Title: Doing well by doing good
Sub-title: Independent convenience store operators can learn important lessons from the charitable and community involvement activities of the larger players.
During the recent Olympic and para-Olympic games, about 500 Canadian athletes participated in events that they had been dreaming of and preparing for all of their lives. Many, if not all of these athletes could never have gotten where they are without substantial backing from their families. Yet due to the costs involved in attending the events family members risked left behind on the day of those athletes faced their greatest challenge.
Petro-Canada, which - through the ancillary products it sells in its service stations, - runs ones of Canada’s largest chain of convenience stores, wanted to help. So the company organized the Petro-Canada Athlete Family Program, which put up athletes’ families during the games for four nights of accommodations, plus meals and event tickets.
“Family support can be crucial to an athlete’s success, yet the costs often means that family members have to support their loved ones from miles away, “ said Seven Keith, Petro-Canada’s (Director Olympic Activation) in a statement. “This program allows athletes to focus on their performance without the distraction and stress of worrying about their families during the games.”
Combining business and social responsibility
Yet Petro-Canada’s participation, while certainly a well-intended, laudable cause, had a more practical business side. At a time when oil companies are under increasing consumer pressure due to wide-spread consumer suspicions of price-gouging in their gas retail operations, the sight of the company’s logo being displayed throughout the Olympic events beside the venerable five hoops, provided a great opportunity to change the dialogue.
Petro-Canada’s Olympic sponsorship is a textbook example of what experts call “cause marketing,” which Wikipedia defines as “a type of marketing involving the cooperative efforts of a for-profit business and a non-profit organization for a mutual benefit.” Petro-Canada has been sponsoring Canadian Olympic athletes for 22 years. But this year, having 500 athletes parading around with company-supplied red and white jackets, toques, carves and backpacks, was a particularly timely opportunity.
Of course Petro-Canada isn’t alone in its cause marketing efforts. A slew of convenience store industry stakeholders and suppliers undertake similar initiatives. These include Couche-Tard’s support for the Red Cross and the United Way, Cadbury’s sponsorship of the “Right to Play,” Pepsi’s “Pepsi refreshes the World,” and many others.
These companies follow in the footsteps of the first great cause marketing campaign, which took place back in the mid 1970s, a partnership between Marriott Hotels and the March of Dimes. The effort, which was led by Bruce Burtch, raised significant funds for the charity, and provided hundreds of thousands of dollars of free publicity for Marriott. Burtch later coined the term “Doing Well by Doing Good,” which could be the motto of any successful cause marketing effort.
Independents can learn from the big boys
However according to one expert, independent convenience store operators, which are having it a bit rough lately can learn from efforts by the big boys. “Smaller companies are much more nimble at identifying local demand and needs,” says Michel Huet, a business development consultant with MichelHuet.com. “As a result they can make considerable gains from cause marketing efforts.”
The stakes are high. An onslaught of pressures, ranging from business competition, to contraband tobacco and sales tax harmonization, are squeezing profits like never before. As a result, more than ever, convenience store operators are seeking innovative ways to generate more traffic into their stores. Many consumers drive by one or more convenience stores on their way to the supermarket. Operators that can give them a reason to stop will have a major advantage.
Cause marketing opportunities will naturally depend on where each particular store is located. For example the logical choice for stores located near arenas, soccer fields or other sports facilities would be to contribute to sports-related events. Convenience stores located in school districts can gain better top-of-mind recognition by participating in school events such as by buying ads in yearbooks, calendars or programs.
Often, a small investment can go a very long way. For example Couche-Tard sets up collection boxes in its stores, and then distributes the funds to a variety of charities. However its net cost of that particular activity is negligible – all it has to do is to buy the collection boxes. Customers contribute the funds, and Couche-Tard gets the visibility and great branding benefits by distributing them
Donating product, the tax implications
According to one charitable organization, increased business focus on charitable activities is needed now more than ever. “With the tough economy out there, the needs are particularly great. We can use all of the help that we can get.”
says Nicolas Carpentier, a coordinator at Sun Youth in Montreal, which provides emergency and crime prevention services and operates a food bank for disadvantaged families.
So how can convenience stores help? One way, says Carpentier would be by donating “close to expiry date,” merchandise, for immediate distribution. “We often get shipments of product from food companies directly, but rarely from convenience stores,” says Nicolas Carpentier, a coordinator at Sun Youth in Montreal.
That said, according to Sonny Bernard, a tax expert with Bessner Gallay Kreisman, the direct benefits to businesses from cause marketing campaigns are difficult to measure. “It’s a bit like advertising,” says Bernard. “You can never really be sure how much extra traffic it will generate.”
However anecdotal evidence is strong that there is some benefit, and that that benefit has been increasing in recent years. For example in a 2008 study by the Cone research group, 79 percent of consumers reported that they would be ready to adopt a new brand that was associated with a good cause. That’s up from 66 percent in 1993.
One thing that it will generate for small, independent stores, whose profits are taxed in the hands of the owner, is a higher relative tax advantage. “For corporations it does not make a difference from a tax standpoint whether they distribute close to expiry merchandize or whether they just take a write down,” says Bernard. “But for individual taxpayers it does. The tax credit rate for charitable donations is at the highest level. But many CStore owners are in a lower tax bracket. So their relative advantage is the difference between the two rates.”
Cause marketing: costs versus benefits
One of the biggest objections that smaller businesses raise when asked to take on certain causes is how much they cost, particularly when those costs are weighed relative to the often intangible benefits that the derive. In a sense they have a point. For example paying the food and hotel bills of 500 athletes families for four days, almost certainly cost Petro-Canada more than $1 million. Yet looked at another way, the Athlete Family Program’s cost is fairly small relative the $18 billion in revenues and more than $1 billion in profits that the Petro-Canada’s parent company Suncor Energy pulled in during its 2009 fiscal year.
The same thing applies to Alimentation Couche Tard Inc, North America’s largest convenience store operator. During fiscal 2009, the company, which operates 5,833 convenience stores across the continent, gave more than $2 million to a variety of worthwhile causes ranging from large national bodies to local organizations such as a center for homeless children. Once again while $2 million sounds like, and is, a lot of money, that works out to only one percent of the $253.9 million that the company earned that year.
The lesson that the big players provide is that just a small amount of charitable dollars can go a long way in terms of boosting a company’s reputation in the community. Independent convenience store operators would do well to take note, because if they do not, in today’s rough environment, their competitors almost certainly will.
Those that remain unsure that their cause marketing dollars generate an adequate return on investment can always comfort themselves that at minimum, that by giving generously - at least they are doing the right thing.
Sidebar: Tips for leveraging cause marketing efforts
Peter Diekmeyer (peter@peterdiekmeyer) is CStore Life’s Quebec correspondent.
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