The Teapot Story: Giving Money Away Draws Customers, Boosts Sales

Nearly every day I excitedly read another report or article citing the benefits–many of them financial–of corporate social responsibility and socially driven business.  I smile and compile and try to digest these percents and survey populations and geographic-specific findings. IBM and OgilvyEarth harvest invaluable information* that shapes thought and work for many of us.  Putting aside reports for the next several paragraphs, I’d like to share a simple anecdote that illustrates the power of connecting cause with business.Picture 2

Clam Lorenz, co-founder of MissionFish, the nonprofit that administers ebay Giving Works, relayed this story at the Online Giving Marketplaces Conference. I heard it via Stanford’s Social Innovation Conversations.

ebay brought together a group of sellers to solicit feedback and promote sharing. One seller (I’ll call her Lucy) complained that she was selling 30% fewer teapots than her competitor, despite comparable pricing and ratings.  The only noticeable differentiator was that her competitor donated 10% of all sales to a nonprofit in which she was personally involved.  It was posited that her act of donating and commitment to a specific nonprofit provided a competitive advantage: buyers were drawn to the option that allowed them to do good just through the act of their purchase.  So Lucy chose a nonprofit to support through donating 10% of sales and increased her sales by 30%–leveling Lucy with her competitor.

While neither teapot seller’s 10% donation is particularly generous or creative, it’s a clear allure for customers.  Associating your business with social or environmental responsibility (even the dullest form of it) creates stickiness with customers, is an asset to nonprofits and a (30%) boon for these teapot sellers.

*As referenced, IBM and OgilvyEarth’s latest findings:

IBM’s recent study finds 66% of 224 business leaders surveyed are actively focusing on CSR as a way to increase revenue and reduce costs.

OgilvyEarth surveyed 2,100 British consumers and found that:

  • 40% of consumers are more concerned with environmental and social issues now than they were pre-recession; and
  • 29% of consumers pay more attention to a product’s environmental and social credentials now than they did 12 months ago.

Photo credit House To Home

Tags: ,


Leave a comment
  1. Mosses Akizian August 14, 2009 at 5:13 pm #

    Thanks for sharing this Olivia. Part of my ecommerce plan was to take a similar path; this assures me that not only it’s rewarding personally, but also financially.

  2. admin August 14, 2009 at 5:22 pm #

    Mosses, thanks for your comment and congrats for building a social element into your business! Happy to help with any questions.

  3. Andrew Warner August 14, 2009 at 6:15 pm #

    I like data like this.

  4. admin August 14, 2009 at 6:17 pm #

    My too because it’s so digestible and sticky. Great anecdote to pull out when arguing social mission with companies. Thanks of the comment.

  5. Rob Caldwell August 17, 2009 at 8:12 am #

    I like that “Lucy” was able to increase sales by 30% after she started to be more socially responsible. I like this because it was good for her business. I wonder, though, if doing this just for an increase in sales (as it seems…maybe there is more to the story, I don’t know) will hurt her in the long run? I think it could hurt her if customers find out that she may be donating just for the sake of saying she’s doing so without really being involved or genuine. (Again, I’m not sure if this is really the case, but let’s assume so.) Does this mean that donating some of her profits is a bad thing? No. But, I do think that being genuine and passionate about the “extra” things that a person does is more important than an arbitrary percentage.
    Have you ever compared the two?

  6. admin August 18, 2009 at 10:23 am #

    Rob, you bring up a critical point. I wanted to use this story as a simple vignette to demonstrate consumer behavior for cause-related products. Of course, it’s often not as simple as just donating X% to charity (although this act still has merit). I hammer the importance of authenticity and being genuine when speaking with entrepreneurs or companies about how to implement a social mission. (In this post, I choose to present a simple anecdote at the expense of talking about the guidelines.) I think it’s a long-term failure–as you suggest–if a company doesn’t integrate its social mission with its business mission and passions. Thank you for contributing to this discussion.