CEOs are the New Politicians: 5 Things Brands Need to Know About Demands for Social Activism

Today, consumer-facing brands are facing a unique threat with consumers continuing to demand more from CEOs. Consumers are starting to expect brands to take stands on hot-button social issues.

Below are 5 tips to navigate a hyper partisan environment.

  1. Understand Your Customer & Employee Base Before You Speak on a Social Issue

One thing that brands really fail to understand is who they are selling to. Often business owners are disconnected politically and socially from their employee and consumer base. Before taking any side, companies need to think about who they sell to and where they recruit their employees from.

For example, Nike focused on the fact that its customer base is urban, cosmopolitan and thus Democratic leaning before deciding to align itself with Colin Kaepernick. Stephen Ross of The Related Group – the owner of Blink Fitness and Equinox – did not think that through before aligning himself publicly with fellow NY real estate developer, President Trump. As a result, The Related Group faced a consumer boycott from some of its most loyal customers.

However, your customer base and employee base will not always be the same. For example, Facebook has a business incentive to back the Republican Party to stave off anti-trust action but must recruit employees who are more liberal leaning. Companies who face that challenge are going to end up paying a talent premium.

  1. We Live in the Era of 47%

While consumers are now expecting brands to reflect their values, they are still far more likely to boycott a company that does not reflect their values than to shift to a brand that does. As a result, companies really need to minimize the downsides of boycotts and take positions on issues that align as closely as possible with customer and employee demographics.

One important thing for companies to remember is that you don’t always need majority support of America, only majority support of your customer base.  Just as President Trump can stay afloat with a 47% approval, controversial brands do not need majority support if they have a loyal base.

  1. Politics and Business Speak to Different Customers

Our political system is structured to promote the interests of rural, ex-urban and suburban residents and dilute the power of big cities. Combined with the fact that older Americans outvote their younger counterparts by significant margins, the political system overweights the voices of older, more rural and more conservative Americans. The opposite is true in consumer markets. Most goods are bought in big cities and thus consumers are far more likely to be younger, more diverse and more liberal than their average voter.

  1. Take a Break Before you Respond to Breaking News

Hold your breath and count to ten! You are not CNN; you do not need to break the news or get ahead of any story.

Dick’s Sporting Goods, which removed all firearms from its store after a spate of mass shootings, only did so after it tested the impact on revenue in a handful of stores.  Nike used social listening before committing to the Kaepernick ad. Both companies did this to ensure that their actions would be well received.

It is important to see which way the winds are blowing before you raise your sail and head out to choppy seas.

  1. If You Can’t Fake Sincerity, You Will Get Nowhere.

One major challenge for brands that have decided to position themselves as woke, is that consumers expect that to continue even when it negatively affects business. The NBA’s recent challenge and blow-back related to its back tracking on the political unrest in Hong Kong was worsened by the fact that the NBA had previously decided to brand itself as a woke and socially conscious sports league, especially on issues of civil and political rights.

Patagonia & CVS Health are two companies that have shown their commitment to brand supersedes short term profits.  Patagonia ended its practice of selling co-branded vests to Wall Street firms and now only partners with non-profits and companies that have a social mission.  CVS also put its brand value ahead of short-term profits by removing cigarettes from stores. This showed consumers that CVS was committed to health care and not just maximizing revenue.

Just like Marie Antoinette, brands cannot have their cake and eat it too.

How do brand navigate these new waters? The best place to start is with a full audit of your customers and employees and to make sure that both external and internal communication reflects your stakeholder’s values. Need help with that? That is where a PR firm can come in. Not only can we help you navigate away from trouble, we can keep you out of it in the first place. Please reach out to see how we can work together.

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LinkedIn: Quintin Maidment

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