Is ‘free’ a four-letter word? Why generosity trumps greed if you want to profit

12 Feb

corporate_greedYou’ve probably seen a flurry of bankruptcies, layoffs, and decreased sales figures blaring across the news headlines. By now we are all well aware that we are in a recession and are paying for the sins of past greed, or at least that of our neighbours.

In tough economic times many companies will be tempted to tighten up their wallets and focus internally on profitability. While this may seem like the prudent thing to do, it likely won’t keep your customers around, and these are the folks we need most right now.

In an earlier post we spoke about why it’s good to maintain, if not expand, your marketing presence in a recession. Much in the same vein, if you want to earn the trust of consumers, and increase profitability at the same time, you should leverage or expand your corporate generosity.

Generosity breeds loyalty. This month’s Trendwatching brief has even coined a term for consumers who are expecting this wave of corporate generosity: Generation-G. These are people who themselves embrace sharing over taking – whether it be sharing their images via Flickr (of which there are 3,087 uploads a minute), or contributing their share-of-wallet to items like (Product) Red .

For smaller companies, a generous gesture can easily get overshadowed by the likes of a Microsoft or Starbucks social program. But now that large companies are scaling back, the little guy has a chance to shine, and even be seen as a hero.

Now, acts of corporate generosity will be the exception, rather than the status quo. How does that help you? We associate the ability to give with strength. This ties back to consumer confidence and trust. Which type of company would you rather purchase from: one that looks strong or one that’s bracing for the worst?

In a sea of bad news stories, companies today who lead with generosity have an opportunity to stand out, to earn free media, and to position themselves as an industry leader.

For all you CFOs, don’t get your budgets in a knot. Becoming a generous company does not have to break the bank. Strategic partnerships can create meaning or benefit for your customers when they are aligned with your values and their needs. Pro-bono work is another great way to give back to the community without squeezing your cash flow.

Random acts of kindness are also a great way to generate buzz. For example a leading e-tailor DangDang.com (the Amazon of China) gives back to its customers – and ensures their eyeballs are always watching their site – by randomly assigning one hour a day where all purchases made within that hour are free.

Consumers tend to have a pay-it-forward approach when it comes to brands. If they experience a brand’s generosity, they will be more likely to help that brand in return – either by word of mouth, or with their loyalty. These are priceless forms of advertising that can keep your sales afloat and give you a leadership position long after this recession ends.

So what can your company champion as a random act of kindness?

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