Frontier -- What Works
Do the Right Thing
A cause-related marketing campaign can help your company break away from the pack
How can a little bank with only 27 employees stand out from giant competitors in a crowded market? That's the problem that faced Stephen Lange Ranzini, president of University Bank, when he moved operations from Sault Ste. Marie, Mich., downstate to Ann Arbor three years ago. His answer: Show a little heart.
Right away, Ranzini launched a widely advertised program called Kids B'Cause, which gives a portion of every transaction--$5 for each new checking account, for instance--to local charities such as Safe House, a battered women's shelter, and the Family Literacy Project. Last year, the campaign, a cornerstone of the bank's marketing strategy, raised about $10,000 for four grateful charities. "In banking, you have to make people feel good about you before they do business with you," says Ranzini.
So it goes in cause-related marketing, the growing practice of designating a portion of sales or profits to a nonprofit cause--and aggressively publicizing it. While big corporations, such as American Express and Target Stores, pioneered the concept in the mid-'80s, increasingly, small companies are getting involved, too, says William Chipps, consultant with IEG Valuation Service, a Chicago market research firm. IEG, which tracks overall cause-related spending, projects companies will spend $700 million this year, up from $262 million in 1992.
Proponents say such programs can generate good PR by communicating your company's values. There's a bottom-line benefit, too: According to the 1999 Cone/Roper study of Cause Branding, 65% of consumers say they would probably switch brands to one that benefits a good cause if price and quality were equal.
Of course, the public will see through a shoddy attempt at headline-grabbing and will be suspicious of vague terms. A successful campaign chooses its cause carefully and spells out its purpose and the percentage to be donated.
Last summer, Greg McVey, CEO of Primordial LLC, an eight-employee toy company in San Francisco, teamed up with 1,900 Denny's restaurants and the charity Save the Children to promote his toy called Zoob. Denny's customers bought more than a million boxes of Zoob, resulting in a $10,000 donation to the charity and plenty of buzz for Primordial. "Tying in with a national charity and a national chain gave us our 15 minutes of national fame and also demonstrates that we care about families and children," says McVey. It's a case of doing good to help your company do well.
For more successful cause-related marketing, click Online Extras at frontier.businessweek.comBy Aimee L. Stern