Does a company’s overt social and political engagement risk alienating consumers?
For years, corporations have avoided publicly commenting on fraught social and political issues, fearful that whichever stance they take might offend certain groups of employees, customers, or investors. When a CEO or executive expresses a controversial opinion, their brand is immediately and often irreversibly aligned with what may be nothing more than a personally held belief.
The rise of millennial buying power has blurred the line between the corporate and the political, as younger consumers express increased incentive to purchase a product when the brand’s ethos aligns with their own. According to Forbes, 26-35 year olds are over 20% more likely to say they’ll shop at companies whose socio-political stance mirrors their own.
But it can be hard for brands to gauge what issues are theirs to champion, and what issues might inadvertently set off a media firestorm. Let’s take a look at some of the major companies and CEOs who have spoken out on global issues, and how their actions affected the bottom line.
Chick-fil-A and the Biblical Family Unit
Fast food chain Chick-fil-A found itself embroiled in public controversy in 2011, when CEO Dan Cathy told a Christian news outlet that the company supported “the biblical definition of the family unit.” While his statements fell in line with a company ethos that has long been controversial, this declaration finally pushed some dissenters over the edge.
The media had a field day with the sound bite, and protests popped up at Chick-fil-A locations around the country. But the media primarily focused on the parties negatively impacted by Cathy’s statement, while overlooking the sizeable demographic that embraced his stance. In fact, public perception of the company actually improved immediately after the controversy among consumers in the Midwest. Several months after the onslaught of negative publicity, consumer use of the chain was up 2.2% year over year, and does not appear to have suffered any long-term damage.
Starbucks Tackles Racial Tension in America
According to a study from KRC Research, if a controversial issue is not directly linked to a company’s fundamental business, fewer Americans think it’s a good idea for companies to take a stance. When Starbucks Chairman and CEO Howard Schultz waded into the murky waters of America’s race problem with a plan for baristas to write “Race Together” on every coffee cup, Twitter nearly imploded with negative feedback. According to Fast Company, “Schultz has long championed corporate social impact, but his high-profile push on the issue of race has some from both the business world and the black community wondering whether there’s a limit to the growing trend of what’s known as ‘CEO activism.’” The unsuccessful program was soon scrapped. “We made a tactical mistake. So what?” Schultz said of Race Together. “We’re moving forward.”
Despite the initiative’s horrendous press coverage, Starbucks released its second-quarter earnings report a month after its launch and instantly silenced its critics. According to Fast Company, “revenue and operating income had leapt 18% and 21%, respectively, driving the company’s stock to an all-time high.” The Wall Street Journal noted that “there was no indication that the move to wade into the complex and divisive issue [of race relations] hurt sales.”
What can other companies learn from these two incidents? It’s worth acknowledging that both Cathy and Schultz were already running massive empires at the time of their respective controversies. While their activism may not have negatively impacted sales, the subsequent growth their companies enjoyed cannot necessarily be attributed to it, either.
So what’s the takeaway here? In the future, CEOs would do well to address only the social topics most pertinent to their business (see: H&M’s CEO on labor wages in Bangladesh). If the hot button issue is not directly related to the success of your company’s product or service, consider this: how would your brand weather a public relations headache should all go wrong?
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