How social missions create more revenue

How social missions create more revenue

A 2017 trend is venture capitalist firms (VC) backing brands who have quantifiable positive social and environmental impacts associated with their products and/or business model. In other words, it’s cool to be a positively conscious brand in 2017.
 

“What’s a B corp?”

TechCrunch gives excellent examples of “social ventures [including] outdoor gear and apparel makers Patagonia, which promises to protect and preserve the environment, and Tesla Motors which aims to accelerate the world’s transition to sustainable energy with electric vehicles and now solar products.” Others, like Ben & Jerry’s, seek to “meet human needs and eliminate injustices in our local, national and international communities” as well as initiatives to be environmentally responsible. 

The current eCommerce market is composed of individuals focused on human development and brands that solve humanitarian and ecological problems. B Corps seek to solve social and environmental problems. These brands often operate on a triple bottom line (TBL) concept. TBL is a 3 part accounting framework for evaluating business’ performance of interrelated dimensions: financial, social, and ecological. The challenge of this unique framework is measurement. 

Typically when starting out, B Corp and TBL brands need sufficient capital so that their focus is on the long-term plan for addressing the underlying company values. When VCs are evaluating a company, they look for:

  1. LTV: CAC around 4:1 or 5:1
  2. Revenue steadily growing >30% 
  3. New customer acquisition from word-of-mouth marketing
  4. Diversity in customer acquisition (not reliant on one channel)

Even if a brand is not actively seeking VC backing, they’re still tasked with quantifying their social, environmental or human capital as well as meeting general revenue and profitability goals. The trick with TBL is finding a way to measure the social, environmental or human capital.

The merger of eCommerce and social networks further enables TBL companies to positively impact 3 parts of the framework. Using on-site marketing to encourage sharing helps brands increase revenue and provide product exposure. 

1. LTV: CAC ratio

Brand innovation and product quality play the leading roles for LTV, but on-site marketing can greatly influence CAC. By enabling on-site marketing to lift conversion rates by 40% or greater, acquisition costs are reduced by 30% on a per customer basis, drastically improving LTV: CAC ratios.  

To lift conversion rates by such an amount, commerce companies must use a multitude of tactics to correct site imbalances (high conversion low traffic pages or vice versa) such as moving content from the buried in site navigation to the forefront, encouraging conversion before abandonment, telling brand stories sooner, etc.

AddShoppers average conversion rate when using at least 5 tactics is 42% lift.

AddShoppers average conversion rate when using at least 5 tactics is 42% lift.

The AddShoppers OMP has significant influence over key eCommerce metrics such as AOV, ARPV, repeat sales (advocacy), retention, conversion rate, and new customer acquisition. These factors make up LTV: CAC calculation.

Use this ROI calculator to determine AOV with and without AddShoppers. Then use the LTV and CAC formulas to get a general idea of what your ratio could look like with AddShoppers’ influence. 

2. Steady revenue growth

AddShoppers’ average client experiences a 38% increase in Average Revenue per Visitor (ARPV). Continued growth can be expected. 

AddShoppers’ client, MiiR, a certified B Corp, saw a 47.07% extra in total revenue from 2016 Black Friday holiday shopping weekend. 

This was accomplished without incentives (read more details here). Looking at the following graph, based on this percentage, without an on-site marketing solution, it would take MiiR twice as long longer to reach the $2M mark.

Takeaway:  As they say, time is money. Don’t just speak to annual growth possibilities, show the data then dream bigger. Read a one-sheeter of MiiR’s success here
 

3. New customer acquisition from word-of-mouth marketing

Word-of-mouth marketing typically influences new customers and is reflected in referral marketing programs and social sharing. The campaign strategies can be coupled with incentives to spread product/mission awareness. 

 A client that specializes in premium dog goods retailer donates a portion of their proceeds to the BISSELL Pet Foundation and only carries products from responsible companies (noted as “legitimately natural without dangerous additives”). To spread awareness they have a non-incentivized Social Sharing campaign. This is their highest converting strategy. Campaign users convert 78% higher than users who are not served the AddShoppers site experience.

Refer-a-Friend campaigns are great for do-good brands because people love to share causes they care about. People are much more likely to push products to their friends when they believe in the product. Data from our 2016 report supports the mentality of people trusting their friends over brands; Refer-a-Friend traffic converts at 6% (313% higher than site-wide conversion rate). Coupled with a strong Social Sharing strategy, Refer-a-Friend campaigns can spread brand reach, contribute to direct revenue growth and encourage repeat customers. 
 

Concluding thoughts

Socially responsible businesses are increasingly becoming the norm. 

We believe in “great human” powered technology and we love helping these businesses further their missions faster.

Click below to download the PDF of this article for future reference.