01.What is CRM?
Cause-related marketing (CRM), is a business partnership between a company and a charity. While CRM can take many different forms, one of the most common is when a company allies itself with a charity and contributes a portion of the sale price of its product to that cause.
The first high-profile CRM promotion started in 1983 when American Express agreed to donate one cent from every purchase made with its card to the fund for the restoration of the Statue of Liberty. The partnership was a resounding success for both parties, raising $US1.7 million for the cause and increasing American Express card use by 28% and new card applications by 45%. Since then, CRM has increased in popularity, especially in Australia where products claiming to support charities have appeared all over the place in the last few years.
So what’s the difference between CRM and straight-out fundraising for a charity? Hailey Cavill, whose consultancy Cavill + Co specialises in company-cause partnerships, says the main difference is marketing. She thinks good CRM is an effective way to raise funds, promote the company and engage the consumer. In addition, she says it gives charities an opportunity to raise awareness.
“Many charities just don’t have a big marketing budget, so if they can jump on board a promotion that’s going to a million customers that’s great marketing, and then they get the money too," says Ms Cavill. "It’s about win-win but we shouldn’t pretend it’s anything more than a marketing strategy that makes everyone feel good.”
Please note: this information was current as of September 2008 but is still a useful guide to today's market.
For the companies involved, CRM has several advantages, if it’s done well. A cause campaign can increase sales as well as improve brand recognition, and help to develop customer loyalty. While many large companies may already have foundations that donate money to charity behind the scenes, CRM is a very public way of engaging the customer at the same time as enhancing the reputation of the company.
Paul Henderson, Acting CEO of The Smith Family, says CRM forms part of its overall fundraising mix, which includes appeals, donors and business partners. In March 2007, it worked with long-time partner Colgate to raise more than $100,000 to fund an oral health and healthy eating program.
The promotion was simple: for every tube of selected Colgate toothpaste sold, 10 cents of the sale price was donated to the Smith Family. Henderson says the promotion was a success because the cause was specific and a good match. “Most people are going to brush their teeth, and if they can buy a brand of toothpaste they like as well helping out disadvantaged families, then it’s a bonus.”