The Bru Notes

Post-Katrina: Putting the human back in marketing

As I get ready for my summer vacation in the Northwest, my thoughts are in the South, specifically New Orleans and the Gulf Coast. That area is about to mark the third anniversary of Hurricane Katrina. No doubt residents fortunate enough to have homes and jobs and politicians and government officials charged with the region's recovery will cite the many signs of progress. Others, with equal claim, will point to the vast stretches that have yet to recover, looking virtually as they did when the floodwaters receded.

My reflection is of a different sort. I only experienced the storm and its catastrophic aftermath through the media. A year after Katrina hit, I traveled along the Gulf Coast and into New Orleans. I needed to see with my own eyes what had happened. I returned to New Orleans a few months later as part of a volunteer crew that gutted and cleaned homes for a week. Needless to say, what I saw with my own eyes has left a lasting impression.

I realize now that Katrina is as responsible as anything for the shift I made in my work. I had spent 20 years in high tech marketing and was running the PR and advertising agency I co-founded in 1993 when all hell broke loose in New Orleans and the Gulf Coast. The storm and a tragically flawed response at all levels of government laid bare for the entire world to see the outrageous inequities and injustices that remain in our land of the free and home of the brave.

By coincidence, I departed my previous business and the high tech industry a year after Katrina hit. I had decided I needed to shift what I knew how to do -- branding, marketing, communications -- in support of businesses and organizations whose values and actions are making the world a better place. When I formed a new firm to work at the crossroads of sustainability and marketing, I wasn't seeing sustainability through the single lens of saving the environment. As much as we humans have disregarded and damaged our natural world, we have caused no less harm to each other. Katrina was simply the most recent evidence.

Efforts to create a sustainable future must treat the Earth and all of its inhabitants as one. Sustainability isn't saving the old growth in the Pacific Northwest forests and ignoring the rights of all humans to have their basic needs met and to live in peace. By this standard, green marketing falls short. Its preoccupation with promoting eco-friendly products is often little more than dressing up unsustainable consumption in a different color. Even more significantly, green marketing doesn't go far enough to address the broader human and social dimensions of sustainability. If you're a retailer touting your green product lines while paying employees low wages and no benefits, you fail the sustainability test.

Management guru Peter Drucker said the function of marketing is to create and keep a customer. In this post-Katrina world, maybe it's worth remembering that customers are humans first. Forget that, and one day marketers will have no customers to keep.

Why marketing dashboards don't measure up

I get invitations to attend workshops all the time. Usually, I gloss over them. But I stopped on one the other day called "Marketing Metrics and Dashboards 2.0." Not exactly a topic I've been dying to learn about. But it got me thinking: There must be a business opportunity for someone willing and able to show how best to integrate "triple bottom line" metrics into marketing.

Marketing dashboards have come into vogue in recent years, although they are not in broad use because they are complex and expensive to create and maintain. They seem to have found a niche primarily among large companies whose marketing departments are under scrutiny by CEOs and CFOs to demonstrate their expenditures are adding to the bottom line -- the profit bottom line, that is. The marketing firm that is leading the workshop focuses on helping its clients "determine the financial return from marketing investments." Their tagline is: "Measure What You Should, Not Just What You Can." 

That begs the question: What "should" marketers be measuring? In recent years, marketers have been under increasing pressure to prove a positive financial impact from their programs. Dashboards are touted as one mechanism for doing so. I'm all for marketing carrying its weight financially. I also believe the possibilities, if not the responsibilities, of marketing go well beyond its impact on sales and profits. 

Companies committed to sustainable business practices recognize their success can't be achieved simply by maximizing profits. They understand that profits gained at the expense of the environment or stakeholders, such as employees, suppliers and communities, are to be avoided and indeed are not a measurement of success at all. The triple-bottom-line approach of balancing profits with people and planet acts as a check on ill-gotten financial returns.

Which brings us back to marketing measurements. I would expect companies professing a commitment to the environment and the fair treatment of all stakeholders would also ensure this commitment is reflected in how they conduct and evaluate marketing. If marketing is held to a standard of financial ROI only -- even as difficult as that is to measure -- there will be no incentive for marketers to sweat the social and environmental impacts (positive or negative) of their work.

Marketers can perform a vital sustainability function by understanding, monitoring and influencing how their employers or clients create and manage their supply chains, conduct fair trade practices, manufacture their products, dispose of their waste, deliver their services and encourage recycling and reuse. This should be what it means to take responsibility for what you're marketing.

Companies fixated on the financial bottom line are telling marketers to ignore this function and putting them in position to build customer demand for unsustainable products and services. But marketers are not simply victims here. They have a choice: keep playing the game, try changing the rules in favor of sustainability or look for a new employer or client.

A marketing program devoted to sustainability would adopt and track metrics that demonstrate how and how well marketing is contributing to the financial health of its employer or client, the well-being of people the company interacts with and the protection of the environment. I know this is asking a tremendous amount from marketers, not least of which is to define the non-financial metrics to be used.

At this point, I'd be happy getting more people in business to agree the value of marketing shouldn't be measured in dollars and cents alone. Anybody building a triple-bottom-line dashboard?

What might sustainable, local firms do with $49 mil?

In my vision of sustainable communities, I picture a thriving economy built around locally owned, independent businesses that embrace the triple bottom line: people, planet and profits. So it is that I have little patience for economic development practices prevalent in Oregon and around the country that emphasize national business recruitment over local business development. 

I believe we should be doing much more to take care of the businesses that are already here putting down roots, hiring local residents, keeping their profits local and multiplying as they circulate in the local economy and being run by owners who are active in their communities -- because they live here, too.

Editors at The Oregonian lost an opportunity to underscore that point in an editorial on Saturday about last week's announcement of the Hynix semiconductor plant closure in Eugene. The decision puts 1,100 people out of work, many of them paid well above the average Eugene wage. Hynix, like any number of tech companies wooed by Oregon officials in the past several decades, was given large state and local tax credit incentives to locate in Eugene some 13 years ago. 

Although the Hynix plant closure is an opportunity to question the wisdom of showering national or international businesses with tax breaks to locate in Oregon, The Oregonian editors say forget about it:

It's not productive to second-guess the state's wooing of Hynix and its use of tax incentives, as some in the Legislature have begun to do. A 2003 study by University of Oregon economics students Melinda Rowan and Jennifer Witt found that the $49 million in tax breaks and road enhancements used to lure Hynix resulted in a positive impact in taxes, wages and system development charges of more than $275 million over the first five years of its operation. Had the state not offered its incentives, Hynix wouldn't have built its plant, employed 1,100 people and paid taxes.

Their argument against re-examining the Hynix recruitment strategy is hardly convincing. The editors conclude Hynix would not have come here without the $49 million incentive package, so the positive impact in taxes, wages and whatever system development charges would not have been realized. But that's assuming the $49 million in incentives were not spent at all. 

What might have happened had the state and city pledged that same $49 million in 1995 for support of locally owned, independent businesses? Hynix received the equivalent of $44,500 for each of its current 1,100 employees from state and local government. What might 1,100 locally owned, independent businesses in the Eugene area been able to do with $44,500 each? Or what might 110 of the best locally owned, independent businesses in Eugene been able to do with $445,000 each?

We'll never know the answer, but I'm not aware of any state or local economic development group even asking those questions. Businesses based and owned in Oregon are getting the short end of the economic development stick. They can only dream of government officials coming to them and saying, "We believe in you and want you to thrive in Oregon. Here's a half-million dollar package to help you grow your business." 

Can you imagine what a select group of Oregon's most innovative, most environmentally and socially committed business owners and their employees could and would do to reward the citizens of this state for making a meaningful public investment in their businesses? Not all of them would succeed, of course, but I'm certain enough would to add at least the equivalent of 1,100 quality jobs. 

And most important of all, those successful locally owned, independent and sustainable businesses would keep repaying Oregon's investment long after the 13-year life span of Hynix in Eugene.

Greening junk mail? Start with junk being marketed

A group calling itself the Green Marketing Coalition is trying to produce best-practices guidelines for the direct mail business. That would be the "junk mail" business to most of us. "So far the coalition's guidelines are long on earnestness and short on truly new ideas," the New York Times concludes. The paper quotes one head of a nonprofit dedicated to protecting forests:

"It's hard to argue against any well-intentioned effort to use more recycled paper, but the idea of greening junk mail is still a bit like putting lipstick on a pig."

Ouch. I suppose the direct mail business earned that swipe. I hate junk mail as much as the next person. But not all direct mail is junk. It's the rare individual who never responds to a single direct mailer. A generally acceptable response rate to a mailer is about 2%. That means most mailers are not junk to 2% of us. Believe it or not, that's usually enough of a response for businesses or other organizations, including nonprofits, to keep stuffing our mail boxes. 

The Green Marketing Coalition, which got its start in Seattle, is made up of both direct marketing businesses and their corporate clients. Their guidelines are aimed at reducing the environmental impact of direct mail. It's easy to scoff at their efforts, like the nonprofit executive director quoted here. Many believe direct mail is fundamentally unsustainable, given its waste of paper and the energy used in the production, distribution and disposal of materials that so frequently get ignored by its target audience.

But direct mail continues to be used because it can be, and often is, an effective marketing tool. We probably all know admirable environmental nonprofits that are among the legions of direct mail marketers. As a former co-owner of a marketing agency that offered direct marketing among its services, I would urge organizations to move completely to electronic mail as soon as possible. Although most of us hate junk email as much as junk paper mail, at least it's more eco-friendly. 

One reason companies don't resort to email exclusively is the anti-SPAM laws that restrict the use of commercial email to opt-in subscribers only. Traditional postal mail has no such restrictions. It's easy to buy a postal mail list and send away. The environmentally responsible thing to do is use postal mail only when there is no alternative, such as when you're just starting to create an opt-in email list or your target audience doesn't have email access. Those are not problems for most major companies or organizations today.

If direct marketers really wanted to make a difference, they wouldn't promote products or services that are not sustainably made or delivered. Period. The junk goods and services purchased as a result of successful direct mail do far greater environmental harm than junk mail itself. 

I don't think you'll be hearing that conversation among members of the Green Marketing Coalition anytime soon.

This question's for you

I blog, so I guess that means I have an opinion or two. But today I thought I'd start something new. I'm calling it "This Question's for You."

The game is simple. I pose a question - something on sustainability and/or marketing. And you post a response. Ask your friends to respond, too.

Here's this week's question: What would marketing look like in a sustainable society?

Putting sustainability values ahead of market signals

At the risk of over-simplifying, I see most businesses falling into one of two camps when deciding whether and how to "go green." I'll call one the market camp and the other the values camp. 

The market camp consists of businesses whose green decisions are driven by whether there is market opportunity or customer demand for green(er) products or services. These businesses tend to be product focused. In other words, if green can sell, then they'll produce it. Otherwise, forget it. They can't stay in business producing things few customers want.

Businesses in the values camp decide to go green because they believe it is the right thing to do environmentally and socially. They tend to be operations focused. In other words, green operations are capable of only producing green products and services. If they find themselves to be ahead of mainstream marketplace demand, so be it. Financial success can't come at the expense of environmental or social damage.

So how might businesses in these two camps react to results of a national survey on green issues recently conducted by an ad agency in Knoxville, Tenn.? 

European group produces sustainable marketing guide

When it comes to sustainability, Europe is ahead of the US on many fronts. Marketing seems to be one of them. I am always on the lookout for fellow marketers who are giving serious thought to sustainability, and my research often points back to Europe.

One example is this guide on sustainable marketing produced and published recently by CSR Europe. The focus of this first guide is on how to minimize environmental impacts through the influence of marketing. A subsequent booklet will be produced that looks at marketing's role relative to social issues such as human rights, equality and diversity.

The first guide offers a sustainable marketing toolkit that its authors say "has been created to show you how you can integrate the principles of sustainable marketing into your day job quickly and simply." There are indeed some useful suggestions and tools, but I'm not so sure about the quick and simple part, as I'll get into in a moment.

Doing good doesn't drive business giving in US

Private companies in the US tend to be more generous than companies in other countries in giving to charity, according to an international survey discussed in the June issue of Inc. magazine. Companies in all surveyed countries are primarily motivated by promotion of employee recruitment and retention; however, private US firms are much less likely than their international counterparts to be motivated by "saving the planet."

The survey's supervisor believes employees are commonly the ones pushing their employers to donate to charities and support community service. So employers, seeing this desire among their workers, figure giving is a good way to keep and attract employees. The survey spokesman was surprised that "saving the planet" did not rank higher as a motivation in the US.

I'm not surprised by the finding, but I hope the next survey reveals some changes. The drive to give must come more from the top than the rank and file. Only then will we see the giving continue and expand. And along with that, US business owners and senior managers must accept the challenge and need to do the right thing for our planet. Not that employee retention and recruitment isn't important. It is. But giving out of concern for the planet signals to all of your stakeholders that you recognize your organization has social and environmental responsibilities. The reward is inherent in the action of taking responsibility, not in the profits, or even the retaining of employees.

I don't have other studies at my fingertips to prove this, but I believe companies whose owners and leaders operate from a place of commitment to the common good will also enjoy the greatest employee loyalty and generate more interest among desirable employee prospects. These social and environmental values need to start at the top and be embedded in all aspects of a company's behavior and practices. Giving to charity or community groups flows naturally from the values of a triple-bottom-line company: people, planet, profits. 

That businesses give back to their communities, even for selfish reasons, is a good thing. But when the majority of business employers are motivated solely or primarily by their employees to do good, we have a serious misplacement of values at the top. We need business leaders to embrace their responsibility to the common good and become committed and active citizens of their communities and the world at large. Until many more do, there will be no solving the daunting social and ecological challenges in front of us.

There's no consuming our way to green

I find it difficult to avoid the topic of Wal-Mart when speaking of sustainability and marketing. The company came up again today at a breakfast presentation by two professors of business from the University of Portland, sponsored by the Oregon Natural Step Network. And once again I find myself bristling at the notion of Wal-Mart playing any part in the ultimate sustainability solutions for our planet.

Professors Diane Martin and John Schouten conduct research related to sustainable marketing. Included in their work is the study of Wal-Mart's aggressive sustainability initiatives. They receive no payment from Wal-Mart as part of their research. Nor do they shop there.

Martin and Schouten peppered their presentations this morning with examples of what Wal-Mart was doing to lessen the environmental impact of its business operations, the products it sells and the global supply chain that feeds its stores. Schouten says the company is so serious about its sustainability efforts it has reached out to detractors such as the World Wildlife Federation, Sierra Club and Conservation International to involve them in their green initiatives.

But when asked whether she was aware of Wal-Mart actually encouraging their customers to consume less, Martin quickly replied, "No." Schouten said the mindset that "growth is good" is still very much present in Bentonville, although its managers are all evaluated by metrics of sustainability. He didn't say what those metrics were, but clearly they don't involve helping Wal-Mart customers buy fewer products. Wal-Mart doesn't plan to relinquish its role as the world's largest retailer -- indeed, its revenues make it the equivalent of the world's 19^th largest economy, Martin said.

This raises what I believe to be the fundamental question for companies and marketers embracing sustainability principals: Can humans consume their way to green? In other words, can we simply switch from brown products to green products across the board and create the sustainable future we all want? 

Wal-Mart and most other companies can't envision a future where their customers dramatically lessen the amount of goods they buy. After all, what would happen to their growth ambitions and their need to create adequate shareholder return? Their solution is to get us to consume differently: less brown, more green. 

I don't believe we have the luxury of simply shifting to green products. In fact, I can't imagine a sustainable future where humans -- at least in the developed countries -- don't reduce their consumption many fold. That's a prospect few in business, including those of us in marketing, want to either accept or condone. Where's the money in non-consumption?

Last week, I heard author and Boston College Professor Juliet Schor speak for the second time in several months, this time at the national conference of the Business Alliance for Local Living Economies (BALLE) in Boston. Schor is a well-known critic of over-consumption by the middle/upper classes of developed countries. She cited new data that illustrate how the growing scale of consumption among higher-income people is swamping virtually all the product greening steps our society is taking. 

The de-materialization of our economy is not happening. For example, in what Schor calls "the Ikea effect," American consumption of furniture in material weight increased from 6 billion kilograms in 1998 to 12 billion kilograms in 2005. Our population increased 10 percent in that time, but our furniture consumption doubled. We consumed 2.9 billion kilograms of ceramics in 1998 and 5.7 billion kilograms in 2005. Our electronics consumption -- despite the ongoing miniaturization of digital gadgets -- increased from 3.8 billion kilograms in 1998 to 6.2 billion kilograms in 2005.

Schor's solution is to engage people in redefining the good life. One where we acquire more time and far less stuff. A life in which we work fewer hours, and use that time to reconnect with ourselves, our families, our communities and nature and rediscover our happiness. Schor didn't say it, but I'm pretty sure you won't find even a green Wal-Mart in her picture of the good life. You certainly won't in mine.

The accidental benefit of higher gasoline prices

There's going green. And then there's saving green. We're seeing the difference now as gasoline prices climb over $4 per gallon. 

In the post-"Inconvenient Truth" era, many Americans are finding ways to drive less or volunteering to trade in their gas guzzlers for gas sippers to do their part for the environment. That's going green. Lately, people are selling gas hogs and driving less for a different reason. To save green. Whether the motivation is to save the environment or to save money, the results are the same: fewer gallons of gas consumed and fewer greenhouse gases emitted. 

But the environmental benefit rarely gets mentioned when reporters cover the broader economic and personal financial costs of expensive gasoline. As much as it pains me to say it, an economist quoted in the New York Times is probably right when he says:

“Al Gore came out with a movie called ‘An Inconvenient Truth’ in 2006, when Hummer sales were still good. The inconvenient truth, in fact, is that prices are what matter. With gas prices soaring, Gore is going to get his collapse in Hummer sales, not because people went green, but because they wouldn’t spend the extra green to buy the gas.”

My hunch is a lot of Americans have wanted to do the right thing for our warming climate by downsizing their automobiles, but have waited for financial incentives. When gas was closer to $3, the incentive wasn't great enough. At $4 and climbing, it is.

Sustainability marketers should take note. There are a certain number of eco-minded customers who choose the environment over saving money. But most customers are guided by their pocketbooks and probably always will be. In the case of gasoline, they find ways to consume less, so they can save money. Period. The environmental benefit is unintentional or, at best, icing on the cake. 

Not that enviros should be complaining that Americans drove 4.3 percent fewer miles in March 2008 than March 2007. We'd just all feel a lot better if we knew environmental values, more than economic reactions, explained the drop. Maybe then, we'd trust that Americans are serious about fighting climate change.