When a brand takes a stand on an issue-- any issue -- it can be detrimental to the brand image. This is not an opinion, it's fact. For every consumer who applauds a cause marketing Super Bowl spot someone will hate it. For every brand that decides to wade into a political topic du jour by making a big bold statement, that statement might end up costing them. The reasons for this are myriad: we live in a more polarized society than ever, political beliefs are now guided by emotion instead of logic on both sides of the spectrum. As a result, the majority of non sign-waving people are desperate to find a respite from it all. They don't want propaganda in their peanut butter. They just want peanut butter. And if you decide to put propaganda in your peanut butter, no matter how much they may have loved your brand in the past, they have no compunction about saying "the hell with you," and choosing another brand or shopping elsewhere. And we're not just talking a few white knights on Twitter threatening a boycott. We're talking hard numbers. Target is just one brand who is still feeling the financial backlash. Audi and 84 Lumber felt it during the Super Bowl. And while theirs might not have taken a financial hit, it did effect brand perception.
Brand perception isn't solely tied to politics; consider Chipotle who still hasn't gained back all of their lost customers from its 2015 widespread outbreak of E.coli. It's stock was at an all time high of somewhere around $768 a share before then. Now it's $408. There may be a few factors for this, but brand perception is still high on the list. These cautionary tales should be cause for alarm. A sharp financial decline starts with a sharp decline in brand perception.
This is true even if your brand is "too big too fail." That's why it is so curious that Starbucks has waded a second time into this arena. Back in 2015, they wanted its baristas to talk to customers about race. This initiative, which found baristas putting the words "race together," on coffee cups, was short lived and almost universally panned, and met with charges of hypocrisy. As the New York Times mentioned at the time, "...critics said that Starbucks might look first to its own executive team, which they suggested was considerably less diverse than lower-paid staff." And then there was that other group who "...felt that a coffee company should not foist such discussions on customers."
Now two years later, Starbucks has made a pledge to hire 10,000 refugees worldwide, in response to President Trump's now discarded and revised executive order temporarily banning people from six countries who are on our terror watchlist, with more than a few exemptions including students and residents who already have visas, and people who have already been cleared for asylum. The pledge was made as a knee jerk response to the original less nuanced order. Regardless it was still met with backlash. "Credit Suisse issued a hold rating on Starbucks, noting "significant volatility in recent weeks,CNBC reports. According to YouGov BrandIndex, consumer perception levels for the company have fallen by two-thirds since late January."
Twitter is never a good barometer for the general population, but the response is still a good indicator of the polarization this announcement caused. While one side applauded it, another side did not. In response from many conservatives or Trump supporters or veterans advocates who said there are thousands of veterans right here who could use a job, may of whom are homeless, Starbucks "responded to the conservative backlash by saying it would speed up its previously stated goal of hiring 10,000 veterans and military spouses by 2018. Starbucks announced that plan in 2013, and said on Thursday it had already hired over 8,800 so far." In the initial wake of its announcement, Starbucks saw its stock did drop nearly five dollars in one day. Its brand perception has taken a huge hit. And Starbucks had better hire a refugee on the executive board if they haven't already as that will be the next big complaint. And then they'll be back where they were when they wanted to talk about race.
The lesson to be learned here is an age old one: Consumer loyalty is built over decades and ensured by a brand's consistency of product. If a brand suddenly changes their product (Pepsi changes its logo, Coke introduces New Coke) there will be backlash. The same is true of a brand's consistency of communication. Starbuck's was known for cause marketing when it came to fair trade coffee. Having a discussion about race or responding to a President's executive order on terrorism is a completely different story. These decisions can harm a brand's perception as much as a change of packaging because it suggests inconsistency-- especially when you give up on the discussion so quickly or react to the backlash. Investors like consistency and so do consumers. Co-opting or responding to culture can seem like a great idea, but unless your brand was built that way, it definitely isn't a good idea. And if by Howard Schultz's own admission he expected backlash to occur, then it shows he isn't being consistent about providing the same type of experience for his consumers. It's as if he's saying "it's okay if half of you get mad and want to leave, because I have this point to make."
if he wants to make a point, so be it. It's his company after all. But companies who do this can't then be surprised when people who don't agree with your world view, or just don't want propaganda in their peanut butter or politics in their lattes choose to shop elsewhere.
Thanks, @kidsleepy for this insightful article. Many more cerebral cerebrations, kid! @arthurbarbato