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A clear purpose is what drives a company's success. For companies, small and large, purpose gives a clear direction. It helps a company define who they are, what they stand for, and what they want to achieve by selling their products and services.
When a small business owner hears about a "purpose-driven strategy," they might assume that this is another piece of corporate jargon that doesn't apply to them. However, that couldn't be further from the truth. By defining purpose early on, a business gives itself the fuel to drive sales, maintain customer loyalty, and experience rapid growth. Purpose-driven companies grow three times as fast as their competitors, gain higher market share, and achieve higher customer satisfaction rates.
Keep reading to discover precisely how defining your purpose can positively impact your business.
Loyalty
Customers are more willing to stay loyal to a brand, pay more for a brand, and defend a brand with a common purpose. According to a Cone/Porter Novelli study, 66% of consumers are willing to switch from their regular product to a new one from a purpose-driven company. This number increases to 91% for millennials.
There are similar numbers for Gen-Z consumers (making up more and more of the buyer's marketplace). When Gen-Z customers find out a company is socially responsible or supports a social cause, they trust the brand more, are more likely to purchase the product, and recommend it to others.
When it comes to your company's growth, customer loyalty matters. An older but well-respected Bain & Company study indicated that increasing your customer retention by just 5% can increase your profits by as much as 95%. A purpose-driven business drives customer loyalty, and customer loyalty drives profits.
Reputation management
According to Deloitte, one of the top retail trends for 2024 was having "an authentic purpose." It concluded that leading with a purpose will be just as disruptive to retail in the next ten years as digital has been in the last decade.
Consumers now go out of their way to discover what causes a business stands behind. Increasingly, the consumer base expects organizations to stand behind a purpose. And not doing so may cause harm to your brand's reputation. It's essential to have a purpose and transparency in sharing it with customers to garner a positive brand reputation.
Innovation
Purpose creates a culture that supports innovation. When a business can demonstrate what it values and tries to achieve to its customers and employees, it puts everyone on the same page. Employees who have ideas about how to get further towards that vision will feel compelled to share them. Customers will provide feedback knowing the business wants to improve and work towards a specific goal.
A recent study found that 53% of executives who work for an organization with a strong sense of purpose also felt that their company was successful with innovation and change.
Growth
Perhaps most importantly of all, purpose drives business growth. First, having a purpose means a company is more likely to reflect on its actions. Businesses need to contemplate if they are still supporting and prioritizing their mission. In these moments of reflection, companies can improve their products or services, ultimately benefiting their customers.
Secondly, purpose resonates with customers, which directly reflects in sales volumes. In fact, according to a CGS survey, two out of three consumers take sustainability into account when making a purchase and are willing to pay a premium for it. In particular, Gen-Z is willing to pay between 50-100% more for sustainable products.
Sustainability is just one example, but the same principle applies to inclusive companies donate partial profits to charities, are ethical in their sourcing, and more. Customers are happy to pay a premium for a purpose-driven product or service.
What is a purpose-driven brand?
A purpose-driven business has more opportunities. But what does it mean to be a purpose-driven brand?
A purpose-driven brand is a business highly motivated by its core mission. The brand provides a service or product that fits consumers' needs and fuels this mission.
Companies can claim to be purpose-driven in various ways, such as being fuel efficient, environmentally friendly, cruelty-free, or inclusive. Some businesses claim to have organically grown or ethically-sourced products, while others tout minimal packaging.
Moving forward
When your brand has a purpose, it helps define what kind of impact you want your company to have on the world. Finding your purpose can lead to tremendous success, increased sales, and intense customer loyalty.
Another way to show that your business is purpose-driven is to obtain BBB Accreditation. Visit BBB.org/get-accredited to learn more about BBB Accreditation and how it can help your business.
For more information
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Read more articles on ways to improve your business growth.
BBB of Southern Piedmont and Western N.C. contributed this article.