Marketing, Strategy & Operations

Give a Little, Get a Lot. Or Not.

Singer-GiveLittleGiveALotPhilanthropy and Your Brand

I first heard of Toms nearly five years ago while wedding dress shopping with my niece. To judge the right length of the dress, the sales person asked what type of shoe she was planning to wear. She answered definitively, “Toms,” sticking out a foot covered in what appeared to be a fabric espadrille, “I’ve already ordered a pair in white.” Her mother and I silently poked one another as the sales person replied, “Oh, I love Toms. I have them in almost every color!”

Toms was started in 2006 by Blake Mycoskie, an already successful serial entrepreneur, and semifinalist in 2002, with his sister, in Season Two of The Amazing Race (they missed by four minutes because they didn’t ask for directions). Mycoskie returned to Argentina for vacation where he discovered both the Alpargata, a casual, canvas shoe worn by polo players and farmers alike, as well as a volunteer worker who distributed shoes to children in need. After traveling with the volunteer for several days, Mycoskie, a Texas native, came home to Los Angeles with the idea to start a shoe company and do some good at the same time. He invested $500,000 of his own capital to start Shoes for a Better Tomorrow, which eventually morphed into Toms. The initial concept, known as the One for One model, which Mycoskie is credited with creating, is a for-profit business that builds into its cost structure the selling proposition that for every pair of shoes purchased, the company will give a pair to a person in need.

Its Not Just Shoes

To date, Toms has distributed 45 million pairs of shoes and has expanded its product assortment and its trademarked One for One giving model to include sunglasses, handbags, backpacks and, most recently, coffee. For every pair of glasses purchased, eye exams, professional examinations, treatment and surgery are given. The “vital materials and training needed to provide a safe birth regardless of the facility” come with a purchase of Toms bags which are tagged, “This bag helps save a life.” Each package of coffee purchased “coffee for you/water for all” ($12 dollars a bag) provides 140 liters of safe water, a week’s supply, for a person in need. A “Stand Up Backpack” comes with training and crisis counseling to help prevent bullying.

Toms claims to have reached 35 million people on five continents with its One for One giving programs. Toms’ donations are made in 70 countries through 100 “Giving Partners,” mostly well recognized not-for-profits who distribute the products and services as a part of their respective community aid and development programs. Some of Toms giving programs include a sustainable development component like a shoe factory in Haiti, launched in 2014, which employs 40 people. Its goal is the local production of one-third of the shoes donated in Haiti, the poorest country in the Western Hemisphere.

How to Get and Give

Toms products are sold on its well-designed web site and in about 1000 electronic and brick-and-mortar global stores including the upscale retailers Neiman-Marcus, Bloomingdale’s, Nordstrom, Bergdorf Goodman (children’s only) and Whole Foods. Product is well signed, tagged and/or imprinted with the One for One branding message.

There are now five Toms stores/cafes in Chicago, Portland, Austin, New York and Los Angeles (Venice). The New York store, launched in late February 2015, is on Elizabeth Street, a trendy stretch of a block that runs between the city’s now hip and fashionable Nolita and Soho neighborhoods. The boutique is warm and cozy, a cross between a ski lodge and a rustic ranch, with exposed brick interiors and worn wood shelving. The coffee house café is in the front of the store, which permeates the space with a wonderful coffee aroma. There is also a book lending library, “bring one, take one,” in a middle passage; the store is in the rear, a garden for sitting or lounging in back. Displays are simple with signage that reinforces the brand’s giving message. Help is plentiful, as are customers, both tourists (lots of them!) and locals who frequent the coffee bar replete with cheerful baristas. A local events manager coordinates promotions and events; when I visited, a clothing drive was underway to help the Bowery Mission a few blocks away. With the exception of one barista with 10 year’s experience, and the store manager, who has a food background, the rest of the employees at the New York store are very recent and enthusiastic college graduates who may aspire to other professions but are thrilled to be working at a company with a mission.

More Than One for One Value

Toms has a bit of a cult following. Millennials favor it for its low-key almost anti-fashion styling and its One for One philanthropic model. Other customers like the comfort. Clearly, the philanthropic orientation is more than a gimmick and one which has been well fused with the Toms brand. “Giving has been incorporated into our business model from the start, so the cost per shoe is fixed,” Mycoskie said in an interview, recognizing that charitable giving per se is subject to whims and cuts that most companies are “not built to handle.”

Apparently Bain Capital recognized Toms’ growth potential when it purchased 50 percent of the company from Mycoskie in August 2014. At the time, Forbes valued Toms at $625 million. Mycoskie has said that he recognized the need for a CEO but also recognized the need for an appropriate corporate structure to attract the right person. After the Bain acquisition, Jim Alling, who began his career with Nestle, was president of Starbucks USA, and most recently COO of T-Mobile, became Toms CEO. Mycoskie retains his title of Chief Giving Officer and will focus on the creative and philanthropic side of the business. Mycoskie will also donate half the proceeds of his stake from the Bain acquisition to a fund that will support and invest in sustainable entrepreneurship. Bain will match his investment in the fund and has committed to preserving the One for One model. In a speech in New York after the Bain acquisition, Mycoskie said that “…it showed that investors are thinking about business differently and the smart ones recognize that the consumer is demanding more from companies and so to invest in a company like ours that’s giving something away but is also profitable…(is)… the future of business.”

There is an important trend here.

Corporate Purpose

Corporate purpose is often defined as a company’s core reason for being: a purpose which exists beyond return to shareholders, sometimes expressed as a unified vision of strategy and responsibility or a point of view about how a corporate entity sees itself in society overall. Many companies have no feeling about their corporate purpose and their relationship to the greater world around them. Others, like Toms, are organized almost entirely around that principle. Some companies are socially alert good corporate citizens but get little or no credit for their actions from their customers, shareholders or employees.

If You Give I’ll Switch

The general wisdom has been that “all things being equal,” meaning product quality, price, and other basic entry criteria, consumers will choose a brand, or switch to one, that is “doing good” over one which isn’t.

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In 2012, as part of its ongoing “goodpurpose” study, Edelman, the world’s largest PR firm, surveyed 8000 consumers in 16 global markets to explore their attitudes about social purpose. The results are striking:

  • 72 percent would recommend a brand that supports a good cause over one that doesn’t; a 39 percent increase since 2008.
  • 71 percent would help a brand promote their products or services if there is a good cause behind them, an increase of 34 percent since 2008.
  • 73 percent would switch brands if a different brand of similar quality supported a good cause; a 9 percent increase since 2009.

It is important to note that the results of this study show greater interest in purpose in emerging economies like China, Brazil, India, Indonesia, Malaysia – versus established economies like the U.S., Western Europe, and Japan. Still, the trend is significant: 67 percent of consumers in developed economies would switch to a different brand that supports a good cause, versus 82 percent in emerging economies.

There are important lessons from companies that have incorporated the philanthropic model into their businesses. Those that stand out have made their philanthropy a key ingredient in their organizations, in their brand communications, and in the connection and relevance of the philanthropy to the product and the brand idea, with both a long-term commitment to the programs they support and singular focus on their efforts.

Viva Glam Viva Giving

MAC cosmetics started the MAC AIDS Fund in 1994, the year the founders sold a 51 percent stake to Estée Lauder (ELC). RuPaul, a drag queen model, was the first Viva Glam spokesperson to support the MAC AIDS Fund whose mission was to make a difference in the world of HIV/AIDS, a disease which, at the time, was devastating to the fashion and beauty community.

The Viva Glam campaign was bold in its approach and execution and also communicated the outsized stance, spirit and soul of the MAC brand.

The campaign for the MAC AIDS Fund was, and continues to be, funded by the sale of Viva Glam lipsticks and glosses. The full retail cost of all purchases of Viva Glam lipsticks and gloss, now $17 each, is donated to the MAC AIDS Fund. MAC underwrites 100 percent of the cost of the program. In keeping with the brand essence, spokesmodels for the Viva Glam campaign — the singular promotion for the brand — are meant to be “provocative, alternative, influential…reflecting a diverse community…” and have included the mega-celebrities Rihanna, Nicki Minaj, Mary J Blige, Fergie, Lady Gaga and this year, Miley Cyrus.

Six Viva Glam lipsticks and corresponding lipglosses are staples of the MAC product line. New rotating shades are added with each campaign. Three of the six Viva Glam lipsticks are among the top 10 best-selling shades in the MAC line. To date, the MAC AIDS Fund has raised $380 million, which is donated to organizations that provide a range of services to people living with AIDS. The MAC AIDS Fund is the largest non-pharmaceutical corporate donor to AIDS.

Beyond the philanthropy, MAC believes that the Viva Glam program brings new customers to the brand. Equally, or even more important, is the relationship of the Viva Glam MAC AIDS campaign to the makeup artist/sales associates who are the engine of the brand in its 2,365 global retail outlets that reportedly enjoy the highest retention rate in the industry. A winning proposition for all concerned, especially the Estée Lauder Companies, which purchased the balance of MAC in 1998 and continue to stand strongly behind the MAC AIDS Fund. Under Lauder stewardship, MAC has reportedly grown to over $1 billion in sales.

Eyeglasses For All Who Want and Need Them

Other companies have adopted a singular stance that places a charitable component at the center of the brand. Like Toms, optical retailer Warby Parker promises, “for every pair purchased a pair is distributed to someone in need.” Founded in 2010 by Wharton graduate students, Neil Blumenthal and David Gilboa, now co-CEOs, with the mission of selling affordable, fashionable eyeglasses and being a socially responsible business, Warby Parker had distributed one million pair of glasses to people in need by June 2014. The company’s “buy a pair, give a pair” program tallies the total number of glasses sold each month and donates a proportionate amount to a not for profit partner like Vision Spring which in turn trains local entrepreneurs to provide eye exams and sell affordable glasses. This model attempts to avoid a “culture of dependency” by creating both productivity and sustainability. Warby Parker’s well-integrated social responsibility program is not the only measure of the five year old company’s rapid success — it was valued at $1.2 billion after its most recent round of funding in April 2015 — but it is one that distinguishes the company, and is an essential part of its brand signature. Every pair of glasses shipped includes a thank you card: “Thanks so much for choosing Warby Parker!” on one side, “for every pair of glasses sold, a pair is distributed to someone in need,” on the reverse.

Soap Sells Self Esteem

There are other notable examples of successful and well-integrated corporate socially responsible, philanthropic programs like Dove’s Campaign for Real Beauty. Started in 2004 in response to research showing that only two percent of women saw themselves as beautiful, Dove has a “vision of a world where beauty is a source of confidence, and not anxiety.” The Dove Self Esteem Fund partners with organizations like the Girl Scouts to build self-esteem among tween and teen girls with a goal of reaching 15 million girls this year.

What Works What Doesn’t

The most successful corporate philanthropic campaigns share several similarities. They are simple, to the point and well focused. While Toms is ever expanding its product categories and causes to go with them (Mycoskie has promised a new product/giving category every year) the One for One theme is a constant. The relationship to the brand is always clear and always well communicated. MAC’s Viva Glam campaign may change celebrity spokespeople, but the message and the cause are constant. Warby Parker’s philanthropy is all about giving glasses, the only product it sells. Other notable ingredients are leadership’s commitment to the program, longevity and sustainability. Here today, gone tomorrow efforts can do some good in the short run, but may not do much for a company’s brand distinction, its charitable or corporate purpose or its bottom line.

To be successful at social responsibility you need to be committed, be in it for the long haul, stay focused on the mission, have some connection between the product and the philanthropic effort, and let customers know what you are doing. While the Talmud says the penultimate level of Tzdakah (Hebrew for charity and righteousness) is anonymous giving, I think for companies and brands not so. Done well, corporate philanthropy can enhance your brand and do a lot of good. Done without commitment, connection, focus, good communications and sustainability, corporate giving is just that, a gift.

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