What Do You Stand For? Doing Business in the Ethical Age
These days, a company’s principles and actions are just as important as the products it sells. Here, we explore how SMEs can satisfy consumers in the ethical era.
In a recent report, the strategy division of professional services firm Accenture concluded: “Consumers are no longer making decisions based solely on product selection or price; they’re assessing what a brand says, what it does and what it stands for.” Specifically, the ethical stance of a business.
This might not come as a complete surprise to SMEs in the health and wellness sectors, who are already accustomed to dealing with highly engaged consumers. What is surprising is how mainstream this behaviour has become.
The New Normal
According to Accenture, which surveyed almost 30,000 consumers in 35 countries for the report, more than six in 10 Australian shoppers say their purchasing decisions across all sectors are affected by a company’s ethical values. What’s more, 40 per cent of Australian consumers say they have stopped doing business with a company because of its stance on a social issue.
Shoppers are becoming more vocal about ethics, too: in the countries surveyed, 53 per cent of consumers who disagree with a brand’s words or actions on a social issue complain about it, and many do so publicly via highly visible channels such as social media and review websites.
Discussing the report with Forbes, Rachel Barton, a managing director at Accenture, says: “These findings should be a powerful wake-up call for all brands.”
According to Rachel, a fundamental shift in consumer expectations has taken place in recent years. Thanks to mainstream brands such as Kathmandu, which have put ethical considerations at the heart of their business models, shoppers now feel it is their right to know how companies operate behind the scenes and what their values are.
“Why settle for anything less than a brand that has integrity, respects the environment that it operates in and treats its people fairly?” says Rachel.
The Ethical Generation
Claire Maloney is the founder of Sydney-based PR and communications agency The Bravery, which is dedicated to sustainability and positive social change. Like Rachel, she believes a major consumer shift has taken place in recent years, driven by the ascent of Millennial’s.
“As soon as Millennial’s became the purchasing force that they now are, ethics was thrust into the spotlight,” Claire says.
That’s because Millennial’s are, on the whole, more socially engaged than their predecessors, she says. They are also “digital natives” who are accustomed to finding information, and communicating with others, online. As a result, Millennial’s value openness and transparency.
Stay in Your Lane
While it’s true Millennial’s seek out and reward companies that align with their beliefs and values, they are also inherently sceptical, according to Claire. As a result, she says it’s important that a brand hoping to burnish its ethical credentials remains true to itself and “stays in its lane”.
“Pepsi made a terrible mistake when it attempted to advocate for the Black Lives Matter movement via an advertisement with Kendall Jenner,” Claire says by way of example.
“Pepsi had never before done anything related to black rights in America; in fact, it hadn’t done anything related to human rights in general, or even significantly lobbied for any social causes. It dived headfirst into a sensitive subject and essentially tried to hijack it for its own gain.”
The Ethical Path
So, how should brands navigate this new era? In its report, Accenture says companies operating successfully in the ethical age are following three guiding principles:
- Be clear and authentic. The brand explains exactly how it operates and doesn’t make unrealistic claims;
- Be human. The brand makes an effort to engage in dialogue with its customers and involves them in decision-making about products and services;
- Be creative. The brand isn’t afraid to adjust its product offering or trial new ways of engaging with customers.
According to Claire, the best thing a company can do to satisfy ethics-minded consumers is to look both inwards and outwards.
“First, it’s crucial to understand – and be able to articulate – what your brand stands for,” she says. “For many companies, this will be related to the products they sell. If you manufacture toothpaste, for example, then it’s safe to assume you support good health.
“Secondly, brands need to understand how they are affecting the world around them.” This includes the company’s impact on its staff, its customers and the communities in which it operates.
“If consumers can see you are doing the work to understand your own impact – and that you’re making changes where necessary – they will reward you,” she adds.