How Brands Win and Lose Customer Loyalty by Taking a Stand

Taking a stand offers brands the chance to be more relevant to a consumer’s identity, but doing so may not always translate into positive outcomes.

Two weeks prior to the US presidential election, the CEO of Expensify, David Barrett, went beyond simply wading in the political waters by taking a stand on a controversial topic.

Barrett fully immersed himself and Expensify into national politics by emailing the company’s customers and urging them to vote for Joe Biden, saying that “anything less than a vote for Biden is a vote against democracy”.

Barrett’s email was a noteworthy example of corporate political advocacy.  But in 2020, a year besieged by a global pandemic, economic recession, police brutality, protests about anti-Black racism, and major elections, there is no shortage of brands taking a stand on major issues.

Ben and Jerry’s called for the dismantling of White Supremacy.  Time to Vote, an initiative to encourage voter participation by giving employees a paid day off on Election Day, now has almost 2000 member companies, including some boldface brands such as Patagonia (a founding member of the coalition). And just last week, mainstream financial brands Mastercard, Visa, and Discover started blocking their credit cards from making purchases on Pornhub following accusations of child sexual abuse on the site.

Although taking a stand can allow brands to be relevant and be part of a consumer’s identity, doing so doesn’t automatically translate into positive outcomes, particularly for the largest companies. Given the role of politics in personal identity, consumers tend to identify with brands that share their political values. Conversely, they are likely to dis-identify with brands that do not align with their politics.

Why are companies taking a stand now?

One reason brands are taking a stand now is that corporate political advocacy gives brands more relevance. When consumers are living through a pandemic that has led to massive changes in just about every facet of life — from grocery and Christmas shopping habits, to work and socializing — brands may rightfully feel that the status quo doesn’t cut it in terms of communicating with consumers.

Another reason to take a stand is that doing so allows brands to act as identity signifiers. Marketers and researchers know that consumers’ brand choices are influenced by identity. The extent to which consumers shop at Target or Walmart is influenced by more than price and convenience; consumers choose brands because brands help to define who they are or who they want to be, or what they value and prioritize.

These days, political views tend to be a critical part of many people’s personal identities. In the US, which is deeply divided along political party lines, a person’s views on just about every issue, from athletes kneeling during the national anthem to wearing a mask, are affected by politics. Thus, brands’ stances on these issues are means through which they can become a crucial part of consumers’ identities.

Is it beneficial for companies to take a stand?

So should your brand take a stand on a social or political issue? Here are a few factors to consider:

Know your consumers

Taking a stand on a divisive political topic means that about half the population will disagree, and some subset so vehemently that it will have a negative impact on brand perception and behavior. If the brand has a consumer base that is broadly heterogeneous, taking a stance could be risky.

Thus, brands need to have a sense of the diversity of their consumer base overall and whether taking a stand will alienate key audiences. A complete market segmentation of your customers can inform you of exactly which segments may or may not support your stance.

Negativity eclipses positivity

People are prone to paying attention to, remembering, and acting on negative information. This negativity bias means that a brand’s social-political advocacy is more likely to lead consumers who disagree to turn away from the brand than to lead consumers who agree to turn to the brand.

Specifically, research has shown that negative information is more effective in prompting consumers to boycott a brand than positive information is in prompting consumers to reward the brand. At the very least, brands need to be prepared to weather the storm of negativity more than they should expect to get credit or praise for their actions.

If the brand has recently experienced negative press, this may not be the time to take a public stand on a controversial issue. This summer, for example, in reaction to the murder of George Floyd, Chick-fil-A issued a statement denouncing racism, saying it has no place in our society and should not be tolerated; however, given that Chick-fil-A had been rumored to have donated to Donald Trump’s 2020 campaign and was previously known for contributing to anti-LGBTQ organizations, they likely benefited very little from speaking out in this case.

What does the brand have to gain?

Though negative information is more impactful than positive information, taking a stand can lead a brand to be noticed. Recent research suggests that brands with small market share are more likely to reap the benefits of speaking up.

Though they may lose some customers, the net effect of taking a stand can be positive because they have more customers to gain than to lose. A local coffee shop may find itself earning new customers by taking a stand in support of issues like Black Lives Matter, but a large multi-national franchise likely will not.

While large brands may not gain new customers, a clear stance on important issues can boost their reputations as social leaders. Indeed, for a brand like Starbucks, which is known for political advocacy, a neutral or unclear stance could prove to be harmful.

It needs to be authentic

Perhaps this goes without saying, but it’s a principle that brands still manage to fumble all too often: taking a stand on a social issue is only beneficial to the extent that consumers see it as genuine and authentic to the brand. This might help explain why Nike benefited from its Dream Crazy ad back in2018.

With their trademark slogan “Just Do It,” a key part of Nike’s identity is being rebellious. Thus, supporting Colin Kaepernick (even before other brands took a stand in support of BLM) is entirely consistent with the Nike brand.

In addition to thinking about the immediate impact that authentic stands have on consumer behavior, brands should also think about the impact on their employees. Supporting issues that are important to internal stakeholders can act as a powerful morale boost and increase employee identification with the brand.

In turn, employees who are satisfied and deeply connected to the brand act as brand ambassadors and evangelists who communicate the brand’s and company’s values.

Every brand should stand for something

To successfully win over consumers and employees who identify with a brand, it needs to stand for something. It’s not easy figuring out whether and how to take a stand on political and social issues. It can be a minefield of potential negative outcomes. There are subtle ways of signaling your support and, as Expensify’s CEO demonstrated, there are more direct ways.

But given the current sociopolitical climate, taking the right stand at the right time is becoming a critical skill that all brands must master.

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