John Jantsch: This episode of the Duct Tape Marketing Podcast is brought to you by Gusto, modern, easy payroll benefits for small businesses across the country. And because you’re a listener, you get three months free when you run your first payroll. Find out at gusto.com/tape.
John Jantsch: Hello and welcome to another episode of the duct tape marketing podcast. This is John Jantsch and my guest today is Jeff Fromm. He is a partner at the Barkley ad agency. He’s also the president of FutureCast. He’s a consumer trend expert, speaker, and author of a new book, The Purpose Advantage: How to Unlock New Ways of Doing Business.
John Jantsch: Jeff, thanks for joining me.
Jeff Fromm: Thanks a bunch John. Looking forward to it.
John Jantsch: You also have the distinction of being one of those very few Kansas City guests that I end up having on the show, so I always love that. I never do any of my shows sitting in the same room with people, but we could’ve done that couldn’t we have?
Jeff Fromm: Yeah, we’ll try that. We’ll put it on the calendar for when your schedule allows for that, and we’ll make it a live episode.
John Jantsch: This topic of purpose is so hot that it’s sort of almost starting to get tiresome because everybody’s talking about it, but nobody’s doing it, or not enough people are doing it. Why do you suppose that is?
Jeff Fromm: Well I think part of the reason the topic’s gotten so hot is you have the CEO of Unilever spending a fair amount of time in national and international media talking about some of the brands that they have that do it pretty well. Not all their brands do. They have hundreds of brands.
Jeff Fromm: And then you also have the CEO of BlackRock, which is the other side of the coin, the institutional investor, saying, “In the next few years, if you’re not doing this, we’re simply not gonna invest in your brand. In order to be considered on the list, you’re going to have to be purpose driven.” So you have sort of both sides of Wall Street now talking about it. In terms of the doing it, here’s what I would say. Today’s consumer and today’s employee, all things being equal, leans to purpose or values-driven brands.
Jeff Fromm: But all things aren’t always equal. Sometimes brands are faster, better, they taste better, they’ve got some advantage, and then purpose isn’t going to make a big difference. But when all things are equal, it can be a really big deal. And, and so that’s where I think people need to understand.
Jeff Fromm: And then also you have a lot of, what is the definition of purpose? And by my reckoning, as I’ve looked at a large body of work, there has to be a societal benefit. You could have a really strong brand like Glossier, and it’s a design-led brand. And it’s really interesting. There’s no real societal advantage. Or you could be Amazon and you have a really powerful brand. I’m not sure I see a societal advantage. That doesn’t mean you can’t win if you’re not purpose driven. It just means there are a lot of purpose-driven brands today that are gaining momentum.
John Jantsch: This idea is not new, but why is it, why do you think it’s come to the forefront? What sort of dynamic has made it an essential element now to compete?
Jeff Fromm: You’ve got several factors happening all at the same time. You have really low unemployment, and that means we’re competing in a labor market where I’m trying to distinguish myself, and so if the benefits and the salary and these things are all convergent, being a purpose-driven or values-driven brand can sometimes be an advantage in attracting and retaining staff.
Jeff Fromm: And so even some companies like MOD Pizza compete on that basis. They build that into their DNA. At the same time you have that happening, you have a proliferation, as you know, of direct and indirect competitors. I mean, we could walk down the grocery store and find, I don’t know, 50, 100 different kinds of toothpaste.
John Jantsch: Yogurt. Yogurt’s the one I like to pick on. There’s miles, miles of yogurt.
Jeff Fromm: You know, I had a Chobani yogurt for the lunch today and there are so many yogurts. Now, Chobani is a purpose-driven innovator. I don’t buy Chobani because it’s purpose driven. I Chobani because I love the flavors. In fact, it’s purpose driven, only matters when the flavors I want and the price are about equal. Someone else has better flavors or a significantly better price than, but when things are about equal, then I go to the purpose-driven innovator. And Chobani is one of the purpose-driven innovators that has gone from the relatively smallest player in the category that was probably about as sleepy as any category I could ever imagine to a very hot, vibrant category taking share away from the cereal aisle and taking snack occasions away from people who historically maybe had a candy bar, and now they’re replacing it with a yogurt and a sidecar of sugar.
John Jantsch: I think a lot of times when people think purpose, they think, oh, I don’t know, like Tom’s, you know, like a grand sort of charity. They’re doing all this good in the world. But I think that people sometimes, I think purpose just means that you’re defining what you stand for or why you stand for. And I think a lot of times brands that seem to really take off with this purpose have created a movement or they’ve created some sort of new functionality like Warby Parker, for example. I mean I think they do some nice things and they’ve gotten on the cause a bandwagon as well. But I think originally, they solved a really bad buying experience that people had and that functionality turned them into sort of a movement. Does that, does that make any sense? I think a lot of times people get really hung up on the, we have to give money to charity as our purpose.
Jeff Fromm: I think you’re hitting a really important point. The giving money to charity model has existed for a really long time, and [inaudible] model is only so effective.
Jeff Fromm: In fact, it can be almost ineffective if you’re not careful. The key part is it’s the functionality with something else. Bombas socks, which is a one-for-one sock company, actually makes a technically superior sock, at least relative to all the other socks in my drawer. If it wasn’t a technically superior sock, I don’t know how much I’d care that you’re giving a pair away. But now that I see how superior is, it’s like, well, okay, I feel better about indulging in this more expensive sock.
Jeff Fromm: One of the most powerful brands on the planet is Tide detergent. I think Tide probably cleaned people’s clothes pretty well. Seventh Generation is having great success against this massive brand because I think it probably cleaned about as well as Tide, but I feel a little better about myself when I use Seventh Generation knowing it doesn’t have an impact on the environment and actually at shelf, generally, and you could look at walmart.com and other places, but generally it’s about 10% more.
Jeff Fromm: They’re charging about a 10% premium at shelf. Consumer doesn’t write a check to the environment. They don’t say, “I’m going to write a check to the Environmental Defense Fund” or anything else. They say, “I think it cleans as well as this other thing that I’ve heard about, Tide, but I think it might be a little better in terms of how.” And so it’s not charity. It’s I feel a little better about myself as a person and I don’t pay a lot extra for it.
Jeff Fromm: The key part is there’s a functional benefit, as you pointed out, and there’s a small price premium, although in the world of a Unilever getting a 10% price premium over a brand is strongest Tide, not so small. But that assumes you’re actually getting credit for your purpose, which in the case of Seventh Generation, they probably do. There are plenty of brands that fail to get credit for their purpose too.
John Jantsch: A lot of my listeners are small business owners. So far we’ve talked about really giant businesses, but I think it goes down to the plumber or the restaurant or the local restaurant. I think that people get behind things because of maybe what they think it stands for.
John Jantsch: And I’ll give you a really obscure example. Our listeners won’t know this, but you might. There’s a little, there’s a little bar cafe in Kansas City in Westport called Ca Va, and I’ll give them a great shout out. They serve primarily, if not exclusively, French champagne. I think you can actually get other drinks there, but that’s their thing. And it’s very dark. It’s very French. It has a vibe, and I think that in some cases what they’re trying to do is bring that to the world, bring that experience to the world. I feel like that’s a purpose.
Jeff Fromm: Yeah. It meets some definitions of purpose. The one that we put forward in the book was around societal benefit and we also added that even though the purpose is a noun, metaphorically, purpose needs to be a verb.
Jeff Fromm: It would not meet the standard we put forward in the book. That doesn’t mean they don’t have a reason for existing like Glossier, like Amazon, or like other businesses, but they have a clear reason for being. I’m not that familiar with this particular fine establishment, and it seems, it seems like when I need to get to.
John Jantsch: You need to get to. But here’s my point that you just made. Is it enough to provide the societal, what did you call it, societal benefit?
Jeff Fromm: Societal benefit.
John Jantsch: Societal benefit of making people feel better for that afternoon or that evening? I mean especially since I’m sort of in charge of whether or not it made me feel better? Isn’t that providing a little bit of a societal benefit? I’m trying to take this down to the level where every business says that we can do this. [crosstalk]
Jeff Fromm: There are plenty of people who would agree with you, for sure. They would say that meets the definition, and same with Glossier and Amazon. They all have very clear progress. In the book, we’ve defined it around societal benefit, meaning positive impact on sustainability or cultural issues like issues around equality or any number of things. It doesn’t meet the definition we put forward in the book. It clearly needs the needs of you and other people are wouldn’t be open and doing such a wonderful job.
Jeff Fromm: And so does Amazon and I use Glossier because they’re both bigger companies. The definition we’ve chosen is a little more narrow in order to try to get clarity around the fact that there has to be something that company’s doing, and there are plenty of companies that do things.
Jeff Fromm: There are plenty of B2B companies that are doing things in the sustainability space, and local companies do things. There are local companies taking on everything from urban farming to, you know, help people who don’t have food to other things that are important to their local consumer or customer.
Jeff Fromm: For me, the big part is, in the brands I try to highlight in the book, connecting that purpose to your business model. Seventh Generation is getting a premium from a consumer concerned about getting clean laundry functionally and doing good by the environment, and then they have to reinvest in new product innovation and other things. You try to build a virtuous cycle into the model, whether you’re a small business or a big business, and ideally it helps to fuel how people who use the brand and your employees feel about that brand.
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John Jantsch: Do you see any danger in people saying yes, this fifth P we have to do it? What would be a good purpose? That’s what we’re going to … let’s get our ad agency communicating our good purpose.
Jeff Fromm: Yeah, I think that is a problem. I would say this. Typically, for me, a starting point, you would be very familiar with this, is you sort of look at the heritage and the original reason for being of a company, and a lot of times when you dig back to the roots, you’ll find a functional reason, and then you’ll find some other things about the history of that company.
Jeff Fromm: If you can sort of dig into those roots and find something that’s very true, then that would be a probably better path forward as opposed to why don’t we append this donation onto when everyone buys X we donate 5% to cause X.
Jeff Fromm: It doesn’t usually work out as well when you append it on. And to your earlier point, that functional thing that you do, if you do it really well, it’s important. I’m not arguing in favor of all brands must have a purpose. I think there are a lot of brands that are winning today because that purpose gives them an edge with their employees and their consumers who are spreaders.
John Jantsch: To some degree, could you say that starts with community officially communicating what you believe as a business, is maybe a starting point for this?
Jeff Fromm: Yeah, I think a lot of companies try to do that, and hopefully they start inside their organization so that everyone can feel that internally, and then act on that externally, and all big companies started as small companies as a general rule.
Jeff Fromm: Ben and Jerry’s was once very small. These companies that are purpose driven are also trying to use the term purpose-driven innovators. Ideally they have some beliefs that the founders hold true. Perfect world, it creates a virtuous cycle where those beliefs actually help them retain their employees, that help them acquire their customers and retain customers, and there’s a cycle as opposed to just the append kind of a strategy. We’re going to do this charitable piece, which I think is generally a less successful way to think about this topic.
John Jantsch: As brands are embracing this idea more and more, and so people feel like, “Yeah, I’m a part of a movement,” or “I’m a part of a community,” or you know, “This makes me feel better, to be a part of this brand.”
John Jantsch: Do they run the risk of their consumer then feeling like, “Hey, you have to live this. You have to walk the talk at all times.”.
John Jantsch: And we can take this from the headlines right now of what’s going on with Soul Cycle and, I forget the name of the other brand that are caught up in a little bit of consumers who’ve, who are their passionate, loyal customers because they believe in what the brand stands for, that Soul Cycle is not just about … it’s about you as a person and not just about exercise. And then all of a sudden, it comes out that a board member holds a big Trump fundraiser, a lot of their people object because they feel like that’s not the brand.
John Jantsch: Are we as marketers now getting to that point where every misstep is going to be felt and determined by a market who now has their own TV stations?
Jeff Fromm: Yeah, yeah. There is no doubt that you’re right, that first of all, it’s better to not be out front on some kind of a purpose-driven topic if you can’t offer proof.
Jeff Fromm: Gillette might be the classic case study coming out as a big company in the Superbowl on toxic masculinity without having laid a foundation around their actions. What are you doing as a company to change that conversation?
Jeff Fromm: One of the mistakes small companies can make is getting out early in the communications cycle before you’ve laid a foundation with your internal stakeholders, before you’ve put down a little proof.
Jeff Fromm: The flip side is you don’t have to wait five years to talk about your purpose. It’s not like what we have to have done. One, two, three, four, five, six, seven, eight, nine, 10. If you could get action on the first couple of things, so people don’t think you’re a phony, it’s okay to start a conversation.
Jeff Fromm: But there is a cycle of communication, and I think one of the traps is to quickly try to get credit on something where you don’t have some history.
Jeff Fromm: It’s entirely fair for Nike to start a conversation around a number of topics that are related to cultural things because they’ve done it for a long time. Same with Ben and Jerry’s, but if I had a brand I was working on that had no history, I’d have to come at that a little more cautiously.
John Jantsch: So what if a brand has in the, you know, in their market’s mind, a purpose, and they have loyal fans, but they want to make a change? They believe something new. For example, Patagonia is an example of that a lot of people use. They really had a place in the mind of their customer and then they really went big in the whole reuse, you don’t need to buy new thing. And I think for some people, that was quite a purpose shift. I’d love it if you kind of talk a little bit about, and hopefully you’re familiar with that, but if you talk a little bit about.
Jeff Fromm: I think Patagonia is an interesting example and worth conversation, obviously not a small brand, but they act like a small brand. Their original purpose was sort of a do no harm kind of a purpose and they built quite a following around that.
Jeff Fromm: Then they did a major shift from do no harm to protect and defend. It’s interesting to me. I’m not on the inside of it, but here’s a brand that’s probably in the top 1% of purpose-driven brands with, I would argue, without having data, price elasticity advantage, frequency of use advantage. I mean, people walk around airports with T-shirts that say Patagonia and it’s like, okay. When people start to tuning your brand on your hat and your T-shirts that they’re wearing, you’re a pretty strong brand.
Jeff Fromm: Someone made a choice that consumer trends have changed. We have a lot of competitors that are also trying to do no harm. We’re going to up the ante. And they took action. I think, I think they may have been the company that donated a $10-million tax refund that they got through some new tax law changes all back to environmental charities, if I’m not mistaken.
Jeff Fromm: Here’s a company that has said, “Okay, we’re a purpose-driven, innovator,” and their products had to your earlier point, strong functional appeal. I think other people caught them on functional.
Jeff Fromm: I think other people that caught them on purpose and then they just re shifted on purpose again and to a [inaudible] worse kind of an audience that’s concerned about that kind of a purpose. Now they’re back to “Wow, what a love brand does. They changed the rules.” And so I’m not inside that organization in terms of knowing it, but as an outsider looking at it, I say it’s a great example of a company that staying ahead of the trend and appropriate pacing. You don’t want to be too far ahead. Right? You don’t want to, I’ll kick your whole-
John Jantsch: I don’t think it was that radical. I mean, it was a pretty safe bet that their customer, at least a percentage of their customer, cared about that as well, the traditional sort of outdoor person and not necessarily the fashion person cared about that that new messaging as well.
John Jantsch: If somebody’s listening to this or somebody called you and said, “This really makes a lot of sense but we’re not sure we’ve found what it is or how to communicate it.” Is there a process, a set of exercises, a strategic planning session to find some of this?
Jeff Fromm: In the book, in The Purpose Advantage, I literally lay out step by step the typical process we would use with a mid-size or larger company to identify their purpose. And I say typical because you might modify it slightly based on information presented by company executives about where they are in the cycle, okay?
Jeff Fromm: But it’s designed so any business strategists, even at a small company, could take it and apply it themselves so that they can diligently work towards here’s where I am and here’s the phases of looking through how I move my business forward with that framework.
John Jantsch: Jeff, we’ve presented a lot of big organizations as examples, but again, I contend that this is important to the smallest organization. The impact that they might make at a societal level might be different, but I think the impact to their business could be just as large. Where can people find out more about your work and of course the Purpose Advantage?
Jeff Fromm: I would invite people to connect directly. Whether that’s LinkedIn, Jeff Fromm, or you can email me, [email protected].
Jeff Fromm: The Purpose Advantage is coming out in a couple weeks and it’s on Amazon and you can literally get not only the stories of these brands but the entire workshop in the book. And I think Amazon sells that for all of $10 or $12.
John Jantsch: Dependent upon when you’re listening to this, a couple of weeks means middle of September, 2019.
Jeff Fromm: Yeah. Middle of September. I would expect them to ship the book no later than that, at the very latest. And the idea behind the book was that we are laying out not only the inspiration in the stories [inaudible 00:22:48], so the, the back half of the book is a how to create a more purpose-driven organization. Even for companies that have one, how can I refine? Because I think a lot of companies have one but they want to do better. I want to engage my employees more. I want to have a more engaged customer base. I think the examples you shared, several of which are fabulous examples, particularly your last question about Patagonia, a company that upped the game.
John Jantsch: So Jeff, thanks for something by the podcast and hopefully we’ll go have a glass of French champagne at Ca Va sometime soon.
Jeff Fromm: I’d look forward to it and thank you for having me. And I’m happy to help anyone who would like more information if they want to get in touch. All right?
John Jantsch: Awesome. Thanks Jeff.
Jeff Fromm: Okay. Take care.