The issue of tax avoidance is hardly a new one. For instance, you may not think the Welsh border-county of Powys was capable of sparking a national debate on the subject, yet in 2015 the small town of Crickhowell (population, 2,801) did.
The Powys tax rebellion attempted to take the town ‘offshore.’ A novel idea, it led to a BBC documentary, extensive national coverage, and even a petition demanding Steve Lewis, a town ringleader, be given a place on HMRC’s board.
With tax avoidance readily in the minds of the public, news that Google agreed to pay £130m in tax was supposed to put questions surrounding the companies’ UK profitability to bed. Instead, it has brought to the forefront of people’s minds the same concerns that the residents of Crickhowell raised: that one set of rules exists for multinational firms, while ‘the rest of us’ pay our share.
Objections were publically raised by the chairman of the Commons Public Accounts Committee, the question was raised at PMQs on behalf of “Geoff”, and it was “not a glorious moment” for the government, according to the Business Secretary. For a few days last week, Google stood on the edge of the same cliff that Starbucks faced in 2012.
The reaction in 2012 was damaging to Starbucks, sure. Yet while 1,000 people from UK Uncut disrupted business across London, there were few store closures, no bricks thrown, and the company continues to operate and expand throughout the UK. The damage, however, has been both deeper and harder to quantify.
Reputation management increases in importance – yet tax gets ignored
The importance of corporate reputation shouldn’t need explaining. It should be no surprise that the 2015 AON Global Risk Management Survey, with over 1,400 respondents including CEOs, CFOs and senior risk managers, ranked damage to brand reputation as the top concern.
This finding is corroborated by consumers, who rank corporate “goodness” as the second most important factor after quality for driving repeat purchases, according to the Brand Goodness Report.
Behind every company lies a product that needs purpose; a justification for people to buy, use, promote and engage with a service or idea. Ethics, or Corporate Social Responsibility (CSR), covers everything from gender equality to charitable donations and, you guessed it, paying tax.
Given the importance of reputation management, and the necessity to combine tax payments with ethical practice, it should be a surprise that Starbucks returns to the news, though this time over The Netherlands fighting the EU over a tax order. For Google, the prospect of an inquiry by The House of Commons Treasure Committee should also be reason to worry.
Damage to reputation is just as potent a risk factor as a sexual harassment case or supply chain failure, so why should tax be ignored? When even Manchester United footballers get coverage for avoiding road tax, the message to corporations could not be clearer:
Companies like Google should feel obliged to cough up. Not just because it is morally right, but because it will not damage business as much as negative front page coverage.
Blog author: @GraylingUK
In the last of our 8for16 trends blog posts we consider how, in an era of instant price comparisons and product reviews, brands must foster direct emotional connections with consumers who expect consideration and customisation at every turn.
Relationship marketing has never been more important and in 2016 art will triumph over science and imagination will matter at least as much as effective data crunching. Given that it’s about five times more expensive to acquire a new customer than keep an existing one and that on average loyal customers make up 20% of a company’s business but 70% of sales, it’s well worth investing in cultivating and keeping them. As it becomes ever easier for shoppers to access multiple providers and switch loyalties on an hourly basis, organisations must show that they are attuned to their needs and willing to give back. In place of personalisation gimmickry will be more meaningful connections with individuals that transcend bespoke packaging options.
At the heart of this will be great customer service – which researchers have shown triggers the same cerebral reactions as feeling loved, sometimes even increasing heart rate. Millennials are looking for a hybrid experience that combines streamlined user-friendly digital options with empathetic solution-focused human assistance on hand where appropriate. Amazon Fire users need only tap the Mayday button to connect face-to-face with their own personal tech advisor. And all organisations will need to become more proactive –listening to social complaints and checking in with customers and letting them know what to expect rather than waiting to hear from them.
Reward schemes will need to be increasingly relevant and personal to encourage consumers to spend more and keep coming back. Harvey Nichols’ new Rewards app is a fast track pass to exclusive personalized perks and stylish money-can’t-buy privileges. As well as rewards, each loyalty tier will have its own set of benefits such as gift wrapping, express alterations and at-home styling. Companies will be looking to splice customer spending data with social media intel to deliver hyper-personalized rewards. Global travel rewards currency, Avios launched a hyper-personalized campaign, ‘Do More with Avios’ enlisting the help of customers’ friends and family to use banner ad spaces to nudge collectors to spend their Avios points on doing things together.
We’ll see Emojis pop up everywhere from menus to feedback forms as companies find more direct and intuitive forms of engaging their audiences at every stage of the purchase cycle.
Emojis are no longer just the language of teens – four in five UK adults use emojis on a regular basis and more than 60% of over 35s identify themselves as frequent users, saying they express their feelings better than words. Aloft Hotels TiGi (Text it. Get it.) Emoji Room Service is designed to meet the needs of its guests who simply have to text an emoji of what they want to the hotel’s front desk and within minutes, the delivery is made. Even Goldman Sachs recently launched its report on the spending habits of Millennials with a 22 emoji executive summary on Twitter.
Targeted experiential campaigns are also on the rise with 87% of consumers saying live events reach them more effectively than television advertising, and 98 percent saying a live event motivates them to buy a product, according to EventTrack. Mobile tours, pop-up stores, in-store experiences, entertainment partnerships and sampling events are joined by direct to consumer activities such as Uber bringing kittens in need of a home to meet stressed out workers in need of a cuddle. Gen Y and Z in particular want memorable on-brand experiences that provide them with personal content to share online. This Christmas Burberry is allowing customers to star in and share a personalised version of its Christmas ad alongside celebrities such as Elton John and Naomi Campbell via the “The Burberry Booth” at its flagship Regent Street store.
Ultimately trust – in 2016 more than ever – will be dependent on delivering great brand connections and genuinely personal experiences at all stages of the customer journey.