Who Really Wins When Business and Politics Collide?

May 14, 2021-  By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

In early 2020, more than 80 percent of chief marketing officers didn’t think it was appropriate for their companies to take a stand on politically charged issues, according to Forrester Research. But today, a lot has changed. It has become clear over the past year and a half that consumers are eager to know where companies stand and how they plan to back it up. What’s more, today more than 30 percent of B2C marketing leaders believe it is completely appropriate for their companies to take a stand on politically charged issues, Forrester found.

So I guess we really shouldn’t be surprised that so many corporate executives from nearly 200 companies, including Coca-Cola, Delta Airlines, Dow, HP, Estee Lauder, Target, ViacomCBS, Microsoft, and Salesforce, came out publicly against the new voter laws passed in Georgia in late March. Their voices were echoed by many in the worlds of music, entertainment, and even sports; the commissioner of Major League Baseball, Rob Manfred, even relocated his league’s All-Star Game from Atlanta to Denver in response to the law.

There is a huge risk to taking positions on political issues. In today’s hyper-divided political climate, coming down on one side or the other is sure to ruffle the feathers of those who don’t agree with the corporate position, and the company then risks alienating a significant share of its potential customer base. Take up the Democratic Party’s position and you could put off the Republican half of the country, and vice-versa.

Am I likely to completely abandon Coke and start drinking Pepsi or spend $100 more to fly on an airline other than Delta because I might not agree with their positions on the Georgia voting law? Probably not, but all things being equal, I might consider altering my relationships with these companies in some way. I might rethink my membership in these companies’ loyalty programs, or I might not be as willing to share my personal information with them.

Some organizations might not withstand the backlash. Though it is too early to tell what the long-term impact will be, some data already suggests that support for Major League Baseball is slipping after its decision to relocate the Mid-Summer Classic. This follows the fallout that the NFL and NBA saw when some players chose to kneel during the national anthem.

While I might not change corporate allegiances, some customers will alter purchase decisions based on where companies stand on the issues that matter most to them. Forrester’s study found that 51 percent of U.S. online adults between 18 and 24 years of age admit to researching companies to ensure that they align with their positions on social issues before making purchases from them.

When choosing between two similar products from two different companies, 43 percent of U.S. adults will favor the one whose stated position on social, political, or environmental issues most closely mirrors their own. They might also cut companies that share their views some extra slack when customer service issues arise.

In conducting its research, Forrester presented survey respondents with 21 issues to assess their relevance to consumers. Among the topics that scored highly were racism, gender inequality, climate change, minimum wage, and criminal justice reform.

While some government leaders are advising corporate America to stay out of politics, 68 percent of U.S. adults believe that CEOs are in a great position to drive real social and economic change in America.

But that doesn’t mean companies should take a stance on every single issue. Company values should determine when to voice an opinion and which side to support.

Consumers today are much more aware of the social and political issues surrounding them, and they expect companies to make a significant contribution to making things better. But companies can’t just provide lip service to these issues; they need to be authentic in their political messaging and back up the words with action in their hiring processes, brand campaigns, environmental footprints, and other business-related activities.

Making a political statement is a path that companies need to tread carefully. They need to evaluate all possible outcomes of their statements and assess their ability to accept any potential fallout.

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