“You have two hands, one for helping yourself, the other for helping others.”
— Audrey Hepburn
Key Points
- The term “cause marketing” was first introduced in 1983 by American Express after they pioneered a marketing initiative that helped to raise funds to renovate of the Statue of Liberty.
- Cause-related marketing saw a compound annual growth rate of 6.33 percent from 2002 to 2017.
- 87% of consumers will purchase a product or service because the company involved advocates for a particular cause or issue.
- When it comes to charitable giving, consumers perceive small businesses as being more sincere than large businesses.
- Companies should contribute to causes that align with their own core business activity.
- Millennials expect companies to take a stand on social issues and to pursue more than profit alone.
- Currently, Voguelle makes a donation from every sale to three not-for-profit organizations that advocate for workers’ rights in fashion-related industries.
Introduction
Cause marketing, also known as cause-related marketing, is a virtuous business practice. In simple terms, cause marketing can be described as a collaboration between a commercial enterprise and a not-for-profit organization. While this is true, cause marketing is now an industry in its own right and deserving of far greater analysis.
As such, many renowned marketing professionals of the last thirty or so years have examined this topic and attempted to provide further clarity as to what cause marketing really is. Providing a concise definition, the eminent marketing authors Philip Kotler and Nancy Lee describe cause-related marketing as when:
“…a corporation commits to making a contribution or donating a percentage of revenues to a specific cause based on product sales.” 1
Equipped with this definition, it is useful to take a moment to distinguish cause marketing from other forms of virtuous business practices, namely, corporate social responsibility and corporate philanthropy. For example, corporate social responsibility can be described as a business model that helps an organization behave in a socially responsible manner.2 Examples of corporate social responsibility include companies fulfilling their environmental responsibilities and adhering to employment legislation.3 Unlike cause-related marketing that can be considered as companies going above and beyond the minimum requirement, corporate social responsibility is an expectation that all companies should meet.
Meanwhile, corporate philanthropy happens when commercial businesses donate funds to non-profit organizations and/or good causes.3 While noble and admirable, corporate philanthropy lacks any real business objective (despite, perhaps being tax deductible) and is less likely to create much public awareness, as is the case with cause marketing.
Obviously, both corporate social responsibility and corporate philanthropy are always commendable. However, many would argue that cause-related marketing is a more impactful approach for companies to take when contributing to the greater good. History suggests that cause marketing can be hugely beneficial for companies, their benefiting causes, and even consumer sentiment.
History & Examples of Cause Marketing
Depending on the source, the concept of cause marketing can be traced back to 1976 when the Marriott Corporation partnered with a non-profit organization called March of the Dimes. The goal of this initiative was to raise funds for March of the Dimes in order to facilitate their work in helping to prevent premature births and birth defects. Meanwhile, the media coverage of this initiative proved to be a valuable source of PR for the Marriott Corporation.4
For others, the concept of cause marketing began in 1983/84 with the much-celebrated collaboration between American Express and The Statue of Liberty Restoration Appeal Fund. On that occasion, American Express was one of several major corporations that were approached with the aim of raising $5.4 million to help renovate the dilapidated monument.
Images by Gerd Altmann & stinne24 from Pixabay
Surprisingly, they declined to make a contribution.5 Instead, Jerry C. Welsh, a marketing executive at American Express, devised a far more ambitious plan.6 His plan consisted of American Express making a financial contribution to the restoration fund every time one of its customers performed a transaction. More specifically, Welsh’s plan involved:7
- A one cent donation for every credit card transaction.
- A one dollar donation for every new credit card account opened.
- A one dollar donation for every $500 travel package purchased.
- A one cent donation for every purchase of American Express Travelers Cheques.
The results of this campaign were phenomenal for both American Express and the Statue of Liberty Restoration Appeal Fund. For American Express, the positive PR surrounding the three-month-long campaign lead to a 28 percent increase in credit card usage while applications from new customers increased by an impressive 45 percent. Meanwhile, $1.75 million dollars was also raised for the restoration fund.7
The success of this initiative lead American Express to coin and trademark the term “cause-related marketing.”8 Since then, businesses of all sizes from all over the world have taken inspiration from this example. The growth of cause marketing has continued unabated.
The Growth of Cause Marketing
The success of the previous example inspired a wave of like-minded initiatives. Some other high profile examples include:
- Maker’s Mark & One Warm Coat: a marketing initiative by Maker’s Mark that enabled them to donate over 20,000 used coats to the One Warm Coat foundation.9
- Yoplait & Susan G. Komen: since 1998, Yoplait raised over $50 million on behalf of this breast cancer research foundation by donating 10 cents for every yogurt pot lid that its customers returned.10
- Starbucks & the Global Fund to Fight AIDS: similar in style to the Yoplait approach, Starbucks donates 10 cents from every beverage sold on World AIDS Day. In eight years, Starbucks has donated over $14 million to this fund, which is then used to educate coffee-growing communities in Africa about the prevention and treatment of AIDS.11
These and many others are some of the leading examples of how effective cause marketing can be. However, as cause marketing has become such a popular strategy with marketing departments across the world, it would be entirely impractical to list every example here. Instead, it is worth taking a look at some of the recent data and statistics that demonstrate the growth of cause marketing since American Express first got the ball rolling in 1983.
Cause Marketing Growth Rate & Statistics
The growth of cause marketing in recent years is truly impressive. According to one report, the value of cause marketing increased from $816 million in 2002 to $2.05 billion in 2017.12 That equates to a compound annual growth rate (CAGR) of 6.33 percent. A graphical representation of this data is presented below.
Graph data courtesy of ESP Properties, LLC / IEG, LLC via Engage for Good.12
Thankfully, this trend is set to continue with cause marketing sponsorship expected to reach $2.23 billion in 2019.13 That would represent a 4.6 percent increase in the figure of approximately $2.13 billion for 2018.13
While such growth figures are clearly impressive, it is also worth noting some of the other key statistics that market researchers have revealed in recent times. Most significantly, data shows that issues pertaining to consumer perceptions of a brands social impact can influence other factors such as customer loyalty and a willingness to recommend that brand to other people. The following infographic is a showcase of some of the more compelling arguments for cause marketing in recent years.
Infographic data courtesy of Engage for Good.13
Corroborating with much of the data presented above, CONE research from 2017 highlights four key statistics relating to the impact of cause marketing. These are:14
- Where government leadership is lacking, 63% of consumers wish for companies to take a lead in the drive for social and environmental change.
- 78% of consumers want companies to tackle issues relating to social justice.
- 87% of consumers will purchase a product or service because the company involved advocates for a particular cause or issue.
- 76% of consumers would refuse to purchase from a company that they believe is supportive of an issue that is contrary to their own personal beliefs.
Academic Research
While most of the research into cause-related marketing is conducted by commercial organizations, new insights are also coming from the world of academia. Several recent academic papers add further credence to the research mentioned above. For example, De Vries and Duque (2019) advise that cause marketing can be particularly beneficial for smaller businesses. The reason for this is that consumers see small businesses as having to make a much greater effort to engage in cause marketing activities. As a result, small businesses are seen as being more sincere in their charitable efforts and command a greater degree of respect from customers for getting involved.15
Meanwhile, Howie et al. (2018) recommend that companies should allow their customers to choose which causes they want to support. According to their findings, doing so increases the likelihood that customers will perceive a company as being ethical and socially responsible.16
Finally, Kim, Youn, and Lee (2019) propose that companies suffering from previous negative reputations can improve their brand image by engaging in cause marketing activities.17
Based on all of this research, both commercial and academic, it is clear that cause marketing continues to grow in popularity and influence. This is true for companies and their staff, charities, and of course, consumers. However, effective cause marketing is not as simple as picking a random cause to support and hoping for the best. As the cause marketing concept has evolved over the years, so too has a set of guiding principles and best practices. Therefore, with so many benefits to be gained from the practice of cause marketing, companies would be well advised to do so in a strategic manner.
Cause Marketing Best Practice
As wonderful as cause marketing can be, it’s not all roses and butterflies. When done incorrectly, cause marketing can actually backfire on a company. One such high profile example of this was when Kentucky Fried Chicken partnered with Komen for the Cure. Obviously, both organizations had good intentions. However, a fast-food company partnering with a health-related cause was seen by many people as a complete mismatch. The lesson here was that perceptions in cause marketing are critically important.
To prevent such mishaps from happening, marketing experts advise on following certain best practices. These include:18, 19, 20
- Choose a related/relevant cause: as demonstrated by the example of KFC and Komen for the Cure, choosing to support a cause that relates to or aligns with your business is essential. A good example of this would be a clothing company collaborating with a charity that supports homeless people.
- If possible, act locally: cause marketing campaigns that advocate for local issues can be very effective. Typically, people are very concerned about issues in their local communities and look favorably upon businesses that get involved.
- Be specific: people need to know exactly what cause you are supporting. Therefore, claiming to care about the environment is not sufficient. Instead, explaining to people that a percentage of the proceeds from each sale will contribute towards the clean-up of a specific local amenity is much more likely to spur people into action.
- Be positive: it’s easy to focus on all of the negative aspects related to the cause you are supporting… for example, the awfulness of cancer. However, marketing campaigns are far more effective when they focus people’s minds on the positive goals you are hoping to achieve… for example, funding research to find a cure for cancer.
- Educate all involved: wherever possible, consumers and even staff members should be made fully aware of the details of the partnership being pursued along with the company’s motivation for supporting that cause.
By following best practice, businesses of all sizes in just about any industry can contribute towards the greater good and bolster their own image by engaging in cause-related marketing. Moreover, there has never been a better time to adopt a cause marketing campaign as it is now almost an expectation of the millennial generation.
The Millennial Effect
Millennials are great! They really are. Never before has a generation of people been so well informed and conscientious about the welfare of our planet and all who inhabit it. With this in mind, it is now essential that companies are seen to engage in ethical business practices that are above and beyond the sole pursuit of making a profit. In fact, failing to contribute towards a worthy cause can be very harmful to modern businesses.20
For instance, research published by DoSometing Strategic finds that 67 percent of millennials have previously stopped purchasing from a company that stood for something that did not agree with their own personal values. Conversely, 76 percent of millennials said they have purchased from companies that support issues that align with their own personal values.13
These findings are very significant and reflect a set of standards that millennials expect from companies. Here at Voguelle, we take all of the above information into account and use it in guiding our cause marketing efforts.
The Voguelle Approach — Our Major "WHY"
Before outlining the specifics of how Voguelle conducts its cause marketing campaigns, it’s worth reflecting on how we developed our major “why”. By “why”, one is referring to our raison d’être, our reason for existing and the difference we want to make in the world.
While originally developed as a fashion brand selling the trendiest fashion accessories to the e-commerce generation, it quickly became apparent that Voguelle was, well, just any other online store. It was one of a countless number of similar websites. While there was nothing inherently wrong with this, it didn’t give our business any real sense of purpose. We lacked a major “why”.
With this realization came a period of introspection. We needed to find a greater reason for being, to serve a cause bigger than ourselves. While we reflected on this issue, the world watched in horror as two worsening migrant crises developed in the Mediterranean Sea and in Central & North America. The sight of desperate people making perilous journeys across hostile environments, hoping to flee violence and oppression in their own home countries proved to be a catalyst for change at Voguelle. This would be our calling.
With this realization, we set about finding ways for our business to contribute towards bettering the lives of people in underdeveloped parts of the world. Specifically, we would help people in such locations who work to produce products for the fashion industry. With just a small amount of research, it became abundantly clear that this was not only a noble cause but also, a feasible goal.
Firstly, by utilizing modern e-commerce systems, it is possible for producers and sellers in any remote location to interact with customers all over the world. Secondly, modern logistics and distribution networks make the transportation of goods around the world easier than ever before. Because of these realities, e-commerce has the potential to enable economic growth and development to take place in any part of the world. This is tremendously exciting.
With that said, many difficulties still remain, particularly in the area of technical expertise. All too often, artisan producers in remote parts of the world create wonderful products that Westerners would be very happy to buy. However, a lack of e-commerce know-how and poor technical infrastructure can inhibit this trade from taking place. As a result, artisans are left to eke out a living by selling to the local (limited) tourist trade.
Thankfully, the fair trade movement is addressing this problem. Using their considerable influence, the fair trade movement is able to bridge the gap between artisan producers around the world and businesses like Voguelle that have a customer base who are enthusiastic about purchasing ethically produced fashion items. This is the starting point for Voguelle. We are committed to supporting the fair trade movement and have a lot more work to do in expanding our fair trade inventory. Overall, our goal is to provide an environment where fair trade artisans can exist as equals alongside some of the world’s most recognizable fashion brands.
With that said, we quickly felt somewhat restrained in the amount of good that we could do with our fair trade activities. Due to current limitations within our distribution network, we only sell fair trade products to customers in the United States. As a company with customers all over the world, there is a lot more good that we can do.
In order to do so, we began the process of finding other ways and means of contributing to the greater good. It was at this stage that we really started to realize the full potential of cause-related marketing. By finding a way to support relevant causes, we now had the opportunity to give all our customers, in every part of the world, the opportunity to participate in helping us to implement our “why”. Therefore, what first appeared to be a limitation within our fair trade strategy, ultimately lead to a second, complementary strategy for supporting our “why.”
Our Causes
As a modern e-commerce business, Voguelle prides itself of utilizing the best technology available. As such, in order to facilitate our cause marketing activities, Voguelle uses the Pledgeling Give & Grow application on the backend of this website. Based in California, Pledgeling is a wonderful organization that facilitates the alignment between brands and good causes. At the time of writing, Pledgeling has processed almost $20 million worth of donations to good causes across the world in a wide array of charitable sectors.
For companies like Voguelle, Pledgeling is a tremendous asset. However, with more than one million nonprofits to choose from, it would be easy for us to become overwhelmed by choice. Thankfully, Pledgeling limits the number of nonprofits a company can work with to 12. Furthermore, they also provide an excellent search facility so that brands like Voguelle can easily find relevant causes to support.
Following best practice, Voguelle makes sure to support causes that are relevant to our core business. Of course, with so many nonprofits to choose from, it would be tempting to try to solve all of the world’s problems and make donations to all kinds of charities, everything from non-profits that conduct medical research to NGOs that are involved in environmental conservation. However, as outlined above, the evidence is in and the correct approach is to support nonprofits that are relevant and aligned to the industry we operate in.
Furthermore, as academic research unveiled, the patrons of a business are always appreciative of the opportunity to select from a range of charities to support. Therefore, Voguelle currently supports three great causes, each of which advocates for the protection of vulnerable people that work in or may end up working in fashion-related industries. Accordingly, during the checkout process, customers of Voguelle have the option of choosing which charity they would like a donation to be made to. Otherwise, the donation is split evenly amongst our chosen causes. The following image is a screenshot of this process in action followed by a brief description of each of the nonprofits that we currently support.
Labour Behind the Label
As the name suggests, this organization advocates for the rights of people working in the garment industry across the world. By raising public awareness, Labour Behind the Label is helping to improve the working conditions of people who supply products to the fashion industry.21
Action Against Child Exploitation
According to this organization, there are 168 million children around the world who cannot receive a proper education because they are forced into labor, often working in hazardous conditions. In many cases, these children are forced to work on cotton farms that supply the fashion industry.22
Fair Trade Certified
The fair trade movement is close to our hearts. Fair Trade Certified is a great organization that facilitates sustainable development for workers in communities across the world. They do this by certifying and promoting fair trade products.23
An Ongoing Process
As you can imagine, we are very proud to support each of these organizations. People everywhere should be able to work safely and with dignity. And now, more than ever, consumers in the West are demanding this from the commercial sector. Of course, our work in selecting nonprofits to support is never done and we are always searching for other good causes to back.
For example, the International Initiative to End Child Labor is a nonprofit organization that we have noticed on Pledgeling and are hoping to add to our list of good causes. Rest assured, as soon as it becomes available we will add it as an option. We have room for nine more good causes so watch this space!
Conclusion
As we can see, the era of cause-related marketing is now well established. To paraphrase Jerry C. Welsh, a founding father of cause-related marketing, corporate giving is no longer a case of checkbook philanthropy, instead, it is a combination of corporate marketing and social responsibility.24 Or, as we like to say at Voguelle, if you’re gonna be marketing anyway, you might as well do well!
Now more than ever, consumers, particularly of the millennial generation, expect companies to advocate for social issues. The relentless pursuit of profit alone is no longer adequate. While it is the case for most commercial organizations, cause marketing can be particularly beneficial for smaller businesses as consumers view small businesses as being more sincere in their charitable giving.
In short, as a marketing activity that brings countless benefits to businesses, nonprofits, and society at large, cause-related marketing is undoubtedly a virtuous business practice.
References
[1] Kotler, P. and Lee, N., 2005. Corporate Social Responsibility: Doing the Most Good for your Company and Your Cause. 1st ed. New York: John Wiley & Sons Inc.
[2] https://www.investopedia.com/terms/c/corp-social-responsibility.asp
[3] https://www.lynda.com/Marketing-tutorials/What-cause-marketing/656808/719542-4.html?srchtrk=index%3a1%0alinktypeid%3a2%0aq%3acause+marketing%0apage%3a1%0as%3arelevance%0asa%3atrue%0aproducttypeid%3a2
[4] https://www.huffpost.com/entry/cause-related-marketing-j_b_409633
[5] https://www.independent.co.uk/arts-entertainment/cause-related-marketing-discovery-is-credited-to-amex-1160323.html
[6] https://www.nytimes.com/1986/07/06/business/cashing-in-on-higher-cause.html
[7] https://www.growwithfarm.com/cause-related-marketing/
[8] Daw, J., 2006. Cause Marketing For Nonprofits: Partner For Purpose, Passion, And Profits (afp Fund Development Series). Wiley.
[9] https://www.brandwatch.com/blog/cause-marketing/
[10] https://www.forbes.com/sites/davidhessekiel/2017/04/18/four-cause-marketing-classics-passed-last-year-and-a-new-era-began/#284aaa8c7e8d
[11] https://ids.uni.edu/agoodcause/2017/03/09/10-impactful-cause-marketing-campaigns/
[12] https://engageforgood.com/iegs-growth-cause-marketing/
[13] https://engageforgood.com/guides/statistics-every-cause-marketer-should-know/
[14] http://www.conecomm.com/research-blog/2017-csr-study
[15] De Vries E.L.E., Duque L.C. (2019) The Impact of Firm Size and Gratitude on the Effectiveness of Cause Marketing Campaigns: An Abstract. In: Rossi P., Krey N. (eds) Finding New Ways to Engage and Satisfy Global Customers. AMSWMC 2018. Developments in Marketing Science: Proceedings of the Academy of Marketing Science. Springer, Cham
[16] Howie, K.M., Yang, L., Vitell, S.J., Bush, V. and Vorhies, D., 2018. Consumer participation in cause-related marketing: An examination of effort demands and defensive denial. Journal of Business Ethics, 147(3), pp.679-692.
[17] Kim, H., Youn, S. and Lee, D., 2019. The effect of corporate social responsibility reputation on consumer support for cause-related marketing. Total Quality Management & Business Excellence, 30(5-6), pp.682-707.
[18] https://www.americanexpress.com/en-us/business/trends-and-insights/articles/the-90-edge-discover-the-power-of-cause-marketing/
[19] https://hbr.org/1999/09/good-cause-good-business
[20] https://www.entrepreneur.com/article/197820
[21] http://labourbehindthelabel.org/
[22] http://acejapan.org/english/
[23] https://www.fairtradecertified.org/
[24] https://www.nytimes.com/1987/03/29/business/business-forum-doubts-about-cause-related-marketing-profits-have-place.html