Insights

Can You Measure the ROI on Your Brand Values?

Reposted from The Wise Marketer

As the world celebrates the beginning of 2022, while living and operating in what is arguably year 3 of the global COVID crisis, individual intentions and resolutions for the new year might be shaping up differently than they have in previous years. The crisis has prompted this great collective pause and created a reckoning of what’s valuable in every aspect of life. In the current normal, we’ve been thinking about what’s important, what are true needs, and what no longer serves us. We can think of these as prompts for ourselves as we reflect on the many choices we make day to day and how these choices add up to create the lives we want to lead.

This is evident in one of the most powerful outward expressions of what we hold valuable as consumers, our purchase choices. In so many ways it has really been a consumers’ market out there, with so many options available. Consumers are choosing their WHOs, WHATs, and HOWs based on their own WHYs, so it makes sense that they’re looking for brands who are clear about their own WHYs. They’re increasingly attracted to brands that reflect similar values or values to which they aspire. It’s no longer as straightforward as choosing between Brand X and Brand Y, it’s now a matter of selecting the brand that aligns with the right WHY.

Empowered consumers believe their choice in brands expresses their own truths, such as, but not limited to:

  • I want to preserve a livable climate, so I choose a brand whose labor and supply chains are local, so I know they’re acting on the climate emergency and sustaining the local economy without outsourcing.
  • I am anti-racist, so I choose a brand with mindful marketing and communications that doesn’t use harmful language or images.
  • I believe in gender equity, so I choose a brand whose charitable foundation supports LGBTQ2 mental health.
  • I am a supporter of the military and first responder community, so will support companies founded by people in this community or which donates money to supportive causes.
  • I’m concerned about the role of unfair labor practices in manufacturing, so prefer to buy from “Made in USA” companies.

Marketers know this about consumers, it’s why values-led marketing isn’t really new, but it used to exist in the realm of counterculture and not quite in the mainstream. Brands like PatagoniaBen & Jerry’s, and Tom’s have long headlined feel-good stories about their efforts to do business where people, purpose, and planet intersect for healthy profit. Their loyal customers are observed to be die-hard fans and other brands frequently look to these “values pioneers” as the standard for making clear statements about their purpose and in turn capturing the hearts of their customers.

Are these brands’ customers the exceptions? Chapman & Co. Leadership Institute, a consultancy specializing in leadership, company culture, and customer loyalty says they’re fast becoming the rule. In 2021, their research found that 60% of US consumers say brand values (including a commitment to diversity and a positive company culture) influence their purchasing decisions.

In the same Chapman & Co. study, customers identifying as “brand loyal” expressed the strongest focus on brand values when making purchasing decisions. As the alignment between personal values and brand values becomes more important in making a purchase decision, we wonder if those brands hitting the press for alleged transgressions or misalignment with consumer values will continue to get a pass for their misdeeds.

“Every business is trying to crack the code of customer obsession,” said Barry Kirk, Chapman & Co. Principal and loyalty practice leader. “But, far too often, companies are neglecting one powerful tool they already have right at their fingertips — their brand values. The reason they hesitate is because it’s hard to quantify how you’re showing up in terms of values, and what impact that is having on your revenue.”

SO, CAN BRANDS MEASURE THEIR WHY?

Chapman & Co says they can, and it’s the reason they’ve entered into a strategic partnership with Vrity, a data company dedicated to helping brands measure the financial impact of their values.

Jesse Wolfersberger, CEO and Co-Founder of Vrity, addresses brands’ hesitation to lead with values:

“There has been a black hole of data, which prevents many brands from truly living their values.”

Vrity’s independent research showed that 82% of consumers say they will pay more for brands that share their values — with 43% of respondents saying they would pay double. Even with this evidence that brand values are important to consumers, brands have been reluctant to market a values-based message because they can’t quantify the financial upside of leading with their core values in their customer loyalty strategy.

Chapman and Vrity have adopted a shared approach towards helping brands capitalize on their core values as a marketing asset. Some highlights of the approach include:

  • Helping brands understand how consumers perceive their brand as measured across 20 core brand values categories
  • Determining how brand identity aligns with the five key types of customer loyalty
  • Measuring the financial impact that values are having on the business
  • Creating a strategic approach for integrating values messaging into an ROI-positive customer loyalty approach

“With this partnership, we will help businesses make their values a key lever in building customer loyalty, and measure the financial benefit of doing so, through Vrity’s market-leading VRI platform.” says Kirk of Chapman.

If brands are still seeing values-led marketing as a cost that is hard to justify, this partnership may help brands see why they can’t afford not to pay the price. Many retailers are carving out competitive positions defined by their core values or a unique approach to creating and delivering their product or service. But the current climate presents risks associated with standing firm in what a brand believes and communicating those beliefs when consumers can use their own power to participate in the conversation in ways that can go viral. One poorly worded email or ill-conceived message can be punished at scale via social networks.

No wonder that brands need to develop better data in order to build confidence in emphasizing their core values. Wolfsberger of Vrity highlighted the point saying:

“Data is confidence — confidence to set budgets, confidence to measure results, confidence to justify to executives that values are driving revenue.”

With power to participate in these social conversations, customers have gotten savvier at demanding transparency from the brands they patronize. That transparency was previously focused mostly on sale and return policies, pricing and discounts, and the finer points of terms and conditions in subscription agreements. However, transparency is taking on a new meaning today and the brands that have taken time to create a strong brand built on specific policies or beliefs should be rewarded by attracting customers who have an innate emotional connection to the brand.

There can’t really be a down-side to a season where core values are having a moment and being scrutinized for value. The more interesting question is to understand the power of values-based marketing on financial results, and just how sustainable that value will be as the “pandemic years” fade into history. At the least, brands should reap benefits from working to meet customers in this shared emotional space as they move to align their values for the greater good. In the long run, an approach that does better for people, planet, and profit seems to be a worthwhile path to pursue.