Balancing Purpose, People, and Profit Part II: Private Sector
What hurdles is your business facing in this economy? We are observing businesses that are struggling with rising costs, supply chain issues, labour shortages, increased competition, and changing consumer behaviour. At the end of the day, many are losing capacity to manage operations and/or are losing profits as they take on substantial increases in the cost of doing business.
To navigate this, we’ve been looking at pricing strategies, consumer pushback and value propositions. We’ve decided to stop flogging the USP approach (We do X for P and, unlike our competitors, we do Z) and instead, we focus on strengthening your WHY.
A powerful approach is to develop a defined purpose or mission that aligns with a value-added pricing strategy.
Yes, you can profit and still have a purpose driven business!
This article explores the significance of purpose-driven strategies and provides practical insights for small businesses to position themselves for success.
The Power of Purpose
A defined purpose serves as the North Star for any business. It outlines why the company exists, its values, and the positive impact it aims to create. Purpose-driven businesses have a distinct advantage in a struggling economy as they can authentically connect with consumers who are increasingly seeking out products and services that align with their values.
In the same way, they will attract key people to onboard in their labour force (and retain them!). By integrating purpose into their core strategies, businesses can foster stronger loyalty, build deeper relationships with customers and employees, and differentiate themselves from competitors solely focused on profit.
Applications
Let's consider a service-based business in the hospitality or tourism industry, such as a hotel or sustainable tour operator, and explore how it could adopt a purpose-driven strategy based on the concepts discussed above.
Example: The Sustainable Eco-Lodge Redefining Hospitality
Purpose Statement: Our purpose is to provide exceptional hospitality / tourism for guest stays and/or adventure while promoting sustainable practices, positive employee culture, preserving natural environments, and supporting cultural exchange.
-
• Sustainability: We prioritize sustainable practices in all aspects of our operations, from energy consumption and waste management to the use of locally sourced and organic products. We strive to minimize our environmental impact and contribute to the preservation of natural ecosystems.
• Positive Employee Culture: We foster a positive and inclusive work environment that values teamwork, respect, and personal growth. We invest in our employees' well-being and professional development, recognizing their contributions and promoting a healthy work-life balance.
• Cultural Exchange: We believe in the power of cultural exchange and aim to create opportunities for guests and staff to learn from diverse backgrounds, traditions, and perspectives. We encourage respectful interactions, cultural understanding, and the celebration of local customs and traditions.
• Environmental Stewardship: We take responsibility for the protection and conservation of the natural environments surrounding our eco-lodge. We actively engage in initiatives that promote biodiversity, conservation, and restoration of local ecosystems, working hand in hand with local communities and organizations.
• Innovation and Continuous Improvement: We embrace innovation and continuously seek opportunities to improve our operations, services, and sustainability practices. We stay up-to-date with industry trends and technologies, constantly exploring ways to enhance the guest experience and minimize our ecological footprint.
• Responsible Tourism: We promote responsible tourism by encouraging guests to respect local customs, cultures, and environments. We provide education and guidance on sustainable travel practices, empowering guests to make informed choices that have a positive impact on the destinations they visit.
Now let's consider a product-based business in the agri-food sector, such as a food and beverage processor, and explore how it could adopt a purpose-driven strategy based on the concepts discussed above.
Example: The Sustainable Beverage Processor (We happen to love craft beverages)
Purpose Statement: Our purpose is to produce high-quality craft beverages while promoting sustainable agriculture, supporting local farmers/producers and environmentally conscious packaging. We package our craft with a focus on advocating for local artists and the Arts in general.
-
• Quality Craftsmanship: We are dedicated to producing high-quality craft beverages that are meticulously crafted using the finest ingredients and techniques. We strive for excellence in every step of the production process to ensure an exceptional taste and experience for our consumers.
• Sustainability: We prioritize sustainable agriculture practices in sourcing our ingredients, working closely with local farmers and producers who share our commitment to environmental stewardship. We aim to minimize our ecological footprint by promoting regenerative farming methods, water conservation, and responsible waste management.
• Support for Local Community: We strongly believe in supporting and uplifting our local community. We collaborate with local farmers, artisans, and suppliers, contributing to the economic growth and sustainability of our region. By prioritizing local partnerships, we create a positive impact on the livelihoods of those around us.
• Environmental Consciousness: We are deeply committed to reducing our environmental impact. In addition to sustainable agriculture practices, we focus on environmentally conscious packaging solutions, striving to minimize waste and utilize recyclable or compostable materials. Our aim is to promote a circular economy and contribute to a healthier planet.
• Advocacy for the Arts: We value and promote the arts as an essential part of our brand identity. We actively support local artists by featuring their work on our packaging and collaborating on creative projects. Through this advocacy, we aim to foster a culture of appreciation for artistic expression and contribute to the local arts community.
Profit: Value-Added Pricing Strategy
A value-added pricing strategy involves offering products or services that deliver additional benefits beyond what competitors provide. By combining purpose and value-added pricing, businesses can create a compelling proposition that justifies a higher price point, or simply justifies a revision to pricing that can support an increase in operating costs.
Here's how a defined purpose enhances a value-added pricing strategy:
1. Building Trust and Loyalty:
Consumers are willing to pay a premium when they believe in a brand's mission and values. A well-defined purpose helps small businesses establish credibility, build trust, and foster long-term loyalty. When customers understand the positive impact their purchase can make, they become more inclined to support the business, even if it means paying a slightly higher price.
2. Differentiation in a Crowded Market:
In a struggling economy, competition intensifies as businesses strive to attract a shrinking pool of customers. A purpose-driven approach provides a unique positioning that distinguishes small businesses from their rivals. By effectively communicating their purpose, businesses can stand out, appeal to a specific target audience, and capture market share, even in a challenging environment.
3. Communicating Value and Quality:
Value-added pricing requires effectively communicating the value and quality customers receive from choosing a particular product or service. A defined purpose serves as a compelling narrative that highlights the unique attributes and benefits offered. By emphasizing the positive social or environmental impact, businesses can justify a higher price point and demonstrate the added value they bring to customers' lives.
4. Fostering Innovation and Adaptability to Manage the Bottom Line
Purpose-driven businesses often possess a strong determination, which fuels innovation and adaptability. When businesses are driven by a larger mission, they are more likely to invest in research and development, exploring new ideas, technologies, and practices to continuously enhance their offerings. This commitment to innovation not only increases the value proposition, but also enables businesses to adapt to changing market conditions and stay efficient.
The Business Case
Businesses that embrace a defined purpose or mission have a remarkable opportunity to position themselves for success, even in a struggling economy. By focusing on purpose and people, businesses do not have to play the pricing game. They will attract discerning consumers and foster stronger relationships, cultivate an inclusive people-centric workplace and build a resilient foundation for growth.
Balancing purpose, people, and profit is key. Businesses that seize this opportunity will not only weather economic storms but also inspire positive change, become voices of authority in their market space and create lasting impact in their communities.
