The Benefits of Brand Purpose (and Risks of Not Living Up to It)

A company’s brand purpose serves as its guiding light. It shouldn’t be a complicated statement filled with buzzy words. Instead, it should be a clear and simple indication as to why your brand exists (besides to make money, of course).

It’s not enough to simply publish your brand purpose. You must use it to boldly separate your brand from the competition and influence customers to believe in it.

In September 2022, a best-in-class brand made a bold announcement to embody its brand purpose: “Patagonia founder donates entire company, worth $3 billion, to fight climate change.”

Patagonia has led and contributed to environmental sustainability efforts for years. In fact, their consumer-facing brand purpose is, “We’re in business to save our home planet.” This is an example of a sound brand purpose leading to bold, fame-worthy action.

A study revealed that 82% of consumers make purchase decisions with a brand’s purpose in mind. While 76% of marketing leaders believe their brand has a defined purpose, only 10% of those marketers say they have a meaningful action plan behind their brand purpose.

Why Brand Purpose Matters

Brand purpose isn’t a promotion strategy. Instead, it’s a filter to apply to marketing and operational decisions. According to Havas, 76% of people state that the brands they buy stand for a greater mission and purpose.

• Set your brand apart from competitors. By developing a clear sense of purpose, you can effectively communicate why they should choose your brand over others. The Kantar Purpose 2020 study illustrates that brands with perceived positive impact outperform those that are not or are only partially purposeful.
• Better connect to your customers and add value to society. Customers are more likely to purchase from a company that they believe is doing something meaningful. Per Razorfish, 76% of consumers say the brands they buy make the world a better place, and 67% say the brands they buy make them better people.
• Strengthen customer loyalty. Nearly 90% of consumers would switch to brands that share their values and outlooks on life. Further improve customer loyalty by actively engaging with customers, responding to feedback, and showing that the brand is invested in creating a positive customer experience.
• Build a strong employment brand and positive corporate culture. When employees understand the organization’s values and purpose, they feel more connected to the company and are more likely to stay with the organization for a longer period of time. Plus, it makes it easier to attract top talent, as 75% of job seekers consider an employer’s brand before even applying for a job.

Putting a Brand Purpose Into Action via a Bold Stance

Determining what truly matters to your brand and effectively communicating that doesn’t just make for good PR—it can also have dramatic business implications. While it may be too soon to see the effect Patagonia’s announcement has on its business, there are stories of brands that became famous for their bold actions.

REI – Black Friday closing.

In 2016, REI answered its customers’ search for attached meaning and made the decision to close all its stores on Black Friday. REI’s then-CEO stated, “For 76 years, our co-op has been dedicated to one thing and one thing only: a life outdoors. We believe that being outside makes our lives better. And Black Friday is the perfect time to remind ourselves of this essential truth. We’re a different kind of company—and while the rest of the world is fighting it out in the aisles, we’ll be spending our day a little differently. We’re choosing to opt outside and want you to come with us.” REI’s weekend sales dropped from the previous year but quickly got back on track during the holiday season and was praised among media and customers for its decision. REI stood firm in its purpose and invited us all to join them.

CVS – No more tobacco.

When CVS rebranded itself to CVS Health, it faced a dilemma. Its retail pharmacy footprint was well designed to deliver on its healthcare focus, but the store’s tobacco offering flew in the face of its mission as a healthcare company. CVS announced it would cease selling cigarettes and tobacco in all its stores, a projected $2 billion loss in yearly revenue, to deliver on its brand purpose of “building an entire world of health care around each and every person we serve.

” Simon Sinek points out that “CVS’s stock price fell by 1% the day after the announcement from $66.11 to $65.44 per share, only to recover the very next day. A year and a half after the announcement and eight months after the plan was implemented, the stock hit $113.65 per share, nearly double what it had been before the announcement—at the time, a record high for the company.”

Sinek also reports, “An independent study commissioned by CVS to see the impact of their decision showed that overall cigarette sales dropped by 1 percent across all retailers in the states where CVS had a 15 percent market share or greater. In those states, the average smoker bought five fewer packs of cigarettes, which totaled 95 million fewer packs sold over an eight-month period. On the other hand, the number of nicotine patches sold increased by 4 percent in the period immediately after CVS stopped selling cigarettes, indicating that CVS’s decision encouraged smokers to quit.”

The Impact of Inauthenticity     

Havas Group’s Meaningful Brands reports that 71% of U.S. consumers are tired of brands’ empty promises. And shockingly, 75% wouldn’t care if brands disappeared altogether. Customers easily see through brands using purpose as a gimmick and not activating against it. When a company fails to live up to its brand purpose, it risks damaging its reputation, losing customer trust, and facing severe consequences.

Erosion of Customer Trust:

When a company fails to live up to its stated values, it undermines the trust that customers have placed in it. This can lead to negative word-of-mouth, a decline in customer loyalty, and a loss of market share. Customers today seek authenticity, transparency, and alignment with their own values, making it crucial for companies to uphold their brand purpose consistently.

Reputation Damage:

In the age of social media and online reviews, negative experiences can quickly spread and tarnish a company’s image. According to a study by the World Economic Forum, more than 25% of a company’s market value is directly attributable to its reputation. Once a company’s reputation takes a hit, it becomes challenging (and can take months or often years) to regain trust and repair the damage.

Employee Disengagement:

Employees may feel disillusioned and disconnected. Employees want to work for organizations that share their values and make a positive impact. Failing to live up to the brand purpose can lead to disengagement, decreased productivity, and increased turnover rates. Misalignment between a company’s actions and its stated purpose can create a toxic work environment and result in the loss of valuable talent.

Legal and Regulatory Consequences:

Misleading advertising, false claims, or unethical practices can result in lawsuits, fines, and damage to the company’s bottom line. Failure to live up to a brand purpose can attract negative attention from regulatory authorities, leading to investigations, penalties, and potential long-term consequences for the company’s operations.

Missed Business Opportunities:

Stakeholders, including partners, investors, and customers may hesitate to engage with a company that lacks authenticity or fails to align its actions with its brand purpose.

Real-World Stories of Failed Brand Purpose

Here are a few examples of companies that have faced criticism for falling short on brand purpose and how they took steps to repair the damage.

False Claims

The Honest Company’s stated purpose is “making happy, healthy lives possible for more people everywhere.” But what happens when part of that promise isn’t delivered? The Honest Company claimed their infant formula was blended with naturally derived, organic, and other high-quality ingredients sourced from trusted organic farms to ensure pure, safe, and quality goods. Accusations, and a lawsuit, were made against the company that their baby formula contained synthetic ingredients that aren’t allowed in organic products and some ingredients were “not assessed as safe for human foods.” The lawsuit was later dismissed, though the damage was already done. The company has since made a comeback by refocusing its mission and bringing research and development, as well as quality assurance, in-house.

Positive Intention, Poor Execution

In 2017, Pepsi released a controversial ad using imagery from the Black Lives Matter movement that didn’t relay the intended message. The ad, featuring Kendall Jenner, showed many attractive young protesters holding signs that read “Join the Conversation” while smiling, laughing, and high-fiving. After a public backlash where Pepsi was accused of trivializing a social movement, the ad was removed from the media rotation. This was a poor execution of Pepsi’s “embodying young energy” brand strategy and caused the company public embarrassment.

Practicing what you Preach

The e-cigarette company, Juul, marketed its products as a safer alternative to smoking, with a brand purpose to transition the world’s adult smokers away from combustible cigarettes. However, the company faced scrutiny (and a lawsuit) for its marketing practices that allegedly targeted and attracted underage users, which contradicted its claimed commitment to public health.  A few ways in which Juul has since worked to get the brand back on the right track include removing flavored products, introducing multi-step age verification for online sales, and launching educational programs to discourage underage e-cigarette use.

Customers sense what’s authentic and what’s a gimmick. The authenticity of a brand’s purpose comes from having a deep understanding of the world in which you exist and knowing how your brand fits in it. Forcing a fit just to get attention can lead to infamy and distrust. Take bold actions that are authentic to your brand purpose, and you’ll likely be rewarded with trust, loyalty, and ultimately business results.