In their ever-increasing need to differentiate themselves, many companies are turning to the use of cause-related marketing.

Historically, “Marketing 1.0” was a product-focused enterprise born of the Industrial Revolution, and “Marketing 2.0” was a customer-focused effort leveraging insights gained from information technology. Now with “Marketing 3.0,” Philip Kotler came to confirm that marketing’s latest incarnation must engage people in ways that offer “solutions to their anxieties to make the globalized world a better place.”

It is known that consumers believe companies have obligations beyond making money for their owners. In fact, it is getting more difficult for a company to connect with customers and prosper if it does not stand for something more than its financial bottom line.

Consumers Prefer Causes

The 2013 Cone Global Cause Evaluation Survey shows that 55% of surveyed customers have boycotted a company because of irresponsible business practices. 53% would not invest in a company that does not actively support a good cause.

When choosing between two companies with similar products that engaged in cause marketing, 70% of those surveyed cited “personal relevance of cause” as the reason they chose one company over another. On another note, 76% think it is alright for brands to support good causes and make money at the same time.

According to new research presented at the World Federation of Advertisers’ annual conference in Brussels, 88% of global marketers surveyed overwhelmingly said that CSR will be increasingly important in building brands in the future. However, only 46% of those marketers thought that consumers approve their support for good causes. When in fact 60% of consumers surveyed claimed to be looking for brands with a sense of purpose.

Companies are asking the following questions every day: Should we stand for a purpose or continue doing traditional marketing? How do we optimize our purpose-driven marketing investments? Can being socially responsible be used as a messaging strategy in our marketing campaigns to help increase revenue?

American Express Starts a Trend

The concept of cause-related marketing was first introduced in 1983 by American Express to describe its campaign to raise money for the Statue of Liberty’s restoration. American Express donated one cent to the restoration every time someone used its charge card. As a result, the number of new cardholders grew by 45%, and card usage increased by 28%.

Nowadays, there is an increasing number of companies introducing marketing activities involving corporate efforts of business and non-profit organizations for mutual benefit. The market is seeing a flooding number of new collaborations between corporates and NGOs where their respective assets are combined to create shareholder and social value.

Businesses and Nonprofits Must Align Their Stories

If you have ever purchased a product or service and felt good about it because it had a little pink ribbon or a sustainability label on it, you have likely been a consumer of a cause marketing campaign.

We have totally changed the way we live our commercial lives; we now invest more of our minds, hearts and spirits. We keep searching for solutions that bring value to us and let us feel that we have a purpose in life.

“Marketing 3.0 will be won by those who become purpose-driven social brands” explains Philip Kotler in Marketing 3.0: From Products to Customers to the Human Spirit, and to do so, businesses and non-profits must align to bring a cohesive brand story to life.

Companies are increasingly turning to purpose-driven marketing with the hope of cultivating loyalty among their key customers. Sure, consumers are happy to help save the world and be more responsible. But they must first see the benefit to their own households.

When going through the process of developing purpose-driven social brands, companies have to make sure that there is a win-win situation between customers and the charity. This is achieved when customers feel their lives are enhanced by the charity efforts and that good feeling is transferred to how they feel about the market.

Cause Marketing: The Right Direction?

Despite compelling data however, many businesses are still indecisive on whether it is the right direction to take and whether is it the right time to start investing. “As marketers, we spend billions of dollars each year trying to understand consumers all over the world. Unfortunately, it is harder and harder” Edward Martin, Director Marketing Excellence and CSR Insights at The Hershey Company.

Therefore, it is time to understand that only a minority of customers take time to answer marketing surveys and ads. However, customers are more willing to engage with companies on social causes and environmental issues. It is not a good way to get into the customers’ minds? Try it once and you will see the immediate result.

Peter Ducker once said, “Profit is not the purpose of a business but rather the test of its validity.” I will take that a step further: The real indicator of measuring the success of a sales force is not making profit. It is the test of its added value and effectiveness to the customer. We need to step back from our conventional practices and take a larger view of what connects us to build deeper bases for purpose-driven engagement.

However, in order for these efforts to be effective, customers must feel that your efforts are authentic and truly supporting a cause. Businesses should be transparent about how they are distributing funds to the cause and clearly outline the win-win solution the product or the campaign is preaching for. If you plan to develop a purpose-driven social brand and do a lot of cause-marketing, then develop a policy which deals with many of the above issues.

Monaem Ben Lellahom is a Co-founder and Head of Sustainability Consultancy services at Sustainable Square Consultancy & Think Tank. He focuses on developing Enterprise Sustainability and Responsibility strategies and programs and Social Return on Investment (SROI) analysis for clients across various industries. He also focuses on Sustainability reporting and has produced key successful Enterprise Sustainability reports and case studies in the Middle East region showcasing their social, environmental and economic performance. Monaem possesses expertise in Enterprise Sustainability strategy and implementation as well as the measurement systems, governance, capacity building and stakeholder engagement aspects of this agenda. Read other articles by Monaem.