The Business of Doing Good: How 3 Companies Are Winning the Wallets of Millennials
“Just as happiness is best experienced by not aiming it for directly, profits are best achieved by not making them the primary goal of the business.”
— John Mackey
Two words: conscious capitalism.
A term popularized by John Mackey, co-founder of Whole Foods, and Raj Sisodia, co-founder of Conscious Capitalism Inc., in the book “Conscious Capitalism: Liberating the Heroic Spirit of Business.”
At its core, it’s a business model that attempts to generate value for customers, employees, and the greater community, rather than just focusing on maximizing profits that pleases shareholders.
This is not a new concept.
The origins can be traced to R. Edward Freeman’s 1984 book, “Strategic Management: A Stakeholder Approach.” In this book, Freeman recommends that businesses build their strategy around their relationships with all of their stakeholders.
But it’s Mackey that has been its most ardent advocate. Whole Foods is not just an expensive supermarket chain. Whole Foods marketed themselves with the philosophy of revolutionizing the food industry by encouraging real, organic food, sustainable growing practices, and more.
To summarize: Values matter.
What do customers get when they purchase their groceries at Whole Foods?
High-quality food that nourishes your body and to participate in a progressive movement that will make the world a better place.
The exorbitant prices? Well, it’s just the cost of changing the world.
But what about cash-strapped Millennials who can’t afford the expensive prices?
No problem, says Mackey.
In May 2016, Whole Foods opened the first “365” store — in the trendy Silver Lake neighbourhood no less — aimed to target Millennials with its reduced prices. Its hope is to capture the Millennials who patron Trader Joes.
Whole Foods isn’t the only company who’s caught wind of the purchasing power that Millennials have.
WealthSimple: The Socially-Conscious Robo-Advisor
“This is the first time a financial services company in Canada has explicitly targeted millennial investors .”
— Michael Katchen
WealthSimple, the online investment management service, was founded in 2014 by Michael Katchen in Toronto.
The Robo-Advisor’s slogan, “Investing for Humans,” has been aggressively targeting Millennials since its emergence three years ago.
From marketing tactics such as 30-second promotional clips of a diverse set of young people speaking about their relationship with money to well-known celebrities writing their own personal stories on the firm’s website, WealthSimple has avidly been targeting young professionals and first-time investors.
Katchen himself is a Millennial, and knows what works.
In 2015, Katchen claimed that 85% of their investors were between the ages of 25–45.
Last year, WealthSimple upped the ante: Introducing a socially responsible investment portfolio. According to their website,
“SRI means investing in companies that meet a certain threshold of social responsibility. SRI takes into consideration environmental impact as well as social and governance concerns.”
The portfolio includes global stocks with a lower carbon exposure and developed and emerging economies that are based on criteria such as human rights and low corruption.
As of May 1, 2017, WealthSimple reached $1 billion in assets and secured a new investment of $50 million in the company.
TOMS Shoes: Redefining Retail With the ‘One-for-One’ Strategy
“Built into our cost structure is the intention to provide great benefit to our customers because they feel like they’re getting to be part of something more than just a transaction.”
— Blake Mycoskie
In 2006, Blake Mycoskie founded TOMS — a retail company that sells shoes, eyewear, and more.
But, unlike other retail companies, every single time TOMS sells a pair of shoes, a new pair of shoes will be given to an impoverished child.
The ‘One-for-One’ model has now been adopted by many other companies, including Warby Parker who donates a pair of glasses to someone in need for every pair of glasses the company sells.
According to the Brand World Value Index, last year TOMS ranked higher than Nike in the Millennial demographic. This is shocking, given that TOMS revenue is a sliver compared to that of Nike’s.
Millennials aren’t impressed by capitalism.
According to this 2016 Harvard survey, which polled individuals between the ages of 18–29, only 42% of participants supported capitalism. Further, 51% did not support capitalism and 33% of participants supported socialism.
As a fellow Millennial, I can attest that I find the current economic system problematic. With the rise of student debt, precarious employment and hyper-consumerism, I am desperate to seek people and organizations that are authentic, social-minded and understands the unique challenges that Millennials face.
Although I may not be in a position to start a non-profit organization, I am more than willing to patron restaurants that pay their workers a $15 minimum wage, clothing stores that have cruelty-free products and local food markets owned by a family who lives in my neighbourhood.
For better or for worse, capitalism is the dominant economic system. While for some that’s great and for others it’s a nightmare, Millennials have the purchasing power to reward businesses that align more with their values.
We see this in the fight for more expansive workers’ rights, higher minimum wages, and supporting businesses that demonstrate they prioritize people over profits.
The fight for Millennials’ wallets have only just begun for companies. The question now is how to market to this audience that has clearly become disheartened by today’s obvious socioeconomic disparities.
Thanks for reading!
If you enjoyed this story, you should check out www.jenonmoney.com where I write about the intersection of money, work and happiness. — Jen