Why 9 out of 10 Millennials Will Switch Brands
The 2018 “Stand By You” Budweiser Superbowl ad was widely applauded by marketing critics as one of the best ads of the show. Instead of selling beer, the spot quietly and elegantly told the story of Budweiser supplying free fresh water in cans to states that had been hit by natural disasters. The words “Texas, Florida, Puerto Rico, and California” appeared as supers as the commercial ended to the strains of “Stand By Me.”
Heather wrote a blog about the spot and talked about her own personal experiences of dealing with her parents who lived in Houston and suffered through the extensive flooding in Houston in the aftermath of Hurricane Harvey.
It was a highly, effective, moving television commercial. But it was a commercial, and as such it was driven by research – lots of it. I had ABInBev, the owners of the Budweiser brand, as a client for a couple of years, and I can assure you that everything we produced as an ad agency was assiduously researched down to the last word and the last frame. So where did this burst of socially responsible behavior from Budweiser come from? It certainly wasn’t the boardrooms of 3G Capital, which is the fund that owns Budweiser under ABInBev, the largest beer company in the world.
3G is widely known as a relentless cost cutter. When they took over Kraft/Heinz they cut 10,000 jobs worldwide. When they prevailed in their battle to buy Annheuser-Busch, they immediately cut 1,400 jobs – 75% of them at their headquarters in St. Louis. 3G also bought Tim Hortons, a beloved Canadian brand. The Globe and Mail, in an article called “Inside The Brutal Transformation of Tim Hortons”, noted “It took less than a year for Tim Hortons new Brazilian owner, 3G Capital, to erase more than 50 years of corporate culture.“ Now 3G is being sued in a highly public lawsuit by its own Tim Horton franchisees for cutting head office staff, local promotional support, brand advertising, and even the quality of the food their restaurants now produce.
So why the change of heart at Budweiser? In a word: millennials. In a phrase: smart marketing.
"...9 in 10 millennials would switch brands to one associated with a cause."
Research has been building for years that show how millennials crave authenticity and a social conscience. In a Forbes, March 2017 article entitled “Millennials Driving Brands to Practice Socially Responsible Marketing” the author Sarah Landrum noted that 73% of millennials were willing to spend more on a product if it is a sustainable brand. She also picked up on the real kicker – “…more than nine in ten millennials would switch brands to one associated with a cause.”
Since millennials now dominate the work force, the rest is pure math – you need to look like you’re standing up for something other than your bottom line, or you’ll lose share. Rapidly.
But are there brands that really do walk the walk? That go beyond greenwashing and the occasional great TV spot?
The answer is yes, and Patagonia, the outdoor apparel-maker, is one of them. They have established a track record of sustainability since their inception in 1973, and they have embraced what they call a “circular economy strategy” that is at the core of the company’s culture.
In a category where the average consumer throws away 65 pounds of apparel every year, Patagonia urges its customers to reduce what they buy, repair their gear, and recycle what they no longer need. In 2011, on Black Friday, Patagonia ran an ad that featured one of their jackets and a bold headline that read “DON’T BUY THIS JACKET.” The ad had the opposite effect – sales increased by 30% versus year over year. Obviously, consumers felt better about buying from a company that had always taken a stand and rarely compromised.
Sustainability and social good thread their way throughout Patagonia’s business model. Their supply chain involves what they call a “four-fold approach”. Doug Freeman, the company’s COO, talks about product quality, environmental factors, and social responsibility within their supply chain.
In the October 2017 issue of Conscious Company Media, he says:
“We don’t engage with a factory until we know four things. The four critical requirements are product quality, the way the factory deals with the environment in terms of waste, emissions, and water, that workers are paid a fair living wage, and that the factory has the capacity to produce the minimum order quantity.”
Freeman states bluntly, “All of those factors are on the table before we start with a supplier. All four. Not just prices and the business parameters, but all four.“ By adhering to these standards, Patagonia is also able to grow. It had sales of 800 million in 2016, twice as much as 2010, and continues to give 1% of its total revenue to active environmental causes globally.
The company is not resting on its laurels. In 2017, Donald Trump announced plans to radically reduce the size of 2 Utah parks, eliminating almost 2 million acres of parkland to make way for oil and gas drilling and mining. One park was reduced to just 16% of its original size. Patagonia struck back publicly against the Trump announcements. It ran its first television ad in 45 years, challenging the moves of the administration, and emphasizing the need for the maintenance of natural resources and public access.
It wasn’t a one-off effort. In December 2017, Patagonia published an open letter challenging the Utah plans, and it designed its own website takeover with a single blunt, stark headline that read; “The President Stole Your Land”. Clearly, a company committed to fight for its own ideals and not afraid of controversy.
We live in a hyper competitive economy. Jobs are routinely slashed based on a single bad quarter. But even giants like ABInBev have embraced the slow but inexorable fact that their consumers are telling them they need to stand for something more than a healthy share price. And it’s not going to stop. Millennials are raising their own children with sustainable values front and centre. Transparency, fair wages, and environmental activism are now becoming critical checkmarks for any company’s ethical and financial scorecard.
And the social in corporate social responsibility is escalating rapidly.
In the 2018 IAB Report entitled “The Rise of the 21st Century Brand Economy”, the IAB notes that 2/3’s of consumers expect direct brand connectivity, and 67% of consumers have used a company’s social media site for servicing.
If you simply listen to the voice of your customer, they’ll tell you which way your moral compass should be set.
If you need to bring both your cause marketing and customer care offering up to these 21st century standards, then give us a call. We have plenty of experience in building cross platform strategies, writing effective social media governance standards, and achieving rapid implementation.
In 2018, you can either be Volkswagen, with untold billions of dollars paid out over their diesel cheating scandal, or you can be your own Patagonia. If you simply listen to the voice of your customer, they’ll tell you which way your moral compass should be set.