Want More Sales? Give All Your Money Away!

by Colin Shaw on December 20, 2016 No comments

On Black Friday, American retailers kicked off the holiday shopping season by opening their doors in the middle of the night, offering steep discounts, and giving away 100 percent of the money they took in.

Wait – what was that last one?

This year, outdoor clothing retailer Patagonia announced that it would give 100 percent of its Black Friday retail and online sales to grassroots environmental organizations. In a subsequent blog post, company CEO Rose Marcario reported that Patagonia had expected Black Friday sales to reach $2 million. Instead, the total was $10 million. That’s a lot of fleece pullovers and down jackets.

Marcario’s post talked about Patagonia’s grants to environmental groups and then said, “Along with many loyal customers, the initiative attracted thousands who have never purchased from Patagonia before. We’re encouraged to see the great interest from so many in making buying decisions that align with strong environmental values – and taking steps to get more directly involved as well.”

This isn’t the first time Patagonia has scored big by proclaiming its environmental and social values. In 2011, it ran a full-page newspaper ad telling people NOT to buy its jacket because consumption of goods causes environmental degradation. Sales soared in 2012. And Patagonia’s annual growth is in the double digits, at a time when many retailers are struggling.

Rather than discounting prices and pushing customers to buy more, Patagonia consistently appeals to its customers’ core values. It isn’t the only brand successfully taking this approach. Shoe company Toms has always given a pair of shoes to a child in need for every pair it sells, and it now supports other causes as well. King Arthur Flour is a worker-owned company focused on sustainability, education and feeding the hungry – as well as selling flour and baking mixes. And Lush cosmetics donates 100 percent of the purchase price of its Charity Pot body lotion to grassroots organizations working for environmental conservation, animal welfare and human rights.

Good deeds build value & loyalty

These companies understand that businesses can use good deeds to build value and customer loyalty. It costs far more to acquire new customers than to keep the ones you already have. Appealing to customers whose values are aligned with yours is one way to keep your existing customers coming back and attract new ones who are likely to become loyal fans.

It’s tempting to attribute values-based buying to millennials who are tired of consumerism and driven by social causes. But that’s only part of the story. The other part lies in behavioral economics, which tells us that customers behave irrationally and emotionally. I discuss this in depth in my new book, The Intuitive Customer: 7 imperatives for moving your Customer Experience to the next level, which I co-authored with Prof. Ryan Hamilton of Emory University.

When environmentally-conscious customers see Patagonia’s pledges about environmental causes and fair labor, they want to promote those values too. It makes them feel good to support a company that does good. Buying becomes an intuitive, emotion-based decision, and customers can then use durability and high quality to justify spending extra money to buy Patagonia or King Arthur instead of a less expensive brand.

In our customer experience consultancy, we help companies design a customer experience that that fosters customer loyalty and engagement by taking customers’ emotional behavior into account. We use tools like customer mirrors and emotional signature to assess the current customer experience and design a better one.

However, to effectively use company values to build customer loyalty, you have to actually mean what you say!

Wells Fargo Bank bank, for example, is recovering from a scandal in which it fraudulently opened thousands of bank and credit card accounts, boosting its own fees and earning bonuses for its employees at customers’ expense. It is also running full-page newspaper ads touting its work with Habitat for Humanity. No matter how admirable its charitable efforts are, people will see this as an insincere public relations move, not a reflection of Wells Fargo’s mission and values.

What about your holiday shopping plans? Will you be buying based on values, or is price number one for you? Let’s talk about it in the comments section below.

Learn more about the psychology behind customer behavior and how to build customer loyalty, sign up for one of the Beyond Philosophy training courses. Register now using the code Holidays to get 10% discount!

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Colin ShawWant More Sales? Give All Your Money Away!

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