Cause-related marketing, or cause marketing is a mutually beneficial marketing relationship between a nonprofit and a business or corporation. In modern times, more and more companies are now “doing well by doing good.”
One of the early examples of cause marketing happened in 1983. At the time, American Express partnered with a nonprofit group called the Restoration Fund to raise money for the repair of the Statue of Liberty. American Express donated a portion of every credit card purchase to the nonprofit and gave an additional amount to the Fund for every new credit card application they received.
The results were astounding. In only three months, the Restoration Fund raised over $1.7 million for the statue while American Express enjoyed a 27% rise in credit card use and a 45% increase in new card applications. It was then that American Express coined the term cause-related marketing, which has been shortened over the years to cause marketing.
How does cause marketing work?
Cause marketing campaigns are highly visible to the public. With cause marketing, corporations differentiate their product by leveraging the goodwill that is associated with a social or environmental cause. The hope is that consumers will switch brands, increase loyalty, or drive sales as a result. The featured nonprofits can also benefit from the heightened visibility to potential donors—as well as an influx of funding for their cause. The goal of cause marketing is that the consumer, seeing the connection between the corporation and the nonprofit, will become loyal to the corporate brand supporting the nonprofit.
What steps can a corporation take to remain transparent?
Transparency is key in the billion-dollar-a-year cause marketing industry. Consumers want to know how their dollars are spent; they want to know that their money is benefiting a charity in the way the corporation promises. After all, most cause marketing campaigns rely on the consumer’s spending power to be effective. On the CharitiesNYS website, a resource for charities in New York State, New York Attorney General Eric Schneiderman released five best practices for cause marketing. His guidelines aim to help corporations remain transparent and accountable to nonprofits and the public:
- Make promotional materials clear.
Consumers need to know how their money will be used for charity. Marketing materials should clearly communicate the nonprofit’s name, how it will benefit the nonprofit, any donation amounts, and your campaign’s start and end dates. A corporation can maximize transparency with a “donation information” label on products and websites.
- Tell consumers the amount (or the percentage) being donated.
Consumers want to know how much of their purchase is going toward the cause. When giving them this information, avoid vague phrases such as “a portion of the proceeds …” Instead, use a fixed dollar statement or percentage (for example, “We’ll donate $1 for every $10 spent.”) With this level of detail, consumers can know exactly how much of their money is benefiting the cause.
- Work towards transparency in social media.
Social media has become a vital tool for corporate marketing and promotion. Companies should be as transparent in their social media as they are in their traditional product-based campaigns. Clearly communicate how much will be donated for each like, retweet, etc. Make sure social media consumers are aware of the beneficiary, the campaign’s open and close dates, and any minimum or maximum donation amount from the corporation. Tracking of results in real-time can help ensure transparency with the public. Once the social media campaign is over, a company’s social media users should understand that no subsequent actions on their part will result in additional donations to charity.
- Be honest and upfront.
If the public thinks a company has deceived them through a cause marketing campaign, the damage to the brand can be irreparable. Take extra steps to maintain public trust by reporting on things that might not be immediately apparent. For instance, if a campaign will result in an in-kind contribution rather than a monetary one, make that clear.
- Report the results.
Schneiderman suggests logging all information about active and past cause marketing campaigns on your website. He also advises that communicating the dollar amount raised for the charitable organization at the conclusion of each campaign.
Cause marketing is a mutually beneficial relationship for both the corporate and nonprofit partners. Influx of new funds, increased brand visibility, and strengthened public image are just a few of the benefits of “doing well by doing good.” If you are considering a cause marketing relationship with either a nonprofit or a corporation, keep these transparency measures in mind for a successful partnership.