The proven power of CSR on customer and brand loyalty

More critical than ever, consumers have become particular and discerning about brands. Consumers make purchasing decisions with brands they feel are dedicated to giving back, particularly with causes they believe in and support.

We can all attest that we live in an age where customers and consumers have infinite options. It is easy to switch brands based on price and availability.

In this sense, there is an increase in traditional loyalty programs such as loyalty points, discounts, and rewards to woo customers. But today’s consumer has so many choices of where to shop. How times have changed. Organizations now realize that being a good corporate citizen can prove enormously beneficial all rounds.

 

Now let’s delve into Corporate Social Responsibility (CSR) and Corporate Social Investment (CSI) phenomenon that has shaped the mutually beneficial relationship between organizations and the society in which they operate. Previously, the terms CSI and CSR were used interchangeably, but have now been defined separately.

According to CSI Solutions, CSR refers to an organization’s total responsibility towards the business environment in which it operates. CSR describes the broader solution to triple-bottom-line matters of the 3Ps – profit, people, and planet while CSI is one of the sub-components of CSR and aims to uplift communities in such a way that the quality of life is generally improved and safeguarded.

CSR runs both broader and deeper and gets beyond the corporation’s spend to the true spirit of the initiative. This is where a business refuses to use suppliers that take advantage of child labor.

It could mean the company obtains its raw materials from sustainable sources and ensures that its sources are environmentally friendly. This then fulfills the company’s compliance with both CSR and sustainability requirements.

Besides being a Public Relations exercise, or a way to become media friendly, CSI fulfills a company’s obligations to be compliant to the legislature and for some, they expect a return the investments they make into CSR. But Corporate Social Responsibility is a display of a company’s values.

Nevertheless, all firms engaging in CSR are pledging to conduct their business in ways that protect the interests of current and future generations.

Fundamental to most CSR models for organizations are economic, legal, and ethical responsibilities. Consumers believe that firms have a moral obligation to behave in certain ways.

This might include a focus on issues like employee rights, health and safety in the workplace, product quality and safety, charitable work, education activities, and environmental conservation.

Efforts in these and other areas of CSR often prove a worthwhile initiative for the company. Research shows that CSR can be more effective than advertising when it comes to attracting interest from consumers.

Of even greater worth is its potential to enhance customer loyalty. This effect emerges as a result of “generalized reciprocity” whereby customers reward an organization for the indirect benefits provided to them when its CSR activities positively impact their society.

Now few people will doubt the importance of customer loyalty to business organizations due to the addition to the bottom line. Loyal customers boost a firm financially through their willingness to spend more per transaction; make frequent purchases and provide positive word-of-mouth (WOM) recommendations and referrals to significant others.

It is widely acknowledged that loyalty becomes most powerful when it comprises behavioral and attitudinal components.

The blend of repeat purchase behavior and emotional attachment to the company and its brands helps generate loyalty that is robust and enduring.

Recently, many Ghanaian companies are becoming more aware of their environment including recycling, use of organic products, contributions to local charities, and support for community projects.
I have had the opportunity to be part of executing CSR projects for some leading Ghanaian companies.

For instance, United Bank for Africa (Ghana) Ltd contributes a part of its annual profits to education through its National Essay Competition where three top winners are given a grant of US$ 5,000, US$3,000, and US$2,000, respectively.

Aside from this the company also donates over 2,000 pieces of African Literature books to some Senior High Schools to boost reading culture. The total CSR budget which was under my control for the year was in the region of USD100,000.00.

Guinness Ghana sources about 61% of local raw materials i.e., maize, sorghum, and cassava used to produce its premium beverages, from 30,000 farmers in 11 of the 16 regions in Ghana.

Three years ago, I was part of a team who launched and executed activities for the 25th-anniversary celebration of Gold Fields Ghana Ltd. As part of the anniversary celebrations, the mining company commissioned a 33km reconstructed road worth US$ 15 million from Tarkwa to Damang their host community.

Other companies such as Voltic, Verna, and Awake are also pushing environmental and health-related CSR activities which is commendable.

Research indicates that the impact of CSR on customer loyalty can be direct or indirect in nature. A range of different intermediaries has been identified including customer satisfaction, consumer identification with the firm, trust, and brand image.

Optimizing the impact of CSR on customer loyalty should therefore be high on the agenda of companies. A focus on sustainable development offers a route toward achieving this objective.

Companies can create positive perceptions in consumer minds using Public Relations and publicity to promote itself as socially responsible. Another area could be the use of digital media and influencer marketing to further project the great work done by companies in the area of CSR.

To many consumers like myself, experiential and emotional benefits play a significant role in solidifying our loyalty. That’s where things like social causes and the charitable organizations that your brand supports enter the loyalty equation.

Your loyalty program needs to be unique for your customers. Highlighting charitable causes is a great way to engage new members. These emotional moments go a long way toward delivering higher levels of brand loyalty.

Loyalty is developed over time and through a series of moments such as emotional connections a brand makes with its customers.

What charitable causes could your brand stand behind that be supported by your customers?

Customers who feel an emotional connection with a brand will recommend it more than those who don’t feel the same emotional connection.

This kind of business-customer relationship can’t only be achieved through generic advertising and discount sales. It’s achieved through offering a unique customer experience and humanizing your brand through CSR initiatives.