has been criticized since such a small portion of dollars people spend on the products actually makes it to Africa, but also heralded as a huge success for raising $100 million for the Global Fund in just two years and generating goodwill toward the companies involved.
Here's a new cause marketing effort that may be the first aimed specifically at small businesses: Kiva.org, a microfinance site which allows individuals to make loans as small as $25 to entrepreneurs in developing nations, teamed up Advanta to launch the KivaB4B program in mid-April. Advanta issues a Kiva-branded small business card and will match grants made by cardholders to Kiva dollar for dollar (up to $200 a month). Entrepreneurs get to flash their Kiva credit card, which has no fee and low rates, plus they get an insignia to put on their web page or office that shows they are supporting entrepreneurs in the developing world. "Entrepreneurs recognize the value of getting a little seed money," says Ami Kassar of Advanta. "This program allows them to be the good guys and show they care about the community."
Can small companies create their own cause marketing efforts, while avoiding any potential pitfalls? Bryan Specht, an expert in corporate responsibility with Dig Communications in Chicago, believes it can be a terrific strategy for increasing sales and building customer loyalty if done right."There is a huge opportunity here for small businesses to gain market share and take on the big boys in whatever sector they are working in through smart cause marketing efforts," he says. Specht offers these tips for how small companies can benefit from cause marketing:
Don't just support your own pet cause. Make sure it is an issue your target market cares about. Cause marketing works best with young consumers and boomers.
Do it in a way that will provide real benefit to a cause (it can't be too small a percentage of profits to be meaningful, for example). Research from branding firm Cone Inc. finds that consumers believe the most important issues for companies to address are health, education, environment and economic development.
Don't think that you can charge more. Cause marketing is more about gaining a competitive advantage and building brand loyalty than it is charging a premium. Consumers won't necessarily pay more just to participate, Specht warns.
Start small. Try a cause marketing effort first on a local level. For example, a toy store could run a promotion where part of the sales goes to support a local school. If it works, you can build on ways to support educational efforts from there.
A recession may not be the ideal time to start a cause marketing effort, which can cost money and eat into profits. But if sales are slowing and you're casting about for a new marketing strategy, cause marketing may be worth a try.
"In most industries, it won't be the key to success," says Specht. "But it a competitive environment, especially right now, it can give you a real advantage."
Entrepreneur's Corner: Can you boost sales by doing good?