Sales Down $465 Million: Are You Listening to Your Customers?

Author: Bianca Y. Tyler

Instead of always being on the receiving end of an embargo, some companies are actually participating in consumer-led boycotts with surprisingly positive results for the image and bottom line of the companies involved.  

Executive Decision’s 2006 article on the efficacy of boycotts concluded that their effectiveness is solid. Traditionally, embargos turn a large enough number of a company’s customers against it that the company feels forced into changing whatever policy caught the ire of the boycott organizers and, in turn, of other customers. Being on the receiving end of a boycott is an unenviable position for a company to find itself in. Company reactions to boycotts vary from case to case, but until recently, there’s one thing almost none of them did: Join the boycott.

Boycotts that lend themselves to corporate participation are about as new as a corporate environment in which any company would be willing to consider joining a boycott.

Interactions between corporations and public interest groups have come a long way in recent years. The Internet makes information sharing easy and increased transparency on the part of companies is a demand few are able to resist. Corporations spend more time positioning themselves, their policies and their brand for public consumption because of the Internet. Better to define oneself than to find oneself defined by an adversary. 

Another key change, not unrelated from the first, is that corporate social responsibility is part of the mainstream. Expectations from customers and investors have steadily increased across the last decade that companies meet a growing list of social and environmental standards. A growing number of corporate CEOs have embraced these demands and worked hard to carve an impressive market niche for their companies built on explicitly championing the environmental, political and social values they share with customers.

Advocacy groups have come to see that in this new environment, participatory engagement with companies is—depending on the situation and context—an important part of their corporate outreach toolkit. These days, many consumer action campaigns are run with clear-cut organizational precision. 

The lines are blurring on both sides of the equation. Some of the CEOs whose corporate policies interest groups are seeking to change were activists in their youth and have some sympathy to the passion and hope exhibited. Sometimes they agree with the changes being requested and sometimes they don’t, but one thing is working in everyone’s favor:  They are much closer to understanding each other and to understanding the mutual gain through constructive engagement with each other than their predecessors. 

In this context, a tentative new boycott model is springing up. 

Under this model, advocacy groups invite companies to join them in boycotting products from a third-party until such time as that third party changes its policies. Rather than “penalize” a store for selling a given product to send an economic message to a third party, under this model shops are invited to join the consumers in sending a message directly to the party whose behavior the interest group is seeking to change. Retailers who join pledge to stop selling the product until such time as the producers of those products change the behavior found to be objectionable to the advocacy group. Once the third party changes its policies, the boycott comes to an end. Then with full blessing of the consumer interest group, the company resumes sales of products made by the third party.

A prime example of such a boycott is the Canadian Seafood Boycott currently underway across the United States sponsored by the ProtectSeals Campaign of the Humane Society of the United States (HSUS), based in Washington, D.C.   

What Makes the ProtectSeals Boycott Such a Dynamic New Model?

In a nutshell, it’s business-friendly. Instead of boycotting U.S. businesses, it’s calling on companies to join in on the boycott of Canadian seafood. It is premised on the fact that baby harp seals are killed by Canadian fishermen who make the large majority of their income catching and selling fish and a very small portion killing and skinning seals.  And the companies are asked to take a progressive, ethically-based position against the wasteful commercial slaughter.

And here’s another interesting twist: Companies are joining and the results are dramatic.

By March 2008, the number of signed pledges has skyrocketed to more than 545,000 up from 280,000 two years ago. In addition, 3,500 restaurants, grocery stores, casinos, resorts, hotels and seafood suppliers have joined the boycott, shifting their seafood purchasing policies in protest to the seal hunt. The companies have pledged that they will not reverse these changes until Canada ends the hunt for good. (The organizers of the boycott take no issue with subsistence hunting.) Some of the many well-known companies that have joined include Whole Foods Markets, WinCo Foods, Trader Joe’s, Jimmy Buffet’s Margaritaville Cafes, Ted Turner’s restaurant chain, Ted’s Montana Grill, and Legal Sea Foods.

None of this happened by accident. 

From its inception, it was the intention of the boycott’s organizers to involve businesses in the embargo. In early 2005, after years of negotiation with the Government of Canada failed to bring the commercial seal hunt any closer to an end, the HSUS and a coalition of some of the world’s most respected animal welfare organizations gathered together to explore the next steps. 

“Boycotting was the last thing we wanted to do, but after all other options had been exhausted, we reluctantly concluded that short of a boycott, we’d never end the hunt,” explains John Grandy, executive vice president for the Humane Society of the United States. “The Government of Canada had made plain to us that they’d only end the seal hunt if the fishing industry asked for it, and fishing industry insiders made it clear that Canada’s fishing industry would only give up the seal hunt if it had an economic incentive to do so.”

The Government of Canada’s decision to leave the fate of the hunt in the hands of Canada’s fishing industry was a shrewd political calculation. Despite its minimal economic contribution to the sealing provinces, Canadian politicians have long feared that ending the hunt would anger voters in these provinces. Politically, it’s easiest to do what your constituents want. If the fishermen want the seal hunt to continue, it’ll continue. If they want it to end, then Ottawa will end it. This equation saves Ottawa from political fallout. 

 “The men who participate in the commercial seal hunt earn 95 percent of their income from seafood and only 5 percent from killing seal pups. If forced to choose between these two income streams, we had no doubt they’d give up the seal hunt to protect their seafood income,” explains Patricia Ragan, director of the ProtectSeals campaign.

The catch is that consumers buy seafood in small quantities and don't always know where their seafood comes from. In contrast, the restaurants and grocery stores from whom Americans buy seafood know exactly where their seafood comes from. According to figures from the National Marine Fisheries Service, about two-thirds of the money Americans spend on seafood is spent in restaurants. This makes restaurants critically important buyers of seafood. Americans spend less of their seafood dollars in grocery stores than in restaurants, but the amounts spent are not insignificant. If restaurant and grocery stores owners could be convinced to join the ProtectSeals boycott, the Humane Society reasons, the impact of the boycott would be greatly amplified.