3,5 minute read
There’s been a lot of talk about Brand Purpose lately. The purpose of brands and of companies.
I have the impression that a long-standing concept has been brought to the forefront of businesses lately, which has already been discussed at a personal level, with concepts such as Ikigai, and is now also being mentioned together with other concepts such as social impact.
In this article I intend to analyse the concept of Brand Purpose and its real impact on companies.
And, logically, to talk about impact, you have to talk about indicators. Let’s get started!
What is Brand Purpose?
To quote Simon Sinek, author on the subject, the purpose of a company is its WHY, the reason why it exists beyond the purely financial sense (here is his TED Talk on the topic). It is a very powerful concept, one which should underpin the culture and all the present and future actions of any company.
When we started discussing Jelliby, the type of company we wanted to create was something we considered greatly from the start. We needed to believe that all the effort we were going to invest from that point forth was going to have a purpose, a ‘raison d’être’, beyond a financial one.
In our case, we want to create digital experiences that have positive impacts so that we can influence the well-being of people around the world.
That said, we cannot ignore the reality that the Brand Purpose concept has on the agendas of the world’s top CEOs for a very clear reason: it is very profitable.
According to a study conducted by Jim Stengel, CMO of P&G, of over 50,000 companies over a 10-year period, the 50 most profitable companies were those driven by a clear purpose, growing three times faster than their competitors.
But how can we measure the real impact of Brand Purpose? From a numerical standpoint, what KPIs can we use in the face of the skeptics to prove there is a need to work on it and communicate it?
Measuring the impact of Brand Purpose
Let’s assess how a company can benefit from having (and acting on) a clear purpose with a positive impact:
Impact on consumer engagement
As consumers, both personally and professionally (because let’s not forget that behind any business decision there are people), we are becoming more demanding and selective, and it has been proven that we will choose brands and/or companies that have a purpose, adopt a stance, and that are in line with our values and beliefs. Ultimately, in this digital and interconnected world, we are much more likely to recommend a brand with purpose.
As a result, indicators such as NPS (Net Promoter Score) or LTV (Life Time Value) can be undoubtedly influenced.
The NPS is based on a single question: “How likely are you to recommend the product or service to a family member or friend?”. According to the results, customers are classified as being promoters, “passive customers” or detractors. In order to obtain a result, the detractors are subtracted from the promoters and a percentage is obtained in order to measure the quality of the service.
The LTV is the value a customer represents to us throughout his life. It is calculated as LTV = Average Expenditure x Recurrence Acquisition x Customer Life.
Impact on Talent
Purpose is key in attracting and retaining talent. There are more and more studies along these lines, and we are not only talking about Milennials or Gen Z.
In this sense, turnover rates will be taken into account when measuring the impact of Brand Purpose, especially in view of the cost reduction that an improvement in this rate represents (the average cost of replacing a worker is 1.2 times his annual salary). Also, the success rate of selection processes in terms of the time and suitability of the candidate should also be improved.
Impacto on Innovation
It is reasonable to believe that operating with a clear purpose, that also has a positive social impact, will result in an increase in brand equity, making it much more attractive altogether. This in itself, is already an indicator to consider, but it can also have a second derivative.
Conveying a purpose with a positive impact opens the door for employees themselves to want to be part of that purpose, collaborating and contributing ideas to achieve it. This translates into innovation, the acceleration of initiatives that bring value to the customer, the employee and, many times, to society, ultimately improving the brand experience at all levels.
Therefore, indicators referring to internal innovation rates are also closely linked to Brand Purpose.
All things considered…Are you still not convinced of the need for your brand to have a clear purpose?