E-commerce companies are now counting their receipts and surveying the damage from one the biggest online shopping seasons to date. Some companies buckled under all the pressure to deliver the goods on time for Christmas — from servers that groaned under the traffic to the poor foresight of companies who didn’t hire enough holiday help to fulfill the orders. Yet, Santa was good to e-commerce in 1998.
This year, it may worth it for online companies to think about how they’re going to give back. Many large bricks-and-mortar companies already give charitably, some even have small departments that manage this activity. These companies have realized it’s good for community relations and it makes sense.
E-Business Without a Cause
One study by Walker Information, a customer loyalty research firm, found consumer loyalty was influenced by the social responsibility of the company (or, in some cases, the social irresponsibility). The study results show 14 percent of the population seek good corporate citizens when making purchases. And when potential consumers are trying to decide between two similar products or companies, about 40 percent of them will use corporate citizenship as the tie breaker.
Charles Fombrun, a research professor of management at the Stern School of Business, New York University, says in his book Reputation that there are three social factors that affect a company’s reputation (and arguably, its bottom line) — (1) advertising, (2) community involvement, and (3) visibility in the media.
But how does a company decide which good causes to support? The notion of strategic philanthropy has developed over the past several years. This means a company’s community involvement has two primary goals — it does measurable good, and it enhances the company’s reputation with key audiences.
For example, Kraft focuses its multi-million dollar philanthropy on hunger relief and nutritional programs. Home Depot supports Habitat for Humanity with cash, building materials, and expertise. America Online’s AOL Foundation donates technology and technical expertise to schools and communities.
But there is a danger in tying corporate giving too closely with marketing goals. Savvy consumers are wary of claims such as “a portion of your purchase goes to such-and-such a cause.” Many are tired of the ransom note approach of corporate givers. (“Buy our product, or else these poor children will sleep under a bridge tonight.”)
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The nouveau rich of Silicon Valley have earned a sorry reputation for being tight-fisted. They haven’t seemed to follow in the footsteps of their forefathers, Hewlett-Packard and IBM, who arguably are two of the biggest corporate givers around.
(The David and Lucile Packard Foundation, with 46 million shares of Hewlett-Packard stock, are tipping the scales of the philanthropy world toward the West Coast, being the third largest foundation in the country after Lilly Endowment and the Ford Foundation.)
Perhaps the 20-something CEOs can learn something from the Boston College Center for Corporate Community Relations, which instructs senior management types in the benefits of corporate giving and involvement. They will learn how corporate involvement and giving is not just a “feel good” proposition, but good business sense.
Corporate giving and volunteerism is also good for employee morale and loyalty, as several studies have shown. Corporate involvement improves the communities in which their employees live — making them more likely to stay, which matters in this tight job market where many high-tech workers change jobs as often as they change their oil filters.
As for companies who are exclusively online, there are many opportunities to support non-profits through corporate web sites. VISA and eToys sponsored perhaps the most visible online charitable campaign this holiday season on behalf of Toys For Tots, an annual holiday toy drive sponsored by the U.S. Marine Corps.
Visitors to the eToys web site could purchase a toy (out of a selection of about 20) and make the donation online. Granted, the donors were the customers, not the company. But eToys did offer the toys at a 50 percent discount to encourage giving.
Such high-profile “do-gooding” may even start to change the attitudes of those who still think the Internet is a haven for child pornography and works of the devil — and bring more potential consumers online.
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