CSR and the customer

By Stuart Lauchlan, news and analysis editor

Corporate social responsibility (CSR) is big news. The ‘greed is good’ culture that characterised the 1980s and the dot com boom at the turn of the century has given way to a greater awareness of wider concerns. Companies have realised there is much to be gained from their customers feeling good about dealing with ethical and ‘caring’ suppliers and they’re milking it for all its worth.

The power of the ethical consumer cannot be underestimated – left neglected, they can mutate into the vigilante, protest-making, agitating customer! Most people surveyed say that they are ready to switch their custom on the basis of the perceived 'ethical' reputation of one brand or another – although how ready they are to back this idealism up with action is a moot point.

Recently the PC industry’s most notable enfant terrible Michael Dell announced a global carbon-neutral initiative that plants trees for customers to offset the carbon impact of electricity required to power their systems. Don’t worry about the impact your flashy new Dell PC is going to have on global warming – Dell will plant a tree or three to compensate. Everyone’s conscience is clear and Dell can go on making lots of money.

Dell is open about the customer impact of such initiatives. "The customer experience starts with receiving the best value and continues with the knowledge that we are working with our customers to protect the environment throughout the life of their system," said Dell. "Programmes like 'Plant a Tree for Me' and our global recycling efforts empower our customers to participate with us in making a difference.”

Dell is not alone in such moves. PC industry rival HP has been recycling products since 1987; it developed the Designed for Environment policy in 1992, and entered into a joint initiative with the World Wildlife Fund US to reduce greenhouse gas emissions from its operating facilities worldwide in 2006. Tesco, BT and British Airways have also announced that they are joining together to extol the virtues of corporate social and environmental responsibility.

Within the CRM industry itself, the Salesforce.com Foundation has rolled out Earthforce - an initiative to create a carbon neutral salesforce.com in 2007. As part of a wider effort to become a carbon neutral corporation, the Salesforce.com Foundation will work to neutralise the effect of salesforce.com's corporate greenhouse gas emissions from its major areas of carbon consumption, most notably the data centres that house its servers.

"We have always been dedicated to social responsibility, and Earthforce is an important initiative to spearhead our efforts to help the environment," said Marc Benioff, chairman and CEO of salesforce.com. "By offsetting our carbon footprint, we are moving further on the path toward sustainability and engaging our community in contributing to effective solutions for the climate crisis."

Such initiatives are clearly to be lauded, although there is the cynical suspicion that CRM in relation to CSR might just stand for ‘cause related markteting’ – ie it’s more important to be seen to be doing some good than worrying too much about how you actually do it! But leaving that to one side, what part can CRM technologies and practices play in implementing an effective CSR strategy?

Benefits, whether tangible or intangible, arising from responsible corporate practices include:

• Increased sales and customer loyalty;
• Reduced litigation and regulatory intervention;
• Increased employee retention; and
• Greater access to capital.

There are clear opportunities to exploit CSR in brand-building activities, although many companies lose out due to little or no integration between CSR and marketing and CRM. CST needs to be a factor in the customer management and marketing strategies, not just a nice to have tick-box item in the annual report.

Some key elements should include:

• The business strategy must be the foundation upon which both the CSR and brand strategy is built.
• Promises made must be demonstrably backed up with proof points - your claims cannot be based on what you say in your marketing, but what you do as a company.
• Be aware of the CSR elements that should be communicated to customers.
• CSR and marketing departments need to work together to define an approach that can tell a consistent story across all touch-points.
• Corporate communications have to be honest, open and not misleading, especially if companies are taking an ethical or moral stance.
• Look at any association with a moral connection and ask whether there is a fit with the way they operate.
• Companies should make marketing decisions based on commercial reality and consumer insight and only venture into ethical and responsible marketing if they really mean it.
• Companies need to concentrate on genuine customer needs as they will need a compelling motivation to go out of their way to make a purchase, more than a bogus claim to be socially responsible.

Sometimes the marketing can undermine the CSR credibility. Notably The Body Shop had to change the wording of its labels from 'Not Tested on Animals' to 'Against Animal Testing', because ingredients within some of its products had at some time in the past been tested on animals, although not by The Body Shop. The Chartered Institute of Marketing has come down heavily on such things. "Corporate social responsibility and fair trade are being hijacked by unscrupulous marketers as they make ever more cynical sales pitches," it accused.

But positive results can also result of course. BT estimates that CSR performance accounts for over 25 percent of the image and reputation element of enioffcustomer satisfaction. Crucially, a 1 percent improvement in the public's perception of CSR activities meant a 0.1 percent increase in the company's retail customer satisfaction figures. Its response for the Tsunami disaster resulted in the most positive press coverage BT has ever received on a single issue.

Useful links
UK Government CSR Site – www.csr.gov.uk
FTSE - http://www.ftse.com/Indices/FTSE4Good_Index_Series/index.jsp
The Centre for CSR - www.nottingham.ac.uk/business/ICCSR/

This month's stories:

Costs v CSR: what do consumers really care about?

Co-op: A century of values

A model of compassionate capitalism

Case study: Bringing CSR to customers in the printing sector

Where CSR and CRM collide

Linking CSR and CRM: Shop and save (the environment)