For a business, taking a stand on public issues is a double-edged sword.
Researchers from Duke and Harvard offer research asserting that “CEO activism can sway public opinion—and also increase interest in buying the company’s products.”
Research from Weber Shandwick reveals that millennials are significantly more likely to buy products from—as well as work for—companies if their CEOs take public stands on controversial but relevant issues.
More than half of consumers say they buy or boycott brands based on the brand’s stance on a social or political issue, according to the 2017 Edelman Earned Brand report. Companies feel increasing pressure to take social or political stands. More than two-thirds of “belief-driven” buyers will not buy products from a company that remains silent on an issue they believe should be addressed.
Brand managers are not politicians
Others warn that wading into social or political issues poses substantial risks.
When they take sides, companies could alienate half their potential customers. A political stand might please some customers, but the company gains no benefit, warns J. Walker Smith, executive chairman of The Futures Co.
Despite growing pressure from activist consumers, companies should think twice—even thrice—before jumping into politics, Smith writes in Marketing News. A political stance will not expand a brand nor increase its stock value, but it could alienate consumers.
Although public relations and marketing departments might believe they understand their audiences, predicting how large numbers of people will react to sensitive issues is extremely difficult.
Politicians routinely win points by taking positions on issues, but companies are not politicians, Smith writes. Politicians seek to win elections; companies seek to increase sales by winning new customers. They can’t afford to alienate a large percentage of their buyer base.
Some think corporate political stands can increase sales by strengthening the loyalty of core audiences. However, loyalty does not increase a company’s sales, because loyal customers already buy its products regularly. Instead, businesses grow by gaining new customers.
“Brands prefer to build their franchises on common ground. Politicians would do well to emulate brands, rather than the other way around,” Smith says.
One option: Key on non-controversial issues
Other PR and marketing experts also urge companies to think long and hard before taking a stand on a political issue. Don’t take a position just for the sake of it. Examine the brand’s values, and analyze your customer base and other stakeholders.
Companies can avoid displeasing customers by supporting neutral, non-polarizing issues, advises Ricardo Casas of Fahrenheit Marketing, a Forbes Agency Council member. “I’ve seen companies commit serious PR blunders as they seek to align themselves with a segment of the community they serve, not realizing that they’re alienating the other,” Casas says.
Kirk Deis of Treehouse 51, another Forbes Agency Council member, advises: “Be transparent and honest with your core beliefs. If you can be true to yourself, haters will hate, but the fans will grow. Don’t let ‘pleasing everyone’ slow you down from sharing your brand with the world.”
Although some say taking a stand can increase customer loyalty and boost brand value, others warn that companies have little to gain and much to lose. All urge brands to carefully examine their values and deliberate their strategy cautiously before proceeding.
Rule of thumb: Take a stand only on public issues of real import to the company.
A version of this post first appeared on the Glean.info blog.