Global fintech and funding innovation ecosystem

Businesses competing on social values use fintech to gain an edge

Fintech Confidential Issue 3 | Daryl Hatton | March 14, 2021

Businesses competing on social values 1 - Businesses competing on social values use fintech to gain an edge

Competition in business is a given. If you don’t have competition, you probably aren’t in a mature market or have much of a market opportunity.

Over time, businesses have learned to compete on features and capabilities, on price and on customer service. We’ve learned to tune our products to customer needs. Optimized our supply chains and operations to reduce costs and create margin advantage. Invested in our people and systems to deliver the experience customers want.  Built our brands so that customers know what to expect from us.

But. Our competitors did the same and, with the Internet enabling global competition, it has become harder than ever to establish and maintain a competitive advantage. The differences between product and service offerings have dwindled. Sales processes have elongated. Win ratios are threatened. Margins are eroding.

To make things more difficult, customers have started to demand that their suppliers share their business values: Respect for the environment. Fair trade supply chains. Respect for diversity in their communities and employees.

At the same time, the competition for employee talent has increased. Millennial and younger generations want to work for companies that share their values. They express, over and over, that they prefer to work at companies that care. Companies that make a difference. Companies that improve the world.

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A standard response to this situation has been for companies to implement corporate social responsibility (CSR) programs. These integrate social and environmental concerns into business operations and interactions with corporate stakeholders. They provide businesses a framework to evaluate the costs and impacts of their programs. It works. Companies with successful CSR programs visibly demonstrate their commitment to social and environmental issues and win more business because of it.

Unfortunately, CSR programs are typically complex to understand. This makes it hard to use them for lead generation. Or, to acquire and retain employees who say, “Sounds good. Show me.” It is burdensome to demonstrate how the customer or employee impacts the CSR program. And even harder to implement using traditional payroll deduction employee giving programs as they don’t enable customer participation at all.

Millennial and younger generations want to work for companies that share their values.

To solve this complex problem, companies are increasingly turning to social fintech to implement components of their CSR programs. Recent innovations in social fundraising (crowdfunding) solutions enable companies to cost-effectively run their own highly visible social / environmental impact generation programs. These programs demonstrate corporate commitment to the values in their CSR statements. But more importantly, they provide an opportunity for employees, customers and supply chain partners to participate in making the impact, not just watching it.

For example, Ernst & Young, a global consultancy, runs an enterprise crowdfunding program to encourage employees and customers to contribute to multiple civil rights charities. These contributions are matched by the company which helps participants feel like they are directing company resources to causes they personally care about, increasing loyalty and satisfaction. Through participant’s social sharing of their support for the causes, Ernst & Young receives earned social media coverage and measurable brand lift and reach. This style of authentic brand amplification resonates with existing and potential employees and customers.

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Ernst & Young appreciates their ability to independently run their own crowdfunding initiatives without charity involvement. This provides maximum opportunity for brand alignment through the choice of any number of beneficiary charities. Central control of financial workflows ensures accountability. Their ability to run multiple, simultaneous, geographically targeted campaigns satisfies their regional offices’ need to focus on local causes.

Other examples show how these programs align with corporate positioning. Nature’s Path, a fast-growing producer of organic foods, uses matching contributions to encourage their employees and customers to support 10 food security charities in North America. AG Hair, a manufacturer of high-quality hair care products, engages their supply and distribution chains in supporting girls’ education in developing countries, increasing brand loyalty in their predominantly female customer and employee base. Vancouver Sun, a newspaper division of Post Media, demonstrates their commitment to child welfare by encouraging readers to support children’s food programs in schools across BC.

In all of these examples, employees and customers express feelings of empowerment, values alignment, and satisfaction through collaboration. Together, these feelings create loyalty to the company and the brand. Recent surveys have shown that, when features, price and service levels are comparable, customers will invariably make their purchase based on their core values. Powerful brand alignment with these values not only helps acquire customers but helps keep them despite competitive pressure. Social fintech is an easy path to creating brand alignment and loyalty.

About the author:

Daryl Hatton is a founder and CEO of FundRazr, an innovative, award-winning global crowdfunding platform. Daryl is an international speaker and thought leader in online giving and philanthropy. A serial entrepreneur who loves the challenge of building companies from scratch, he has founded multiple start-ups and helped bring one, Optio Software, to a successful NASDAQ IPO in 1999. Today he serves as board member of PayPal Giving Fund Canada as well as an advisor to multiple Canadian and Silicon Valley based start-ups.

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