Do brands need a higher purpose to survive today’s virtue market?

Today’s consumers are demanding businesses have a higher, more noble aspiration than just pushing products and services. Behavioural science analyst Dan Monheit investigates whether brands need a purpose to succeed.

Originally shared on CEO Magazine, 11.1.22

Once again, purpose-led marketing has topped 2022 marketing trends hotlists. Everyone from Hubspot to Deloitte and PwC has been extolling its virtues, as well as the innumerable benefits ‘purpose’ can bring to a company including higher employee and customer satisfaction. The main takeaway is consumers are demanding businesses have a higher, more noble aspiration than just pushing products and services.

It appears the era of a company’s primary responsibility being to its shareholders is well and truly over. It’s no longer enough to just be a beer company, making great beer that people love, and therefore making a lot of money along the way. Now good brands are being asked if there is a higher purpose to justify their existence.

Proof is in the purpose pushers

We see this playing out with the normalisation of the triple bottom line framework that pushes for outcomes that benefit the company, its consumers and now society. It’s a notion that didn’t exist even 20 years ago. Yet today we’re encouraged to see Procter & Gamble as “a force for good and a force for growth”, Patagonia being “in business to save our home planet” and Sumo Salad as on a mission to “make Australia a healthier and happier place”.

It makes sense if you consider the way brands nowadays engage, communicate and converse directly with their audiences via social media. For most CMOs, it is almost impossible not to get swept up in the fast-moving, inescapable social, political and environmental landscape that spans social justice, human rights, women’s rights, LGBTIQA+ rights, climate change, immigration, mental health, equality of opportunity and the elimination of poverty.

There will always be a small, vocal group of people who are so deeply motivated by a cause or purpose that it truly shifts their purchasing decisions. However, there’s also a far bigger group (maybe even the majority) that claim in research groups and questionnaires that purpose would inform their purchasing decisions. It’s not that these people aren’t honest — most of us would enthusiastically say we support the environment, equality and a raft of other social causes. It’s just that it’s our aspirational selves answering the surveys while our actual selves do the shopping.

It’s all in the mind

So why the contradictions? Research from the field of behavioural science has consistently demonstrated that what people say they want and how they actually behave often have little in common.

This particular wrinkle in our thinking is known as ‘temporal discounting’, the idea being that we reduce the value of something the further it is in the future: the hazier and further away something is (for example, a comfortable retirement) the less value we assign to it and the more likely we are to exchange it for something that brings us happiness or value in the here and now (a brand-new top-of-the-line smart TV).

In truth we are consistently making choices that see ‘us of today’ raise two outstretched middle fingers to ‘us of the future’. Future us wants to leave the next generation with a planet worth inhabiting, but that’s no match for ‘today us’ who calls the shots and wants to fly to Europe for a holiday, fill our wardrobe with seasonal fast fashion and drive a petrol-chugging SUV to pick up the kids from school.

This is due to our prefrontal cortex which sits just behind our forehead and spends its days concocting logical, rational stories that confidently explain to the world who we are and what we do. Our prefrontal cortex may say that it wants purpose yet the part of our brain that makes all the decisions wants the benefits now. This is due to our reptilian brain being wired for immediacy.

Being human makes us risk-averse, especially regarding long-term rewards. From the start of time resources have been scarce and difficult to come by. The future didn’t exist because day to day survival was all-consuming. So naturally, we would prioritise the here and now over one day in the future.

This means temporal discounting is responsible for almost every wrong, short-term decision you’ve ever made as it incentivises impulsivity and smaller, sooner rewards over larger, later ones. Most of us know only too well the feeling of sitting on the couch tucking into a bucket of ice cream safe in the knowledge that we’ll entrust our future self to work off the calories tomorrow in the gym, or at least, have a salad for lunch to compensate.

It’s the same reality when it comes to making purchasing decisions such as deciding whether to buy Australian made or non-Australian made, organic or non-organic, Fair Trade or not Fair Trade, sustainable or not sustainable, ethical fashion versus fast fashion. There’s who we are and who we want to be.

Of course, there are inspiring case studies and the meteoric growth stories of brands like ThankYou Water, Who Gives A Crap and Patagonia. These businesses have become the poster children for their admirable, long-term commitments to sustainability, fair trade, social justice and other worthy causes.

While I believe there’s a lot to respect and learn from these businesses, including the pursuit of more than profit, we can’t be deluded into thinking that purpose alone is enough to motivate decisions at the moment.

Perfecting status signalling

The brilliance shared between the three aforementioned successful, purpose-led brands is not purely their commitment to a higher-order social purpose; it’s the very immediate, short-term benefit that they provide in the form of status signalling. All three brands give consumers an opportunity to subtly, or not so subtly, show other people that they are supporting a cause (via a brand and its purpose) that is considered worthwhile.

Patagonia has a well-crafted, well-known brand story authentic to them. It’s also got a history of brand actions and real-world outcomes that clearly demonstrate how it lives its purpose. Of course, if Patagonia’s purpose and long-term vision were motivating enough to shape purchaser decisions in the moment it wouldn’t need to print logos on the outside of their garments. Unfortunately it’s not enough to just save the planet. You also need to make it easy for customers to say they’re helping to save the planet too.

We have a similar story at Who Gives A Crap whose toilet paper is wrapped in designs that are cool enough to be displayed as miniature works of art across homes and cafes. And of course Thankyou Water (now just Thankyou) gave people the ability to walk down the street, hydrate, and carry a very small billboard that confirmed that they supported donating to developing countries that were deprived of clean drinking water.

Ultimately millions of successful brands provide customers with short-term benefits, including status signalling, without flying the flag of a greater mission or purpose ahead. So while excellent corporate citizenry is a beautiful thing, don’t forget that short term gratification is the spoonful of sugar that makes the long-term benefits go down.