Why Businesses Now Need To Balance Profit With Purpose

Social media is a powerful, strategic tool with the ability to connect millions of people around the world, and shape their opinions. The current President of the United States would agree.

But for businesses, it is a double-edged sword. While Instagram, Twitter and Facebook are an effective way for businesses to connect with their customers and build following, if something goes wrong, the mistake is on show for the world to see.

Social media has given a voice to, and shifted power from businesses and governments, to individuals who otherwise would not be heard. Did you know that almost half (45%) of the world’s population is now on social media? (Source: Statista)

People now have access to information about corporate behavior like never before. Socially conscious consumers show no restraint in sharing incidents of corporate negligence on social media. They use social media platforms to organize themselves around issues that are important to them, and strongly express their disapproval for unsustainable business practices.

As per the Cone Communications 2013 Global CSR study of more than 10,000 citizens in 10 of the largest countries in the world by GDP, including India, 62% consumers say they engage with companies via social media, and 26% use social media to share negative information.

They use their voice and purchasing power to punish irresponsible businesses, forcing them to clean up their act, thus bringing about the change they want to see in the world.

A study by the New York Times Consumer Insight Group identified major reasons people choose to share what they do on social media sites. 84% of participants in this study said that they shared to support a cause. Clearly, selling a good product or service is no longer enough. And doing business responsibly is no longer a choice.

Before the advent of social media, social, ethical, environmental misdeeds of corporates used to go unnoticed. But like Mark Zuckerberg correctly said, “When you give everyone a voice and give people power, the system usually ends up in a really good place”

For instance when Nike was accused of deploying child labor in the production of soccer balls, or when the garment factory of Benetton, Primark, and Walmart collapsed in Dhaka, the brands faced severe criticism and protests from consumers and activists all around the globe.

With growing number of socially conscious consumers, especially millennials and Gen Z, companies can expect to see many more instances of consumer-initiated protests and boycotts in the future.

Gen Z, those born between 1996 and 2010 are expected to account for 40% of all consumers by 2020, according to research from MNI Targeted Media. Doing their part to make the world a better place is important to 68% of them, and this directly impacts their buying behavior.

94% of Gen Z shoppers and 87% of millennials believe that companies should address urgent social and environmental issues. (Source: Cone Communications 2013 Global CSR study)

In the long run customers will choose companies that they trust, that share their values and that act responsibly. And businesses that don’t will end up losing their customer base.

In a survey by Greenmatch, a renewable energy consulting agency, 72% of Gen Z respondents said they are willing to shell out more money for goods and services produced in a sustainable way. And nearly half (49%) have boycotted a brand because it behaved in a way that was against their values.

In a mobile-savvy country like India, reputation loss due to negative social media publicity can have serious implications for the business. As per media reports, when high levels of lead and MSG were found in Nestlé’s star product Maggi noodles in 2015, the company lost much more than its market share due to their poorly managed social media responses.

Brands and businesses must now necessarily adapt to the new world order, and be as committed to and innovative about doing good as they are about maximizing profits.

So what would be our one tip to businesses that want to avoid a social media nightmare? Act responsibly, because there is no dodging the animal called social media.