Companies are increasingly using corporate responsibility as a business tactic — and it's clearly working.
If you had the choice, would you buy a bottle of liquid hand soap for $3 or would you grab a similar bottle for $1 more that donates a bar of soap or gives away a month of clean water for each bottle purchased?
SoapBox Soaps, a Virginia-based company founded in 2010, was willing to bet that some people would take the latter deal.
"We may win the same number of customers over time, but the fact that we give back is definitely what sets us apart and gets customers to choose us over another brand," said David Simnick, co-founder and CEO of the company. "There are tons of natural products out there — the industry is growing double digits year after year — so our good ingredients alone, while core to our brand, aren't enough to build loyalty from our customers."
Simnick said he believed his mission is the reason people purchase SoapBox the first time, but what keeps them returning is the mission coupled with the value and the quality of the products.
According to a 2016 Deloitte Millennial Survey, 87 percent of millennials believe that a business' success should be measured in terms of more than just its financial performance. And 73 percent of millennials said that business has a positive impact upon wider society.
Corporate social responsibility — initiatives that a business takes toward environmental or social well-being — is a growing business model that's become so popular that it's almost cliche, said Mark Hamrick, senior economic analyst with Bankrate.com, a website offering financial advice.
It's the buzzword that companies are using to lure buyers into making the purchase, he said.
The majority of people driving the social responsibility trend across the board are millennials, said Courtney Jespersen, retail expert at NerdWallet.com, a financial education website.
The philosophy was developed through brands like Toms and Warby Parker, and it's spreading to mainstream stores.
Kohl's has a Kohl's Cares program that donates 100 percent of the net profit from the sale of specific products to kids health and education initiatives, while Amazon customers can shop and give through AmazonSmile, Jespersen said.
But while the tactic itself is an endearing one, it's important for companies to determine the tipping point: How much is corporate responsibility going to cost the company, and how much more are consumers willing to pay to give back?
"It clearly has to be a balancing act," Hamrick said.
And companies need to realize that the balance will tip in the wrong direction should customers need to tighten their purse strings at any point.
"Push comes to shove, during a recession, they may give up something," Hamrick said. "We see this all the time with organic food preferences at the grocery store."
When customers have more money, they're willing to pay a premium for organic products or for companies that will give back in some way.
"If times get tougher, people have demonstrated that they will switch from a name brand to a store brand in no time," Hamrick said.
Still, Randy Goldberg, co-founder of Bombas, a sock company that donates a pair of socks for each pair purchased (it has donated 922,200 pairs so far), said he isn't worried.
Goldberg said it costs the company about the same amount to produce a pair to donate as it costs to make a pair to sell.
"They're the same quality but with added features developed to meet the needs of people living on the street: an anti-microbial treatment, reinforced seams and darker colors for less visible wear," Goldberg said.
He said that, from the beginning, the company built its financial model with the unit economics of the donation sock in mind.
"Our business exists for the donation, so the cost isn't something that trips us up," Goldberg said.
He said that some customers are drawn to Bombas because they hear about the mission, while others have heard about the product.
The economy is helping the social shopping trend, and Jespersen said he doesn't see corporate social responsibility stopping anytime soon.
"Expect to see retailers continue to give their customers an opportunity to do good through their purchase behavior," Jespersen said.
A reward for shopping? Yes, please.