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Corporate social responsibility increases customer loyalty

Effect of ‘doing good’ greatest on innovative businesses
14 November 2017
Jenny van Doorn
Jenny van Doorn

Corporate social responsibility (CSR) increases customer loyalty. Customer loyalty – measured as the percentage who are still customers after two years – is 7% higher for companies whose customers think they do more for the world. This is the conclusion of researchers from the University of Groningen and data analysis company MIcompany. ‘Our findings are important because we show that noble convictions of serving the community can go hand in hand with financial motives’, says Dr Jenny van Doorn, associate professor at the UG. The findings have been published in the academic journal Marketing Letters.

Van Doorn, Marjolijn Onrust, Professor Peter Verhoef (UG) and Marnix Bügel (MIcompany) analyzed customers’ opinions of the CSR initiatives of 93 brands in 18 industries, and compared these with their buying behaviour two years later. For all the firms studied, investing in CSR had an indirect but positive effect on customer loyalty. ‘We see that the customer’s attitude towards the CSR firms is subconsciously influenced for the better’, says Van Doorn.

Innovative firms benefit most

With innovative firms, CSR has an extra direct effect, which means that investment in ‘doing good’ initiatives can lead to as much as a 12% increase in customer loyalty for this group. Van Doorn: ‘In the eyes of the customer, when innovative firms invest in doing good, this leads to better services or products too. A prime example is the market success of Tony Chocolonely, which successfully combines innovation with a doing good strategy.’

Businesses without strong brand awareness benefit more from CSR initiatives, says Van Doorn. ‘They have more to gain. CSR helps such businesses stand out from the crowd. Take the relatively small ASN and Triodos banks in the Netherlands.’

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