The Conscious Buyer of 2020 is Driving Change!

Compiling our receipts and records to complete a tax return can be described as a fiscal time-travelling journey. We discover how the different ways we have spent money can be used to claim deductions to reduce the amount of tax we pay or obtain a refund. When giving to a charity we often claim a receipt as the amount we donate may be tax deductible. We are guided in our purchasing decisions through clever and effective marketing subtly suggesting that buying their product or service will help us. Chief Financial Officers carefully consider the likelihood of increased sales and profits before approving the spend for an expensive marketing campaign. The results of the campaign are analysed, reviewed, and scrutinised with sales data and feedback from customers used to make changes or influence future marketing investments. How we spend can make a difference.

Creating a collective conscience when buying

The customer of 2020 is more discerning with fairness and equality a key differentiator in their buying decisions. In May 2020, McKinsey published the article Emerging from COVID-19: Australians embrace their values outlining the importance of Australian businesses to engage more deeply with their customers. According to McKinsey 40% of all households are adjusting to a decline in household income, with Generation Z (born 1996–2012) and millennials (born 1980–95) the most affected and least confident of a recovery. Furthermore, the article stated:

Rather than a rise in nationalism (“Buy Australian made”), what has emerged in Australia is strong support for local communities and a sense of “we’re all in this together.” We observed consumers, especially those less financially affected by the restrictions, actively switching their spending to prioritise buying from local businesses and producers. We also observed a “community experience” factor, which helps counteract price sensitivity and sometimes sacrifices convenience as consumers give themselves permission to spend more in the interest of helping out.

Now it is abundantly clear that ethical buying by corporations can no longer be considered as tokenism. When large organisations promote that they are recognised as a leader in diversity and inclusion, the conscious customer wants to know the message is meaningful. Companies strive for innovation and continuous improvement. Customers appreciate it when businesses acknowledge there is more to do to improve equity and social justice. It demonstrates authenticity and the willingness to act inviting others to join them on the journey that will benefit more people in the community. In February 2019, AT&T announced the expansion of its supplier diversity program committing to spend US $3 billion with black suppliers across the US by the end of 2020.  On 26 June 2020, the company reported it had reached 90% of its target.

Qantas is an example of an Australian business making social commitments part of its brand promise while acknowledging further progress needs to be made. In 2017, Qantas announced it was voting yes to marriage equality and launched the Nancy Bird Walton initiative to attract more girls and young women to technical roles. In June 2019, Business Insider Australia Executive Life reported that Qantas Group Executive, People, Culture and Corporate Affairs, Lesley Grant stated while there is a lot of “great work being done” at the company, “we certainly want to do better”. Grant mentioned that its Aboriginal and Torres Strait Islander supplier program could be improved. “We also have a strong commitment to Aboriginal and Torres Strait Islander suppliers to our organisation but this is not where we need it to be or want it to be so I think that’s the next real opportunity for us,” she said.

Delivering on its social commitments will enhance the reputation of an organisation. Supporting businesses that are helping the community and following their example creates a meaningful relationship of unity where conscience and action can benefit others.

Customers can influence positive change

Nowadays it is commonplace for businesses to commit to the preservation of the environment and help improve society. Companies ask ethical based questions in tenders making it part of the selection criteria. A blue-chip organisation would be expected to be able to extensively answer the following:

·        How do you support the communities in which you operate?

·        How do you promote diversity in your employment practices and supply chain?

·        How do you value human rights and demonstrate compliance with your ethics and non-discrimination policies?

·        How do you ensure your suppliers comply with International Labour Organisation obligations and provide safe working conditions?

·        What are you doing to make your products and operations more environmentally friendly?

As customers we have considerable leverage to influence change with companies responding to the demands of the market. In September 2019, PWC published the document Back to fundamentals - Rethinking our relationship with consumer credit in Australia. According to the report advancements in technology and regulatory changes make it easier for new entrants to seize opportunities in the Australian credit market. Private consumption represents more than 55% of GDP, and household debt more than 190% of income. PWC states “A deeply connected credit provider delivers a compelling experience to customers.” The report recommends that companies “create products that work with human decision-making processes and for the customer’s own benefit, rather than anyone else’s.”

There are many subtleties and different types of vendors but there are typically four types of supplier relationships:

1.      As is - a simple need buying at a point in time, for example buying a pair of sneakers from a sports shop.

2.      Tactical - a periodic need buying from time to time, for example renewing insurance for your car or home.

3.      Relationship based – a significant purchase with a recurring need to buy, for example buying a new car from a garage that you also want to service your vehicle

4.      Strategic partner - a major investment or purchase with an ongoing need to buy or a financial commitment, for example taking out mortgage from a bank or credit union to purchase a home.

Imagine if during the course of a year 1,000 customers each with a mortgage valued at $1 million wanting to refinance their home loans asked the same financial institution about its performance on inclusion and diversity and how they plan to meet their goals. Companies study human behaviour and it would not take long for senior executives that customers representing $1 billion of its home loan market considered inclusion and diversity a serious matter. Asking questions about social responsibility when purchasing can influence and compel organisations to be more socially responsible.

Confidence is a critical component in the sales process with salespeople having to demonstrate belief in the products they are selling. Highly effective salespeople confidently approach potential clients through a prospecting process with an ambitious mindset and no doubts in what they are offering to you. When you think about how and where you buy you understand the extent of your influence and leverage. Adopting the mindset of a conscious buyer and modifying your spending habits helps ensure that your needs and the desired outcomes of a fairer society can be achieved. Fast forward 12 months, will your financial records for 2021 reflect fairness in your buying?