More than half (53 per cent) of consumers are willing to pay more to buy from purpose-led businesses, according to the latest CommBank Consumer Insights Report.
While value for money is the primary driver of shopping behaviour for the majority of consumers (41 per cent), almost one in five shoppers are willing to pay more than 10 per cent extra for goods and services sold by a business with a strong purpose. Younger generations are at the forefront and the percentage of those willing to pay more declines sharply with age, ranging from 71 per cent among Generation Z to 38 per cent of Pre-boomers.
Now in its second year, the CommBank Consumer Insights Report offers analysis and insights into the Australian consumer and this year, examined the shift in attitude in how consumers view social purpose in businesses and how it impacts their shopping habits.
Consumers expect a brand’s social purpose to extend beyond competitive price and quality, to actively demonstrate their role in society and seek to support communities by taking meaningful action on social issues that matter to them.
The pandemic has been a primary driver to more than a third of consumers’ reassessing their priorities and making deliberate choices about where they shop and what they buy. The value of purpose varies by category and is highest for food and beverage service, recreational goods and personal care services and products.
Commonwealth Bank’s Executive Manager, Consumer and Diversified Industries, Jerry Macey, said: “The Report findings show the powerful influence of purpose and how it can increase a consumers’ loyalty, advocacy and spending. The pandemic has accelerated a shift in Australian consumer habits and we have seen how shoppers are looking for their own values to be reflected back in the brands and businesses they support.
“Despite this trend emerging from the pandemic, the focus on instilling a social purpose will likely continue for the long term. Consumers have made it clear they are looking for an authentic, all-encompassing approach that is embraced throughout the organisation. ”
Purpose-led businesses benefit in a number of ways with consumers saying they are more forgiving towards a brand with an authentic purpose (38 per cent) and will actively seeking them out (35 per cent). They are also more likely to regularly shop at (35 per cent) or invest in (31 per cent) purpose-led brands.
Passionate about the business’ social impact, Abdullah Ramay, CEO of Pablo & Rusty’s Coffee Roasters hopes to positively impact people and the environment through coffee. He believes it can be done without sacrificing profitability yet the change needs to be genuine. With 26 per cent of their customers buying from them because of its purpose, Abdullah sees the benefit in growing the business as reaching greater scale allows them to make more sustainable choices.
“The consumer makes the judgement call and they are very invested in the brand, which is powerful for growing the business. Being purpose-led is a medium-to-long-term journey that brings clarity and easier decision-making. Simply running two marketing campaigns will not suffice and businesses that make empty claims will lose customers,” said Abdullah Ramay.
Commonwealth Bank’s Jerry Macey continues: “Purpose is important, but it needs to be authentic in order to add value. Today’s consumers are very well informed and can quickly determine whether a brand is genuine about the causes they support. Their connections with brands are often personal, and so they are likely to feel personally let down if brands fail them with inauthentic, short term campaigns.”
Consumers’ views on how businesses can demonstrate genuine social purpose:
- Businesses need to engage their employees to ensure their purpose is meaningful across the whole organisation (66 per cent);
- A business purpose needs to align to the category they operate in (59 per cent);
- Businesses should seek input from customers on social purpose (56 per cent);
- Make a long-term commitment to a social purpose or cause to demonstrate genuine intentions (55 per cent);
- A business should regularly communicate with customers about their purpose (53 per cent).