Satisfying Customers through Corporate Social Responsibility: A Convincing Business Case for CSR Continues to Prove Elusive despite a Welter of Academic Studies. BT Group, However, Believes It Has Quantified a Highly Significant Link to the Bottom Line
Tuppen, Chris, European Business Forum
With so many corporate leaders now convinced of the need for businesses to contribute to the wider societal goal of sustainable development one would expect no lack of convincing proof that corporate social responsibility (CSR) actually works.
Indeed, enter 'CSR business case' into Google and you get 37,000 references. But trying to find in these online articles quantified cause and effect linkages between company CSR activities and real returns on investment is like searching for the proverbial needle in a haystack.
The much-vaunted qualitative business case generally revolves around four key areas:
1. Reputation: building trust in a company is a long uphill climb, but losing it can have dramatic effects on share price and customer loyalty.
2. Retention and Recruitment: employees want to work for responsible companies who care for their workforce and contribute to society.
3. Operational Efficiency: CSR can improve the bottom line through material efficiency, and energy and waste minimisation.
4. Increased Sales: Cause-related marketing. eco- and ethical labels and new product innovation can influence the top line.
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Taking these as the starting point, the two most referenced works summarising the world's knowledge on this subject are Buried Treasure by the counsultancy SustainAbility and Conversations with Disbelievers by Weiser and Zadek.
The former concludes that "evidence in favour of the business case continues to build and is particularly strong in certain areas of business performance. However, there still remains a significant gap between what is intuitively logical and what one can prove." The latter supports this with the observation: "Many of the studies that purport to show benefits do not, in fact, prove their point".
Stock market investors in search of documented proof are equally unimpressed. "There is an enormous dam of desire for socially responsible investing. We just want to make sure it makes financial sense", says Stuart Owen of Barclays Global Investors. Adds Rob Lake of Hendersons Global Investment: "It's too often unclear how CSR links to core business and adds value".
BT's central objective as articulated by our CEO Ben Werwaayen is "to enhance customer satisfaction". So, taking Lake's challenge as our starting point we sought to identify how our CSR activities contribute to customer satisfaction and through that deliver bottom line benefit to the company.
Addressing the challenge
For many years we have monitored overall customer satisfaction ratings based on 3,250 face to face interviews every month with our 19m UK consumers.
Whilst we had an intuitive feel for the underlying factors affecting customer satisfaction ratings, there was no known objective quantified link between these and the measured customer satisfaction figures. BT Retail, led by its new CEO Pierre Danon, took up this challenge in 2001. The company undertook a detailed statistical analysis of all BT's available consumer research covering three main strands:
* Continuous tracking customer satisfaction, key perceptions, complaint levels, advertising awareness and takeout, media coverage, competitor benchmarks and key market trends.
* Event Driven racking the customer experience on all key contacts with BT--provision of service, fault repair, complaint handling, home moves, campaign response, product delivery, face to face and shops.
* Ad hoc driven by the requirements of the business and especially marketing departments to support product and service development, and advertising creative testing.
A detailed statistical analysis of this mass of data identified those factors that strongly correlated with changes in overall customer satisfaction, see Figure 1.
The numbers at the head of each column are the cause and effect modulation (or elasticity) factors for each of the four main drivers of customer satisfaction. …