Knock Out Your Goals in 2025
🚀 NEW eBook: Knock out your revenue goals for 2025! Discover 40 proven eCommerce strategies from top Shopify experts!
…
The 6 step approach to make purpose-driven business commercially viable
- Shanil Modi
According to a study by Deloitte, 78% of consumers are more likely to remember brands that exhibit a strong sense of purpose. Such brands can 2x their market value up to 4x faster than their low-purpose counterparts.
But what does it mean to be purpose-driven? And how do purpose-driven brands ensure they maximise the commercial benefits of such an investment?
What does it mean to be purpose-driven?
Fundamentally, purpose-driven brands are built around a clear set of values and beliefs and they exist for a purpose bigger and more altruistic than profit. Like any for-profit venture, maximising the bottom line is key – but baked into the underlying brand DNA are impact goals designed for people and / or the planet.
There are 3 factors driving the transition towards high-purpose:
> It’s a source of competitive advantage in a rapidly growing market of conscious shoppers and values-based consumption, paving a way to capture market share
80% of Millennials and Gen-Z are only willing to buy from brands that truly care about people and the planet. In 2022, 70% of shoppers bought from the competitor of their go-to brand because of a lack of connection with the brand’s values. According to Forbes, consumers are up to 6x more likely to purchase, protect and champion purpose-driven companies that share similar values with them.
> Regulatory tailwinds
The EU’s Corporate Sustainability Due Diligence Directive and the New York Fashion Act are examples of the many regulations being introduced in Europe and the US designed to hold multinational organisations to account around monitoring and reporting environmental and human rights issues within their value chains. Businesses that aren’t able to adhere to the regulation face costs of up to 5% of their global turnover.
> High purpose brands are more productive because they can attract & retain the best talent, both within their organisation and across the entire value chain
McKinsey research found that people who say they are “living their purpose” at work are 4x more likely to report higher engagement levels than those who say they aren’t.
There’s a lot of noise on social media surrounding “sustainability” and “impact” initiatives amongst the e-commerce community – from small, independent brands all the way up to enterprise – yet when one zooms out globally, less than 20% of major fashion brands disclose any investment into the decarbonisation of their value chains.
Why is there a mismatch between the noise and the data?
In reality, a purpose-driven strategy often means a higher cost base, reducing profitability – at least in the short term.
If the incremental costs of: ensuring workers are paid fair wages; or of switching to more sustainable materials (e.g. organic cotton); or of donating a portion of sales to a non-profit, are not passed on to the end consumer, the bottom line will be impacted.
In a world of high inflation and slow growth, it can be an expensive pill to swallow.
But there’s a material revenue opportunity if brands can market their unique value proposition around sustainability and impact to their conscious customers as part of their story, to increase engagement and loyalty.
How?
The solution is to build a personalised customer experience E2E, underpinned by purpose-driven content
According to Sprout Social, purpose-driven content often generates higher engagement on social media platforms. 65% of consumers feel more connected with brands that have a strong online presence, and purpose-driven content can contribute to that connection by resonating with their values.
Engaging, purpose-driven content is typically educational or entertaining.
As an example, Pangaia’s revenue growth to $75m in less than 2 years was largely attributable to their purpose-driven content strategy, which boosted engagement and loyalty. They used authority and authenticity to drive meaningful connections with their audience on social media, with 80% of their content focused purely on education and entertainment as opposed to product. The use of cause marketing and activism in which Pangaia, alongside the fashion icons they collaborate with (e.g. Pharrell Williams), actively takes a stand on various environmental and social issues, also resonated with their conscious customers which helped to build visibility and loyalty.
So how can you apply this to your brand?
I’ve developed a 6 step approach that could help you with your decision making process. Let’s use an example of a brand looking to give back to causes that resonate with their purpose.
Step 1
Decide on the purpose-driven initiative(s) that you’d like to prioritise.
Let’s assume that you’d like to donate a small portion of your revenue to a charitable cause that aligns with your mission.
Step 2
Define your hero KPIs and calculate how much those KPIs need to improve in order to achieve positive ROI
What problem are you trying to solve? Is it Engagement? LTV?
- A UK business, donating 1% of its revenue to a non-profit means it needs to drive revenue growth of 3% in order to achieve net income break even, accounting for tax breaks (assuming all else equal).
- That could be driven by a combination of AOV and Order Volume uplift.
- Targeting order volume would mean analysing and selecting metrics such as Cart Conversion, Retention etc.
Step 3
Decide on a creative way to design and market the initiative, with a focus on personalisation to maximise ROI
- A problem we often see is that purpose-driven brands do not creatively market their impact initiatives to their conscious customers, which means they see impact as a cost item on the PnL.
- Brands should consider how they can better engage and involve their customers in their decision making process as to which initiatives to support as well as provide updates on the progress of chosen initiatives.
Step 4
Insource vs Outsource
- We often see brands choosing to run initiatives in-house, but then struggle with the admin of implementation.
- Consider exploring plug & play tech solutions that are out there in the market to help implement such initiatives to achieve your objectives.
- Run a cost / benefit analysis to understand whether or not it is optimal to outsource.
FYI – I’m building greenkart, a plugin helping purpose-led brands increase engagement and LTV through their impact initiatives. Shoppers donate a small % of their purchase (at no extra cost) to a greenkart-vetted, charitable initiative of their choice (in line with the brand’s purpose), and track their impact E2E via automated email updates
Step 5
A / B test and iterate based on the data and customer feedback
- Run A / B tests with different customer segments to assess performance and use the data to guide product iterations.
- By opting to outsource, you’ll find that tech partners are often willing to design bespoke solutions to suit your needs (e.g. with greenkart, we’re currently building our next version and onboarding brands to our waitlist… they get the privilege of being offered a tailored solution with a 1 month free trial!)
Step 6
Enjoy the success, continue closely monitoring your hero KPIs and keep collecting feedback!
In the case of greenkart, the first fashion brand we partnered with saw +8% higher AOV, +10% higher Repeat Purchase and +8% Cart Conversion in less than 10 weeks!
Wrapping Up
A shift in mindset and approach is the key to unlocking commercial success with a purpose-driven strategy. Let your commercial objectives define the purpose-driven approach you take and don’t be afraid to iterate to ensure the customer experience is as personalised as possible!
Contact Us
I’d love to hear your thoughts – if you have any comments / questions do feel free to reach out via email at: [email protected]
or book a meeting directly with me >> here!
Related Insights
Need an answer to a problem? Take a look at our insights section to find advice, guidance and recommendations across a range of e-commerce topics – from conversion to retention and loyalty, from systems integration to remarketing.
Repeating Customers Build Ecommerce Brands: Why Loyalty Makes All the Difference
Guest Blog Exclusive! Dicken Doe spills the tea as to how loyalty beats simple retention as a mechanism for…
5 video strategies every ecommerce brand needs to drive conversions
Guest Blog Exclusive! Trendy Grandad have five ultimate tips to nail down your video marketing strategies. Check them out……
Previous
Next
