The story of two CEOs
In early 2017, 500,000 users deleted their Uber app amidst the #DeleteUber grassroots social media campaign. The backlash against the ridesharing giant came after the CEO, Travis Kalanick, opted to not participate in a New York City taxi strike protesting President Trump’s travel ban.
Meanwhile, Lyft’s CEO Logan Green condemned the travel ban and pledged to donate $1 million to the American Civil Liberties Union over four years. According to Lyft’s pre-IPO S-1, the CEO’s move improved their revenue per active rider significantly in the first and second quarter of 2017.
Consumers now buy on belief
A company’s stance on relevant issues can strongly influence a purchase decision.
A 2018 Edelman Earned Brand Study reveals that two-thirds (64%) of consumers around the world now buy on belief, a massive increase of 13% since 2017.
The challenge becomes threefold: knowing the right stance to take, identifying issues relevant to a brand’s consumers, and who a brand’s Advocates and Adversaries are.
Belief-driven buyers are now the majority in every market surveyed, across all age groups and all income levels. The report discards the notion that only millennials and Gen Z care about corporate stance on political issues. Almost as many consumers aged 35-to-54 buy on belief as 18-to-34-year-olds, and consumers aged 55+ are following closely behind.
Clearly the market is pushing CEOs into the often uncomfortable arena of activism.
Why having a “stance” has become so important
As trust of institutions such as government and organized religion erode, Corporate America is quickly filling the void.
According to Gallup research, church attendance is down 20% in the last 20 years. The Edelman report states that government is less trusted than business and 54% of respondents say it’s easier for people to get brands to address social problems than to get the government to take action. These are large, concurrent changes in where society is looking for leadership.
The impact of social media, a more polarized political climate, and a decline in effectiveness of traditional advertising methods have also contributed to the necessity of taking a stance.
Corporate advocacy is now a plank in marketing plans. A brand’s stance can have as much importance in purchase decision as product features: 43% percent of consumers claim that a brand’s position drives their purchase intent, while 44% say it’s the same for product features.
Companies with a position receive more media attention which raises awareness and gets people talking (32% of consumers express intent to advocate for the brand after viewing a brand’s stand vs. 26% for product features). Quite literally customers who are ready to buy are saying: “Oh, yes, your product is great, but tell me where do you stand on X?”. Customers increasingly expect brands to stand for issues that are important to them. And the CEO is uniquely capable of communicating those messages.
The CEO is not only brand activist, but is even becoming as relevant as elected officials in setting the agenda and shaping public discourse.
The new role of the CEO
Using customer personas is a very common practice in marketing. It helps marketers put a face on their ideal customer and therefore reach them more effectively. To consumers, the CEO is the brand’s persona, and their actions reflect on the company as a whole.
CEO activism is a recent phenomenon. Corporate involvement in issues that matter used to happen behind closed doors, with lobbyists and PR agents leading the conversation. Today, CEOs are at the forefront of the conversation. They are encouraged to become activists for the causes their customers care about.
64% of the survey’s respondents said CEOs should take the lead rather than wait for the government to make change. The CEO is not only brand activist, but is even becoming as relevant as elected officials in setting the agenda and shaping public discourse.
CEOs on social media
Social media presence not only increases CEO’s public scrutiny but can make their corporate stances visible to millions of customers. Some corporate leaders are at the forefront: Bill Gates, Richard Branson, Reid Hoffman, John Legere, and Ray Dalio have significant audiences built around their personal brand. Their position on key issues can sway perception of a brand in seconds.
CEOs uniquely raise awareness for their brand, and can have a bigger impact than millions of dollars in marketing budget. Exposure comes with responsibility. CEOs have to be careful to not alienate their key consumers but at the same voice their position on important issues.
When taking a stance can make you (or cost you) millions
In recent years, we have witnessed numerous brands taking a stand. Some have been successful, others have failed, while others even managed to impact public policy.
Pepsi and Kendall Jenner: Pepsi’s attempt to promote unity drove their lowest consumer perception level in a decade. Kendall Jenner handing a can of Pepsi to a police officer amidst what looks like a peaceful protest was seen as a lazy attempt to appear socially conscious. The public found the ad inauthentic and it was taken down.
Nike with Colin Kaepernick: When Nike backed controversial football player Colin Kaepernick, investors held their breath. They were not so sure if the audacious move would pay off financially. Ultimately, Nike’s shares soared to a record high. They did not place a blind bet, Nike is the leading sports apparel brand for millennials, and it perfectly understands the preferences of their key demographic.
Dan Cathy from Chick-fil-A: Progressive issues are not the only ones championed by brands. Chick-fil-A’s CEO Dan Cathy denounced gay marriage in 2012. Same-sex marriage opponents flooded their restaurant, boosting sales by 12%.
Dan Schulman from PayPal: In response to North Carolina’s bathroom law, Schulman canceled PayPal’s plans for a new global operations center in Charlotte, which would have created more than 400 high-paying jobs. The Associated Press has estimated that the bathroom law controversy will cost the state more than $3.76 billion in lost business over a dozen years.
Bill Oesterle from Angie’s List In response to Indiana’s Religious Freedom Restoration Act (RFRA), Bill Oesterle, then the CEO of Angie’s List, canceled its planned expansion in Indianapolis. Marc Benioff from Salesforce joined him in the protest by threatening to halt all employee travel to the state. Then-governor Mike Pence approved a revised version of the law, which forbade businesses from denying service to customers because of their sexual orientation.
Before you take a stand
Consumers notice “faketivism” and don’t hold back in voicing their contempt (as they did with Pepsi). CEOs must navigate their personal and corporate values, their customers’ values and voice an opinion on issues that are meaningful. All while communicating in a way that appears authentic. It’s a difficult needle to thread.
Furthermore, CEOs must be willing to take action on the position, it is not enough to just talk about it. Failure to do so can label the brand as just riding the “woke-wagon” in search of profit.
Ultimately, the stakes are too high for CEOs and their brands not to take positions on issues. Understanding the issues the brand will and will not engage with, how they will communicate, and how they will take action are critical keys to success.
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