On October 1, 2008 Cone Inc., in conjunction with the Fuqua School of Business at Duke University, released the best validated proof yet that cause-related marketing gives certain products a sales lift.
The study had two parts. In the first, 182 individuals aged 18-62 and broadly representative of the American consumer reviewed the contents of a new regional magazine. Each were randomly assigned to either a ‘cause’ group or a control group. The cause group saw cause-related marketing advertisements for four products: shampoo; toothpaste; chips; and lightbulbs. The control group did not see the CRM ads.
Then the study participants were ushered into a convenience store setting with approximately 150 SKUS. Some of products had a shelf tag that said something like, ‘great value.’ Others said, “proud supporter of…”
Study participants were given real money to shop with and were allowed to take home both the products they bought and any leftover money. While all four products saw a sales lift, the increase for the shampoo was a remarkable 74 percent and the toothpaste was 28 percent. The increase was negligible for the chips and light bulbs.
In tests of aided recall, from 61 to 96 percent recalled the name of the sponsoring company and 48 to 66 percent of participants recalled the charity involved.
The second phase of the study was conducted online. A representative sample of 1,051 people were given a magazine to review online. As before, the magazines for the ‘cause’ group had cause-related marketing advertisements, but this time just for shampoo and toothpaste. The control group did not.
There were six brands of toothpaste advertised and six brands of shampoo. Both the control and cause groups were asked to choose a shampoo and toothpaste product… which they received via mail… from among those advertised in the magazine.
This time they found a 19 percent sales lift for the shampoo and 5 percent for the toothpaste. They also found that people spent 49 percent as much time examining the cause ads in both categories versus the control.
Though the sales lift in the second portion of the study was not nearly as large as the results measured in the in-store portion of the study, these are still meaningful numbers.
Suppose your brand does $100 million in sales a year, and, to make the math easy, $25 million a quarter. A 19 percent sales increase in a CRM campaign in one quarter comes to $4.75 million! Even a 5 percent sales lift is $1.25 million. A 74 percent increase is $18.5 million!
Bear in mind that in most cases, cause-related marketing is less expensive to than other tactical promotions a company might conduct.
This behavioral research differs materially from past surveys… pioneered by Cone and replicated by many others… whereby people were asked how they would react to a hypothetical cause-related marketing come-on. This research is much more real-world.
As a cause marketing practitioner and independent consultant I’ve been deeply grateful for Cone’s efforts and insights over the years.
That said, the prior studies were flawed. No matter the sophistication researchers dial into opinion surveys, what people say they will do, given a certain hypothetical can be widely different from what they actually do in real life.
This study, too, is imperfect. But it yields results that are more true to life true to life than any of its predecessors.
The best study would come from examining the actual sales data, for instance from Campbell’s. Basically all of Campbell’s brands… including food service products… are now a part of the Labels for Education campaign. But they were added incrementally. It would be a simple matter to compare their sales after joining the program to their sales before joining it. General Mills could do the same with Boxtops for Education.
If General Mills or Campbell’s wants to turn over that kind of data to me, I’ll hire a marketing statistician and we’ll fire up the SAS and release our analysis to the world, probably in a book. But no company has any incentive to do that.
General Mills is in Minneapolis. Maybe a marketing professor at the Carlson School of Management at the University of Minnesota could convince General Mills to break loose their data if she or he agreed to shield the brands involved.
Thanks to Cone/Duke for this tremendous study.
But here’s hoping for the study based on long-term sales data.
Labels: Campbell's Labels for Education, Cone Inc., Duke University, General Mills BoxTops for Education, Proof of the Effectiveness of Cause-Related Maketing, SAS, University of Minnesota