The Psychological Power of Giving

If 91% of customers are asking for it, you’d better be doing it, right? But what exactly is “it”? “It”, in this case, isn’t best-in-class, extraordinary service, better engagement, faster loyalty point redemption, or price matching for similar goods. “It” is simply giving. 

Last year PR and marketing agency Cone Communications released its latest report on Global Corporate Social Responsibility (CSR) and found that 91% of global consumers are likely to switch to a brand that supports good causes (given similar price and quality).

This is a huge implication for what drives loyalty today and confirms what Jonathan Haidt points out in his book, The Happiness Hypothesis. In the book Haidt explains that humans want to align with good causes that help them feel like they’re making a difference in the world. Giving back and helping others is part of our conscious and unconscious psyche. According to psychologist Carl Jung’s self-individuation theory, humans want to feel like they’re leaving a legacy. And while we may not have the resources or time to start charitable foundations, we look for opportunities that make us feel like we’re giving what we can to help those less fortunate. 

TOMS shoes is a great example of how consumers align with products and brands associated with doing good. TOMS sells shoes that cost about $5 for a kids’ pair and $9 for an adult pair to produce. Yet, consumers continue to shell out $50 to $80 or more for a pair. But consumers aren’t paying this much just because TOMS are cool; they fork over this cash because for every pair that they buy, TOMS donates a pair to a kid in need—and that sense of giving  makes many consumers feel good. Although this model still enables TOMS to profit substantially, consumers keep buying the shoes. In fact, TOMS’ total revenue for 2013 was estimated to be about $250 million. 

In contrast, Nike spends about $16 to produce a pair of Air Jordan’s, which sells for $180. Because the athletic apparel company doesn’t donate a pair per each pair sold like TOMS does, its profit is $164 per pair sold. You choose.

Being a part of something bigger than ourselves is a fundamental human need. Companies that understand this and engage customers in the causes are the ones that gain the most in today’s economy.  In fact, GenXers and Millennials claim that they align their loyalty with brands that give back. In the 2013 “BCG U.S. Millennial Supplemental Consumer Sentiment Survey,” Millennials listed “support causes” as one of the top three most important things brands could do to interest or engage them.

So how do marketers align with the new consumerism? 

First, businesses need to give back—and talk about it. Saying that they give to charities is no longer enough. Consumers want to know just how big of an impact businesses make. As noted in the Cone Communications survey, 90% of consumers care more about the impact of a company’s efforts than the dollar amounts spent. 

Second, organizations need to find out what matters most to their customers. Are their primary passions sustainability, food safety, or social causes?  Then, companies should align their brands with these causes.

Mark Jacobson, SVP of Newport Creative and a direct response fundraiser, has achieved response lifts of 30% and value of gift increases of 25% by following these two steps with a single A/B test. When fundraising strategies are based on donors’ altruistic needs, and help them feel the warm glow associated with knowing they made a difference, campaigns become more successful for the short and long term. 

“When you tell consumers about your victories or your needs—flashing your badges of achievement instead of telling personal stories in which they see themselves and their needs—you  miss the opportunity of helping them fulfill their psychological need to make a difference in the world,” Jacobson says. “When your call-to-action aligns with their values [and] appeal to their needs…, as well as their generous spirit, they are much more likely to align with your cause and support it with donations.”

The same applies to for-profit and not-for-profit direct response campaigns. Make your customer relationships meaningful beyond your products, and watch your lifetime value, brand image, and profitability give back to your bottom line.