Back in early 2020, when news struck that the coronavirus was spreading like wildfire throughout the world, no one really knew what to expect and the effects it would have on the economy, our livelihoods, or to our day-to-day routines. The disruption that would ensue was something that we were not prepared for, but something we had to adapt to.
The pandemic did end up affecting everything — from supply chains to consumer buying habits. It crippled certain businesses, while other thrived. But what was surprising out of all this somewhat seemingly hopeless debacle, we started looking within rather than outward and reassessed their needs and wants and tapped into our good-Samaritan gene seeking to help out our fellow neighbor, especially for those in need. This also translated to businesses as it has triggered an unprecedented wave of innovation as companies ended up reinventing themselves in response to this new reality, wanting to help and impact their community by aligning it with their profit maximization.
Having a social impact built into your business model focuses on impact. However, they still use the dynamics of the market and rely on price/profit mechanism to effectively serve the needs not only of their consumers but more importantly, the recipients who will be impacted. Thus, the value chain dynamics revolves around utilising profit-gaining market forces to benefit the consumer with a quality product while allowing the profit made to be put back into the community.
Consumers seek it
This idea of a social impact enterprise has gained traction in certain societies and markets. Nevertheless, one thing is certain, the social enterprise sector continues to grow. Even last year saw the top 100 fastest growing social enterprises growing on average by 91%.
However, the strength of being a business that adopts a social enterprise model lies partly on its predisposition to bring lessons from business and apply them to answering social need. This not only means the financial sustainability of an enterprise becomes a top priority, but it also encourages us to think delivery of social good as more than a static end result.
A Deloitte study published in 2020 found that 43% of consumers actively choose brands due to their environmental values, and over one-third of shoppers choose brands based on their ethical credentials. Increasingly, consumers want to spend their money with businesses whose core mission is to make a real difference, rather than just lining the pockets of owners and shareholders.
In another report by Business Wire, a whopping 70% said they will purchase a product because a company supports an issue they care about and want to know what the brands they support are doing to address social and environmental issues. This reflects a shift in consumer awareness about the impact of their purchase decisions.
What is the bottom line?
Financial Times reported that consumer spending on sustainable products in the UK (which includes ethical and products that have a social impact connected) reached £29.7bn in 2019, up from £3.1 bn in 1999 when it first started tracking them.
Using social impact as a sales incentive can reduce client acquisition costs and be more effective than other customer acquisition tools by up to 25%. Additionally, sellers can increase their revenues by up to 7% when using social impact as a sales differentiator. The bottom line is stronger too: a 2% increase in sales margins can be achieved because of the reduced discounting on deals.
Having a positive public image means getting more customers. If a company behaves ethically and socially responsible, it will most likely improve the way in which a business is perceived. The emotional commitment that people develop towards social enterprises boosts customer retention and loyalty and prevents the search for alternatives among competing brands. It could tip the scale to buy your product when a consumer is faced to choose from two.
This in turn allows these brands to benefit from higher levels of loyalty and customers’ strong commitment to repurchase this company’s products or services.
Inspiration and doing good comes in many forms. For some, inspiration leads to creating a social enterprise. However, in whatever form it comes in, there is a common denominator that binds them all: the desire to do good in the world and have a sustainable social impact.
For businesses, and owners, who are struggling to find an identity and perhaps tired of pursuing just a for-profit mindset, to pivot to a social enterprise model may not only make economic sense but it would also give you purpose to make the world a better place.
Want to Learn More?
If you enjoyed this article, go and check out my TedX presentation on YouTube called “Entrepreneurship and Empathy”. You can also check out the story of my business, evo3 olive oil.
If you want to learn about creating good habits in your life which can also be implemented in your business ethos, go and check out my book: SLOW Life Diet — Greek Village Living: The Pathway to a Healthier Lifestyle, Healthy Habits, and a Happier You.
It provides a detailed explanation of this slow living lifestyle and provides a guide to help you on your journey in adopting the habits and lifestyle into your own life.
No responses yet