Do Social Good and Earn Customer Respect

Today is a special day for social media and society. Mashable together with (Red) have named today the Social Good Day to show what social media can do for social good. It is intended to “celebrate, share, and educate and engage in a discussion on how social media can be used to tackle some of the world’s social challenges and issues, in particular how it can be used to help fight AIDS in Africa.” For this reason, I have teamed up with a few fellow bloggers. Each one of us will write a special blog post today, and for every comment on these special posts, we will donate $1 to the UN’s Global Fund. Please consider joining us to make the world a better place by commenting on these blogs (see a list at the end of the post), tweeting or blogging about the Social Good Day, or donating to the Global Fund yourself.

In keeping with the spirit of the Social Good Day, in this post, I would like to talk about how companies can contribute to social good and at the same time earn their customers’ goodwill and respect. Although all businesses operate under a profit motive, they are also obligated to give back to the society and fulfill their role as a corporate citizen. Starbucks, for instance, challenges and encourages its employees to contribute to their local community. Brands such as Gap, Nike, and Apple have all become part of Product (Red), where up to 50% the profit from these products’ sales go to fight AIDS in Africa.

Doing Social Good the Right Way

Done in the right way, charitable behavior from businesses can increase customer loyalty and lead to goodwill among consumers, investors and the general public. But corporate philanthropy does not always touch people in the right way. Sometimes it becomes an ostensible tool that some corporations use to cover up their bad behavior or manipulate public opinion. As a consumer and a member of the general public, I asked myself what corporations do that truly touches me as being kind and generous and what appears suspicious and fake to me. Here are a few things that came back to my mind:

• Be genuine. Things coming from a true heart ring differently from those that do not. Being perceived as genuinely caring is what will fundamentally determine the success or failure of a corporate philanthropic effort. There is an old Chinese saying “paper cannot contain fire”. If a company engages in charitable efforts from a manipulative or false motive, consumers will eventually discover, especially with the help of today’s wide-reaching and real-time social media. When that happens, the backfire can be more damaging than not engaging in any false charitable activity at all.
• Be local. While nationwide charitable activities have large scale and high visibility, it is often local events and efforts that bring real closeness to consumers. As national chains take over local markets everywhere in the country and around the globe, a hyperlocal sentiment has taken hold among consumers. People increasingly care about what happens in their local community. With this mentality, charitable activities targeted toward local communities are much more meaningful to consumers, and they bring the otherwise distant corporate personality to a much more intimate light.
• Invite consumers to participate. Consumers like to do good deeds themselves. By involving consumers in philanthropic efforts, companies not only give consumers an opportunity to fulfill their desire, but large-scale consumer participation also creates a natural viral effect that greatly broaden the reach of such efforts. In the Pepsi Refresh campaign, Pepsi invited consumers to submit ideas on improving their communities and then vote on the ideas that were eventually funded. The project touched way more lives in a real way than a single Super Bowl ad.
• Don’t over-publicize philanthropic efforts after a crisis. Just like a guilty child who is eager to get back to the good side of things, it is tempting to overdo charitable activities right after a PR crisis. While there is nothing wrong with doing good, it is better to do the deeds without over-publicizing it. When in the middle of or right after a negative event, it is better to deal with the issue at hand and resolve consumers’ negative feelings than to conjure up conflicting images about the company.

Side Benefits of Being Charitable

Perhaps you will think I am an idealist. But I believe that all corporate philanthropic activities should be done for the sole purpose of doing something good. After all, true kindness does not ask for anything in return. Yet it is amazing how when one does something good, lots of blessings can follow from that kind action. In the case of corporate philanthropy, research has shown that companies gain plenty of side bonuses by engaging in charitable activities.

In a recent study published in the Strategic Management Journal, Professor Baruch Lev and his colleagues tracked 251 companies from a wide variety of industry across a 12-year time span. Using a special statistical technique, the researchers were able to identify the causal effect of corporate charitable giving on future revenue. Their results show that, in the consumer goods and finance sectors, a $500,000 increase in charitable giving contributes to $3 million increase in sales and $1.32 million increase in gross profit. They also found large total giving to lead to higher customer satisfaction ratings. In the B2B and business-to-government sectors, there is no significant effect of charitable giving on revenue. However, there is still a marginal positive effect on customer satisfaction.

In a separate study by Professor Hanjoon Lee and colleagues, the researchers found that corporate philanthropy has a positive impact on public attitude when the action is considered to originate from altruistic motives.

Although there are also studies that show mixed or negative impact of corporate philanthropy on financial performance, the eventual effect seems to be contingent on the nature of the business and why companies do what they do, hence back to the right way and wrong way of engaging in charitable activities. If the true intention behind such activities are for the social good, eventually the public will realize that and will appreciate the actions.

How do you feel about corporate philanthropy? Is there any good or bad example that you would like to share? Remember that for every comment on this post, I will contribute $1 to the UN’s Global Fund dedicated to fighting AIDS in Africa. Below is a list of other blogs that are also doing the same thing today.

• My Aim is True (http://www.MyAimIsTrue.com)
• Bake It Pretty (http:www.BakeItPretty.com/blog)
• Reina Communications (http://www.ReinaCommunications.com/posts)
• Greater Good Life (http://www.GreaterGoodLife.com)
• Powerful Learning Practice (http://www.PLPnetwork.com/blog)
• Outer Banks Design Works (http://obxdesignworks.posterous.com/)
• JASE Digital Media (http://www.jasedigitalmedia.com/blog)

Please take a moment to check them out and comment on their Social Good Day posts. And of course, you can also help by tweeting about the Social Good Day (use #socialgood hashtag) or by donating to the Global Fund yourself. Thanks in advance for your help with a worthy cause!

Good things are better shared!