As a Small Business Owner, would you like to improve customer relationships?
Embracing Social Responsibility (i.e. doing more GOOD through your business) can help in three ways:
- Increasing customer engagement.
- Improving customer retention
- Providing new opportunities to interact with customers.
If you are looking to grow your business, maximizing sales from your existing customers is significantly “easier” and more cost-effective than finding new clients. Doing Good Helps! But first, let’s step back and consider…
Is Social Responsibility Really Important to Customers?
Yes, absolutely! More and more studies have shown that customers (i.e. clients or consumers) pay attention to why and how companies do business. For some consumers, it’s no longer enough to provide good products or services; businesses are now expected to demonstrate how they also ‘do good’.
A 2017 Corporate Social Responsibility (CSR) study by Cone Communications asked American consumers to identify the most important responsible business practices:
- 95% of American consumers consider it important to be a good employer.
- 90% of American consumers consider it important to operate in a way that protects and benefits society and the environment.
- 89% of American consumers consider it important to create products, services or programs to ensure the well-being of the consumers and their families.
- 87% of American consumers consider it important to invest in causes in my community and around the globe.
- 78% of American consumers consider it important to support social justice efforts.
As consumers continue to pay attention to Social Responsibility and access to information on the internet grows, consumers are also taking the time to research company information in advance; 39% of Americans reported they researched a company’s business practices or support of social or environmental issues before purchasing (Cone Communications, 2017 CSR Study).
I do not doubt that as we head into 2020 that number is significantly higher. And even more interesting, 60% of consumers believe they shouldn’t even have to research to find information about the values and positions on important issues. They expect that brands should make it more apparent to consumers (Edelman).
How Do These Consumers’ Expectations Connect to Small Business Social Responsibility?
If you aren’t familiar with Social Responsibility, I recommend that you jump to a former blog article (Why Small Business Social Responsibility Deserves Its Own Identity) to learn more before continuing.
As I’ve previously shared, most of the resources available for “Social Responsibility” were developed for Corporations. I created the Small Actions Framework as a unique four-level approach to Small Business Social Responsibility that is based on Corporate Social Responsibility best practices but specifically designed for Small Business Owners to be flexible, scalable, customizable, and sustainable.
As a quick reminder, Small Business Social Responsibility is a commitment to contribute to the greater good by taking educated, informed, and impactful small actions and implementing mindful business practices that improve the world around you while also contributing to your small business growth and profitability (Small Actions Greater Good definition).
These small actions can be taken across any of the following four Small Business Social Responsibility categories (also unique to the Small Actions Framework):
- Business Integrity – Actions that enhance how you do business including interacting with your customers, employees, contractors, and suppliers (going beyond typical business standards). In other words, how to demonstrate your interest and dedication to conducting business in an ethical and upstanding manner.
- Safety, Health, and Wellness – Actions that improve the safety of your work environment and the overall mental and physical well-being of your employees and customers. In other words, how to demonstrate your interest in the well-being of your employees and customers.
- Environmental Impact – Actions that decrease the physical impact of your business on the environment both directly from your physical location and indirectly from your actions. In other words, how to demonstrate your interest in preserving and improving the environment.
- Community Engagement – Actions that make a positive contribution to your community (keeping in mind that “community” can be defined in many ways – including a geographic area or a group of people). In other words, how to demonstrate your interest in serving and improving your community.
If we go back and look at the expectations of the consumers, we can match each expectation to one or more small action categories. I’ve also included one example of a small action for each consumer expectation: However, just because consumers CONSIDER Socially Responsible actions important, does their interest translate to benefits for your business?
Yes, it does! Here are three major benefits of sharing your Social Responsibility efforts with customers. It’s also extremely important to remember that when you take action, you need to SHARE your action with your customers to see the customer benefits.
Top 3 Ways Social Responsibility Can Improve Your Customer Relationships
1. Increase Customer Engagement
Customer engagement is the emotional connection between a business or brand and its customers. It is how you as a business or brand make your customers “FEEL”.
Studies have shown that Socially Responsible actions help to increase loyalty, positive image, trust, and customer satisfaction (all of which contribute to a more engaged customer):
- 88% of Americans would be more loyal to the company when they support a social or environmental issue (Cone Communications).
- 92% of Americans have a more positive image of a company when they support a social or environmental issue (Cone Communications)
- 87% of Americans would be more likely to trust a company when they support a social or environmental issue (Cone Communications).
- Social responsibility efforts can increase customer satisfaction by 10% or more (Project ROI).
By helping to increase customer engagement, you are also helping to:
1. Increase your odds of making sales – the chance of selling to an existing customer (particularly an ENGAGED customer) is 60-70 percent while the chance of selling to a new prospect is only 5-20 percent (Marketing Metrics); and,
2. Increase your revenue – customers who describe themselves as fully engaged are likely to generate 23% more revenue than average customers (Gallup).
2. Improve Customer Retention
Customer retention is a strategy to maintain a customer’s interest and spending over time. On average, 65% of a company’s profits come from existing customers. Maintaining a longer relationship, i.e. increasing customer retention, therefore can increase sales. In addition, long-term customers are familiar with your products or services and may be more likely to purchase high-priced offerings.
The more engaged the customer, the longer they typically remain a customer. The longer they remain a client, the more likely they are to continue buying your products and services.
When corporate citizenship (another name for Social Responsibility) is incorporated into businesses, there is a 30% increase in the success of improving customer retention (State of Corporate Citizenship 2017).
3. Provide New Opportunities to Interact with Customers
(and therefore increasing engagement AND retention also)
Sharing Social Responsibility information or involving customers in Social Responsibility efforts provides an alternative way to attract customers to your brick-and-mortar location or to your website. Plus, it offers an alternative conversation via email and social media to take a break from direct sales or promotions communications.
Numerous studies have documented that:
- If given the opportunity, 74% of customers would volunteer for a cause supported by a company they trust (Cone Communications)
- If given the opportunity, 64% of customers would express an opinion about a company’s social responsibility efforts online via the website, blog, or product reviews (Cone Communications).
- Involving customers directly in social responsibility activities increases their trust in a company while decreasing their trust in competitors (Project ROI).
How Else Can Social Responsibility Benefit Your Business?
Look for the next 3 blogs in this series to learn more about how Social Responsibility can benefit your employees, brand awareness, and business financials!
- Gallup (Turning Customers into True Believers) – https://www.gallup.com/services/169331/customer-engagement.aspx.
- Cone Communications (2017 CSR Study) – https://www.conecomm.com/research-blog/2017-csr-study
- Edelman Report (2018 Edelman Earned Brand Report) https://www.edelman.com/earned-brand
- Marketing Metrics (Marketing Metrics: The Definitive Guide to Measuring Marketing Performance) – https://www.amazon.com/dp/B0031AI0VC/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1
- Bain & Company (Prescription for Cutting Costs) – https://www.bain.com/insights/prescription-for-cutting-costs-bain-brief/
- Project ROI (Defining the Competitive and Financial Advantages of Corporate Responsibility and Sustainability) – https://www.issuelab.org/resource/project-roi-report-defining-the-competitive-and-financial-advantages-of-corporate-responsibility-and-sustainability.html