photo credit: Dennis Wright

If you had to choose between an idea that would generate money right now today and an idea that could generate considerably more money later, which would you choose?

It’s not a quiz, it’s an everyday decision. Some would say there’s no right answer for every business at every moment; that it depends on the circumstances; that a business hurting for cash flow probably shouldn’t pass up the short-term money. Some would say it’s a false dichotomy.

Every day we face the same choices in our personal lives when it comes to health and lifestyle decisions, and we understand the tradeoff: fun now vs. wellness later. Or when we make personal decisions about finance, and its our long-term financial well-being at stake. We know the value of compound interest, and we know that making healthy dietary decisions now can make all the difference in our health later in life.

But it seems that some businesses don’t even weigh their options; they automatically choose the short-term gains of immediate sales over creating something of lasting value. A company I used to work with struggled with this dilemma, even though they had solid earnings and money in the bank. It should have been easy to invest in their future by making decisions that would tend to make customers more loyal and return more often rather than drive customers to spend a little more in the short term.

Truly great businesses usually don’t make decisions that are based in short-term rewards; they seek outcomes that will prolong their health and enhance their longevity. We need more examples of that around us.

What’s an example you’ve seen recently of a company placing long-term health over short-term gains?

It’s not often that I do a double-take when I’m shopping for routine household goods, but last week I was actually on my tiptoes with excitement over a new version of an old product. What had me so enthusiastic? If you can even believe it, it was plastic bags.

Having a small child in the home, we seem to use a lot of sandwich and snack bags these days. Nothing is quite as convenient for Cheerios, cheddar bunnies, carrot sticks, graham crackers, or even a handful of wipes as a Ziploc bag, and we go through plenty of these plastic disposables every month. I’ve been less than thrilled with using even this small amount of plastic, but it never occurred to me that the bags would or could become more environmentally friendly.

Enter my show-stopping product: The new eco-friendly Ziploc evolve sandwich and storage bags are made from a new resin that uses 25% less plastic than their regular bags, are manufactured using approximately 50% renewable wind energy and packaged in a 100% recycled box, with at least 35% postconsumer content. I read these stats over and over again in disbelief. Ziploc is a brand of SC Johnson, a company that has been working rather diligently to transform their brands into “green” products; frankly, until the evolve bags, I wasn’t really convinced they were serious. I suspected that most of their effort was re-marketing the same old thing with new words and label designs without actually making a change.

It’s difficult to deny the statistics behind the new product. Significantly less plastic, 100% recycled packaging, and what impressed me the most, clean renewable energy as a major power source in production. As a consumer, I truly appreciate the opportunity to put my money into a company that is making a positive change in how it brings products to market and in how that product makes an impact on our world through its lifecycle.

I’m going to keep trying to cut back on the bags and use more reusable plastic products; but SC Johnson has my gratitude for their new direction, and my support with a new loyalty to their brand when I do need some sandwich bags. I only hope they will retool their entire lineup to meet the same standards of this one product!

This may not be the product that gets your attention, but I’m sure something has. What companies have you made a conscience effort to support because they are willing to change? What are you willing to change in your work that will encourage new supporters for you?

There’s been a lot of discussion about elevating corporate responsibility to become a strategic driver of your business. Most companies would like to benefit from their ethical efforts in the form of increased customer attraction and loyalty, yet few have figured out how to do it successfully. When marketing and PR are relied on, it can often backfire in accusations of greenwashing. The secret is to apply brand-strategy principles to build your ethical reputation.

Brand: Who you are, not what you say

First, let’s back up and define what a brand is. More than a logo, tagline or campaign, a brand is a promise delivered. It’s no longer about marketing; it’s about co-creating your reputation with your customers and managing perceptions through your actions. That means your brand could be favorable or unfavorable, depending on how you interact within your ecosystem and whether you’ve actively managed your brand or not.

A brand strategy is, in essence, a focused strategic platform that guides every aspect of the business. It should incorporate 4Ds: desirable by customers, deliverable by the company, distinctive from the competition, and durable over time. It’s a blueprint for how you do business, as well as for the entire customer experience.

Since brand is inherently about building a reputation, it’s not a stretch to say that strategic CSR is all about brand-building… not philanthropy or community programs. The latter are among the tactics to be judiciously identified and tailored to support a desired outcome, which should be to build a clear, consistent and believable reputation among your constituents that engenders preference and loyalty. That desired outcome informs the entire customer experience as well as how you do business.

Five strategies for aligning brand with values

There are five brand strategy approaches that are directly relevant to building your ethical reputation.

chart showing options for ethical brand building

1. Align with Brand Differentiator

Ideally your ethical initiatives will directly support your brand promise. Remember, a brand is a promise delivered… so consider what makes your brand unique from competitors and develop key initiatives to support that. For example, one of Target’s philanthropy programs is to support the arts and design, which directly supports Target’s “affordable design” brand differentiator. Instead of cutting your CSR programs during the downturn, consider shifting resources from generic programs to those that support and drive not just your category, but your brand.

2. Create an Ingredient Brand

Think Westin’s Heavenly Bed or, in the CSR space, Marks & Spencer’s Plan A or GE’s Ecomagination. This is the ‘special sauce’ that makes your brand preferable to values-based buyers and employees. Creating a brand for your ethical initiatives accomplishes several important objectives:

• Helps clarify for employees and customers your ethical value proposition
• Makes it easier to allocate human and financial resources to your initiative (hint: assign a brand manager to own, drive and measure)
• Serves as a growth platform for customer experiences, products and services
• Elevates your social and environmental initiatives above me-too commodity status.

There are a few risks of goodwashing with this approach, so be sure that everyone is committed to creating something of unique value that’s completely aligned with the vision and values of the parent brand. And any misstep by the parent brand may end up discrediting the hard work done to build the ethical ingredient brand.

3. Create a Product Brand

If there are values-driven buyers in your category (highly likely), consider launching a product just for them. Clorox GreenWorks and BP Solar are good examples. Note that these brands are tied closely to their parent brands, so don’t consider this option unless the parent company is doing its part on the ethics front. But a product brand is an excellent opportunity to help customers experience your values and simultaneously boost the profit part of the triple bottom line. Case in point, GreenWorks has now captured 42% of the natural cleaner category in a little over a year.

4. Create a New Sub-Brand

A separate brand (with its own customer experience, distribution channels, etc.) that’s completely anchored on the triple-bottom line puts a bit of distance between it and the parent company. Good examples include Starwood’s Element or, through acquisition, Unilever’s Ben & Jerry’s. Why use a sub-brand strategy?

• To lead your category in capturing hearts and minds of values-oriented consumers without being saddled with baggage of the parent company
• To minimize claims of greenwashing, as all actions of the sub-brand are (should be) congruent.
• To help “turn the Titanic” and reposition the parent company as an ethical brand. The parent company can “borrow” the positive brand equity from the sub-brand while going through the process of cleaning up its act.

Acquisition is the easier route, but often the ethical brand gets flack for “selling out” if it’s not handled carefully, and core values still need to be aligned. Building it yourself is harder, but the benefits could easily outweigh the effort required.

5. Reposition the Brand

This option is especially important for companies with a history of contributing to the problems of the planet rather than the solutions. Formerly “evil” companies like Wal-Mart, McDonald’s and BP have made great strides in redefining their brands as more responsible. With a very large company, this is a process that takes years and top-down dedicated effort to fundamentally change the essence and ethos of the company. For a smaller brand it’s definitely easier.

No hard and fast rules

Please note that there are no easy answers or guidelines here. The most appropriate approach for your company depends on the unique combination of your customers, their expectations and perceptions of your brand versus other options, the progress you’ve made in the ethical realm, whether or not you actually have a clearly defined brand promise, the commitment level from your executive team… I could go on, but you get the point.

I’m happy to have a preliminary discussion with you about the right approach and key considerations for your business; just contact me at jennifer@fruitfulstrategy.com.

This post was originally published at Fruitful Strategy and is reprinted with permission.

photo credit: jchatoff

Once again, Seth Godin gets it right:

If a prospect walks into your dealership and you walk up and say, “Please pay me $200,000 right now for this Porsche,” you might close the sale. But I doubt it. More likely than not you’ve just pushed this prospect away, turned the sliver of permission you had into a wall of self-protection.

So much of traditional business is about interrupting, asking too soon, presuming a preference that isn’t there. Or isn’t there yet. So much of business could be improved by simply taking it a bit slower, building a relationship with a client, a customer, a partner.

It could even be considered an investment, if we were of the mindset to view anything other than money as investments. It could be measured, tested, proved, and improved.

Or it could just be accepted as a better way to do business.

photo credit: Mac Babs – Bárbara Bessa.

How much money does your company spend on advertising? On marketing activities overall?

And how much customer trust does your company lose from allowing deceptive practices to get in the way of a long-term relationship with customers?

Most of what constitutes branding is about defining the ideal customer experience and seeking to embody it in every way possible. How many executives would actually go through the exercise of defining the company only to put it in terms of “deceptive” or even “hoping for apathy?”

Seth Godin makes a lot of great observations in his books and in his blog, but this one from last September is one of his best on how customer trust can be (and so often is) eroded little by little:

My car insurance bill has been steadily rising, year after year, despite the fact that I have a clean record. The logic, I’m sure, was, “well, let’s raise it a little and see who quits…”

If revenue increases enough to make up for the few who quit, you come out ahead. So, quarter after quarter, year after year, repeat the same process. Raise it a little, check to see if revenue rises in aggregate, and repeat.

I’d get the bill, sigh about the fee, consider the hassle of switching, pay the bill and move on.

Until last week. Last week the number was too high. Something in my relationship with the insurance company shattered. After all, it’s not like they had done anything for me, not like I knew anyone there. It was just momentum. And the number was suddenly enough to make me take action.

19 minutes later, I was at Geico.

The problem for my insurance company is that a whole bunch of people will do this at once. When you hit the breaking point with one person, it might be 1,000 or 100,000 people who do the same thing at the same time. And you don’t get a second chance. They’re gone.

Some magazine companies do this. They start subscribers out at low introductory rates, only they don’t call them that, and then gradually step up the pricing for the subscription each year. Of course the best case scenario for the company is that the customer doesn’t notice, but even if the customer notices, the company is counting on laziness or apathy, but as long as the incremental revenue is greater than the cost of attrition, they consider it a winning formula.

But how can you know the true cost of attrition?

Are these companies factoring in the ill will these customers now bear towards them, and the possibility that they will tell their friends, and the possibility they will cancel multiple magazines (in this scenario) at once when the tipping point comes, and the possibility, ever more likely, that they will post their experiences on a blog or on Facebook or on Twitter where dozens if not hundreds if not thousands of customers and potential customers will read what a sneaky practice the company employs?

They may be factoring all of that in. There may well be valid metrics that can be used to measure the effects of each of those considerations. But it’s kind of like the adage that telling the truth is easier than lying; the effort expended to track those considerations seems far more difficult than simply doing right by the customer. And doing right by the customer has all kinds of upside, measurable and less so.

There’s a great article today in HarvardBusiness.org by Bob Lurie about aligning customer value with green value. Lurie points out that companies that hesitate to develop green practices and market green offerings to customers for fear that they won’t pay a premium for it, particularly now, are missing the point:

Focusing on whether or not customers will pay a premium for green products brings with it a number of constraining assumptions: 1) that green products do not have any tangible benefits for customers other than making them feel good about helping the planet, and 2) that green products are more expensive to produce than non-green products.

Both of which, he says, are potentially faulty assumptions.

To the corporate idealist, it may sometimes seem that this hesitation is everywhere, and it isn’t limited to green products and services. Doing more than the barest minimum demanded by the customer requires leadership that is insightful enough to recognize when something of lasting value is being created. That isn’t common, and it gets less common during times of economic difficulty, when taking chances would seem to mean the life or death of the business.

Of course, there’s also the possibility that taking the risk of going above and beyond will actually put the business above and beyond the competition, and that customers will notice. Apple products are famous for being pricier in general than competing devices, but that hasn’t stopped swarms of customers from adopting iPods and “switching” from PCs to Macs.

Sometimes the only way to rise above the stormy waters is by sticking your neck out enough to see over the waves.

Now it’s your turn. What examples have you seen of companies thriving by offering more value instead of more discount? What counterexamples do you feel compelled to point out? Have your say.