ServiceFriday: Building Customer Engagement Through Conscious Capitalism

Improving customer experience and engagement has been ranked by the Marketing Science Institute as one of the most important challenges for companies in coming years. Using examples drawn from highly successful firms, research published in the Journal of Service Management shows how building the foundations of Conscious Capitalism leads to high levels of engagement, particularly in the retail and service sector.

Conscious Capitalism is a business philosophy encompassing four principles:

• Every business should operate with a higher purpose, based on “a deeply held set of core values.”
• The business should be managed to benefit all stakeholders – society, partners, customers, employees and the environment “instead of just focusing on maximizing return to investors.”
• Leaders should “mentor, motivate, develop, inspire, and serve people” consistent with the company’s purpose and values.
• The company “fosters a culture of trust, authenticity, caring, transparency, integrity, learning and empowerment.”

Corporate responsibility aims to “do good” in the world. In contrast, Conscious Capitalism “is about making a positive difference in a direction that a company chooses.” Examples include furthering knowledge, creating beauty, solving problems, etc. Companies that implement the tenets of Conscious Capitalism see customer engagement grow at three levels: when they have an outstanding customer experience, when they make an emotional connection to the firm, and when they develop a shared identity.

Level 1: Delivering outstanding customer experiences

“Conscious retailers strive to provide customers with an experience that is based in the companies’ higher purpose and core values,” in a way that validates the strength and authenticity of those values.

For example, Trader Joe’s mission is to provide the best food and beverage values, and to provide customers with the information they need to choose.  Supporting this, Trader Joe’s does not accept slotting allowances, a common practice where manufacturers offer financial incentives to retailers to give their products prime shelf placement. And, Trader Joe’s publishes the Fearless Flyer, a publication that gives customers stories and information about its products.

Level 2: Creating an emotional connection

At the second level, customers “not only experience and remember the retailer but also sense an emotional link, especially to its purpose and values.”

Toms Shoes offers customers shoes, but the company also provides “vision support, water safety, safe birth and bullying prevention services to people in need.” When a customer buys Toms Shoes, she knows that she is helping the less fortunate, and she feels good about it.

Level 3: Creating a shared identity  

At the highest level of engagement, “customers not only recognize, acknowledge and sense some emotional connection to the core purpose and values of the company … but also share those values when defining their self-concept.”

Because conscious retailers stand for something unique that customers care about, they begin to develop an identity shared with the firm. When this happens, company logos can become something of a badge, helping customers “function proudly as a tribe of cheerleaders for the brand.”

Casey Sheahan, former CEO of Patagonia, explained: “The brand is a cultural movement. It ties into things that connect with how they want to live their lives. They aspire to live in a certain way, and share values with the company.”

Now that’s engagement!

Dig deeper into the characteristics of conscious companies by reading the full paper, available from the Journal of Service Research. (A fee may apply.)