Global Chairman and CEO, EY, Mark Weinberger says “Businesses today are finding that doing good also means doing well”
It can be argued therefore that companies that align their operations with a clear sense of purpose and a commitment to positive impact are not only appealing to a new generation of consumers but are also fostering sustainable growth.
One very interesting piece of research around purpose and financial growth has been undertaken by US firm Jump Associates. According to Jump Associates, over a twenty-year period they found that purpose-driven companies provided shareholders with a 13.6% CAGR return on average, which is five times higher than standard S&P 500 returns, over this long period.
So, this sounds like a great return for larger firms, but here are 3 initial reasons why having a clear sense of how purpose and impact can significantly drive your business success, no matter what size:
1. Enhanced Customer Loyalty and Engagement
Consumers today are more likely to support companies that reflect their own ethical standards and social concerns. According to a 2020 study by Zeno Group, customers are four to six times more likely to purchase from and champion brands that they perceive as having a strong purpose.
When businesses articulate a clear mission—whether it’s environmental sustainability, social justice, or community support—they build stronger emotional connections with their customers. This alignment fosters loyalty and turns customers into advocates who not only buy products but also promote the brand through word-of-mouth and social media, enhancing overall engagement and expanding the customer base.
2. Attracting and Retaining Top Talent
A company’s purpose can also be a powerful tool in attracting and retaining talent. Employees increasingly seek to work for organisations whose values align with their own, where they feel their work contributes to something larger than profit. According to Deloitte’s 2023 Global Millennial Survey, 60% of millennials and Gen Zs want to work for companies whose mission they believe in. Purpose-driven companies provide employees with a sense of meaning and fulfilment, leading to higher job satisfaction, motivation, and loyalty. This, in turn, reduces turnover rates and creates a more engaged and productive workforce, driving the company’s growth from within.
In a recent McKinsey survey of more than 1,200 managers and frontline employees at US companies, only 42% felt their organisations’ purpose statements made a real difference. 72% felt that purpose should come before profits, and 82% believe that it’s important for their employer to have a clear purpose, other than profit.
3. Differentiation and Competitive Advantage
As consumers become more discerning, companies with a clear purpose can differentiate themselves from competitors who focus solely on profits. This differentiation is particularly potent in industries where products and services can otherwise appear similar. Patagonia, for instance, has leveraged its commitment to environmental activism to stand out in the outdoor apparel market, creating a loyal customer base willing to pay a premium for products that align with their values. Furthermore, purpose-driven companies often enjoy increased brand equity and trust, which can translate into long-term customer loyalty and market share.
In conclusion…
Detailed statistics and research clearly outline that consumers are moving towards an informed purchasing decision based on other factors than just price, and businesses need to consider wider factors when looking at business growth targets.
There are much further research around this topic, and for those that are interested in exploring further, please see some research articles below:
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