There are lots of awesome products and services that say they donate a portion of their profits to a feel-good cause. When I see that, it makes me feel really good, like I’m doing something to give back. But does our money really go to those causes? Or does it just encourage us buy more stuff?
According to a 2017 study conducted by marketing firm Cone Communications, 79% of consumers would likely switch to a brand that supports a cause, all other things being equal. This technique of matching a product with a cause is called cause marketing, and it’s been really successful in generating money for important causes. It’s also been really successful at increasing profits.
In one test conducted by Cone and Duke University’s Fuqua School of Business, shampoo that aligned with a cause saw a 74% sales increase over the same brand without a cause. The result is millions of dollars of revenue.
Two professors at the Ross School of Business at the University of Michigan at Ann Arbor found that companies tend to raise prices on their cause-related products, allowing them to increase profits. Their research also found that it’s not uncommon for an entire brand to experience a “spillover” effect where every product increases in sales — just because of that one cause-related product!
This has resulted in companies using cause marketing to increase prices and profits. It doesn’t mean that they aren’t caring or genuinely interested in helping a cause, it just means they know that product is going to sell better and increase their bottom line.
It’s healthy to have some skepticism when you see cause marketing. The best thing to do? Donate directly to a cause you support. That way, you know the cause isn’t being exploited to sell products and the money is going right to organization.