B2B brands are in for a rude awakening. By lagging behind their B2C counterparts, they are inadvertently creating a rift between their future customers and their future business. What do we mean by this?
B2B companies are insulated from direct customer contact. This makes them less responsive to higher needs – the aspirational issues important to their future customers.
The key finding of a new report, The B2B Purpose Paradox, by the ANA, the Harris Poll, and Carol Cone:
B2B companies overwhelmingly believe it is essential to bring a sense of purpose to their organizations, but they lack the critical knowledge and capabilities necessary to activate successful purpose-oriented initiatives.
The study revealed that 86 percent of B2B companies embrace purpose as important to growth, but they are still on the path to implementing purpose so that it influences business and social outcomes. However, only 24 percent said purpose is embedded in their business to the point of influencing innovation, operations, and their engagement with society.
This is the B2B Purpose Paradox. The slow adoption of fully integrated purpose was attributed to purpose feeling more like a PR exercise than an authentic activation (56 percent); purpose not playing a role within the competitive set (51 percent); and lacking the ability to operate with purpose at the center of the business (50 percent).
The report revealed overwhelming support of the role of purpose in B2B organizations:
- 87 percent feel purpose protects their company’s reputation
- 75 percent say purpose supports recruiting
- 75 percent agree prioritizing purpose had a positive impact on their growth
- 64 percent feel purpose is critical or nearly critical to everything they do
The report also explains why B2B companies embrace purpose:
But what exactly do we mean by purpose?
Alas, we find many definitions of purpose in the industry. The B2B report mentioned above defines purpose as:
a company’s reason for being beyond profits that guides its business growth and impact on society.
Accenture defines purpose as follows:
The reason why something exists. For companies, it is the foundation of every experience. It is the underlying essence that makes a brand relevant and necessary.
Accenture’s Rachel Barton explains: “US companies that stand for something bigger than what they sell, tune into customers’ beliefs and take decisive action on social issues are more likely to recast their customer relationships and connect with consumers on a deeper level.”
WARC defines purpose as: a reason for a brand to exist beyond making profit.
Bain has a more nuanced view. At the top of their B2B value pyramid, we learn that purpose has three critical elements: vision, hope, and social responsibility.
Bain’s Jamie Cleghorn: “as B2B offerings become more commoditized, then the subjective, personal concerns of the business customer become increasingly important… the top of the pyramid are the inspirational elements of value: those that improve the customer’s vision of the future, provide hope for the future of the organization or the individual buyers, or enhance a company’s social responsibility.“
Companies must learn to keep up with their customers. How do you keep up with your customers’ values and hopes and dreams?
ASK: What is my brand, my organization, doing to solve the problems of the world – the problems my future customers and employees care about?
From Purpose to Action: Brand Activism
The problem for both B2B and B2C companies is converting purpose to action. What should purpose look like? It should look like action. Everything else is just words (and PR).
In our book, Brand Activism: From Purpose to Action – we describe brand activism as the key to taking purpose, and converting it into concrete action. Anything less, as we will see, leaves a company open to brandshaming.
Companies struggle to embed purpose into their day-to-day activities. And B2B companies find it even more challenging. We can use this simple diagnostic chart to question the effectiveness of our efforts across six broad issues :
This works for both B2C (see: How Woke is Coke?) and B2B.
At this point, the majority of B2B companies believe that CSR is enough. Unfortunately, they are in for a rude awakening. The purpose backlash is coming.
The Purpose Backlash
What happens when your customer decides to boycott your business? Why would that happen? Could that happen? B2B companies are particularly exposed. Let’s look at how with a specific example – the banking industry.
In his latest newsletter, Michael Gordon points out: “to most of us, a bank is just a bank. And we give our choice of banks less thought than what cereal to buy. But there are actual differences.”
For an example, Professor Gordon refers to the Rainforest Action Network‘s 2019 report – Banking on Climate Change – which states:
“One inescapable finding of [our] report is that JPMorgan Chase is very clearly the world’s worst banker of climate change. The race was not even close.”
According to the report, JPMorgan Chase has “zero policies restricting finance” to:
- Tar Sands Oil
- Arctic Oil & Gas
- Ultra-Deepwater Oil & Gas
- Liquefied Natural Gas (LNG)
The “Hall of Shame” looks like this:
Will this make a difference to JP Morgan Chase’s customers? Is this an avoidable risk?
We feel that the backlash is coming. B2B companies must act. Anything less than authentic action is an existential risk. Sure, it may not happen tomorrow. But the day after that is a different story.
In fact, it is an opportunity for a smart disrupter.