You’re rushing to work and desperate for a morning caffeine fix. You run through a mental inventory of options. There is a Starbucks at every block of your commute, your favorite independent coffee shop is a bit out of the way, or the convenience store in your office building.
How do you make your decision?
The startup eGood intends to sway your choice. A recent winner at the TechCrunch Disrupt SF conference, eGood is a new Foursquare-style mobile payment and merchant loyalty platform that gives consumers the option of contributing to a charity when they check out at a local retailer. The logic, according to a recent article by Rip Emerson, is to drive consumers toward retailers that donate to social causes. For Emerson, the purchase decision is clear when all else is equal: Consumers are likely going to go with the retailer that donates to charity over the one that doesn’t because, well, why wouldn’t they?
But circumstances are rarely as simple as the “choose your own coffee adventure” suggests. Unfortunately, the well-intentioned eGood may constrain its success by basing itself on the “all else equal” business model so prevalent with corporate social responsibility strategy. Two products are very rarely similar enough for eGood’s approach to tip the scales. Yet eGood is just one of many brands attempting to use “checkout charity” as a means of making purchases more appealing to the consumer. All of this begs the question: Do these strategies actually influence behavior?
Consumer behavior research suggests that it doesn’t, since all consumer benefits are not created equal. Traditional corporate citizenship activities, such as contributing to charities or encouraging employee volunteerism, are noble; but compared to consumer benefits that deliver value to the consumer versus a third party, they have less relative influence on consumer behavior. In the case of coffee, consumers will more likely purchase coffee from a shop based on location, convenience, or product offering (functional attributes) than go out of their way to patronize a coffee shop that supports a charity (emotional attributes).
Moreover, if services like eGood are successful, it would actually increase the very parity they are attempting to fight; if all local businesses support charity (a strategy with low barrier to entry), the appeal of supporting a charity will no longer be a competitive differentiator.
But this doesn’t mean social impact shouldn’t have a role in influencing consumer purchasing decisions. In fact, when “feel-good” benefits are linked to the drivers of choice for an industry or category, social impact can be very powerful in driving consumer preference. Chipotle is a great example—its business performance has skyrocketed thanks to its ability to position corporate social responsibility strategies, such as sustainable farming and ethical treatment of animals, as functional benefits that result in a better-tasting product. Chipotle doesn’t use its citizenship strategies as a ceteris paribus differentiator; it effectively convinces customers that its social impact strategies result in a better product, tapping into the most important choice drivers for fast-food: taste and food quality.
While supporting local charities is a noble mission, companies that rely on such a strategy as a differentiating characteristic in an “all else equal” mindset are at risk. To influence consumer preference, companies must go after the drivers of choice rather than play at the margins of consumer decision-making. eGood CEO Zack Swire says, “Most importantly, [eGood is] an easy way for businesses to do some good.” eGood is solving the problem of making it easier to conduct point-of-sale donations. But do consumers really even want that? If businesses want to truly drive consumer preference, they must stop relegating social impact to an easy afterthought and elevate it to business strategy.