Max McGraw Chair in Management and the Environment; Professor of Management & Organizations
We live in an era of unprecedented lifestyle marketing, where companies are able to bring an enormous amount of data to bear on personalized customer service that endears us to their brands. But with every Instagram follow and deep emotional appeal, companies are courting both the positive and problematic aspects of strong brand identification.
The fitness firm SoulCycle learned this lesson recently, when news broke that Stephen Ross, the chair of its parent company, had scheduled a big-dollar campaign fundraiser for President Donald Trump. SoulCycle’s predominantly affluent, urban, liberal clientele struck back by encouraging members to boycott the company. While online rallying cries often have little real-world follow up, SoulCycle saw its August purchases drop threefold in percentage terms compared to August 2018.
“Boycotts are actually pretty effective as a mechanism to create social change,” says Brayden King, a professor of management and organizations at Kellogg.
With brands facing perhaps the most acute pressure in decades to strike exactly the right tone with their politically polarized consumers, King offers advice for how companies can continue to engage with their customers and their communities, while minimizing the risk of backlash.
Since Milton Friedman published “The Social Responsibility of Business Is to Increase Its Profits” in The New York Times in 1970, most American businesses have held that firms’ political involvement, like everything else they do, should act to maximize the value of the firm for their shareholders alone.
But recently, CEOs have taken public steps to amend that doctrine to focus on additional stakeholders, including employees, communities, and the environment.
This shift has been met with a range of responses, including some skepticism by critics who see these steps as toothless. Still, there are some recent examples of companies making decisions not for financial reasons, but for moral ones. King offers the example of North Carolina’s transgender bathroom bill in 2016, which dozens of companies publicly denounced.
“Many of those companies were not doing business in North Carolina,” King says. “They didn’t have manufacturing there. They were not employing people in North Carolina. But nevertheless, they signed the statement because there was a belief it was the right thing to do.”
“The key is for companies to know who they are, and who their core stakeholders are, and what those stakeholders believe in.”
This kind of proclamation, in other words, appears to be less about increasing short-term profits, or currying favor with politicians, and more about delineating the company’s values and culture.
“Apple coming out saying ‘We are against this ban’ is not just Tim Cook talking to North Carolina politicians. Tim Cook is also saying to his employees, ‘We support you guys. These are the values we want to have in our company.’ Creating a corporate culture that embraces certain values, embracing a mission that is beyond making money, is actually in the end good for that company and its culture.”
In an online environment that often seems to traffic in outrage, companies may feel like they are operating with a target on their back. But that ire may not always translate into action beyond the confines of social media.
“Consumers tend to have an empowered voice but weak behavioral will,” King says. “We’ve done some analysis that looked at the purchasing data of consumers. Some people expressed the belief that they had engaged in a boycott, but when we look at their actual purchasing behavior, there’s no difference in purchasing between those who believed they’ve boycotted and those who did not support the boycott. In that sense, the boycott almost seems more of an expressive kind of protest than a behavioral protest.”
This expressive power shouldn’t be written off as just theatrics, however. Boycotts can still be remarkably effective in dinging firms’ reputations, especially since the advent of social media, which reduces the costs of both expression and coordination for protestors.
“Boycotts typically create social change by triggering a large media frenzy around the company,” King notes. “It’s that negative spotlight and the accompanying reputational threat that causes the company to listen to what activists have to say.”
In addition to harming its reputation, a media spectacle can also erode a company’s employee culture and recruitment efforts. It can even draw unwanted scrutiny from public authorities, who are less lenient toward firms whose reputations are on the rocks.
The difference between an effective boycott and a less effective one, says King, tends to be how well organized the protesters are. Because while a single angry Tweet can easily be amplified by sympathetic customers, it is generally the grassroots organizations and institutions that give messages their staying power.
“For social movements to be effective in changing consumers’ behaviors, people need to have some sort of social connection to activist efforts, often through belonging to an organization or just having friends who are activists themselves and are putting social pressure on you to participate,” he says. “There are a lot of different activist groups that, for example, want to see better environmental policy. Have they created an infrastructure that will actually help them do that, or are they relying solely on social media and the goodwill of consumers to do that work for them?”
He offers the example of the recent Fridays for Future global climate strikes, started by Swedish teenager Greta Thunberg in 2018. “There were certainly visible leaders on social media promoting it. But you also had a very organized effort by student groups to make sure that people were going to both comment online and attend the event in real life.”
The social pressure generated by organizing efforts can make companies that rely on consumers actually showing up somewhere particularly vulnerable to boycotts. This is where SoulCycle ran into trouble this summer.
“The reason the SoulCycle boycott has been more effective than most other boycotts in changing participants’ behavior is because it’s a very social kind of company,” King says. “It’s not like its customers are just going out and purchasing a product. They’re participating in a community, one with an educated, more liberal identity. When people who all belong to this community get upset and start taking stands on Facebook or Twitter saying, ‘I don’t approve of this CEO’s political stance,’ then positive peer pressure can start to kick in. It leads people to say, ‘Hey, I’m not going to show up to class today, because if I do, I’m going to look bad—or oblivious—in front of my friends.’”
Similar dynamics can come into play when companies activate consumers’ social instincts in their marketing and branding strategies: producing aspirational ‘lifestyle’ content, for instance, or marketing their products as “green.” These appeals may connect to customers’ deepest identities and beliefs—but may provoke an equally stark backlash if the company makes a misstep.
For this reason, savvy companies that do try to connect with customers on a personal level often choose, of their own volition, to engage in corporate social responsibility activities, such as building sustainable supply chains, developing worker-friendly policies, or engaging with various communities.
King has found that once companies face the wrath of a boycott, a funny thing happens. Rather than distancing their brand from politics or social issues, they are more likely to increase their prosocial pronouncements—actually deepening their social and political messaging.
But with the United States fractured in half over politics today, that kind of messaging risks alienating a big chunk of companies’ potential consumer base.
“The key is for companies to know who they are, and who their core stakeholders are, and what those stakeholders believe in,” says King.
The difference between, for example, the boycott of SoulCycle and the way Nike was targeted after it launched an ad campaign featuring former NFL quarterback Colin Kaepernick—which famously led some sneakerheads to set their shoes alight but was still a clear boon to the Nike brand—lies in how the companies aligned their brand identity, stakeholder preferences, and political stances. Most Nike customers are pro-athlete and supportive of Kaepernick’s right to protest, whereas Trump support was deeply unpopular with SoulCycle customers.
“Think about how your political statements align with your company mission and culture and your broader reputation. If you don’t see an alignment, then it’s probably not smart to make those kinds of statements,” he says.