Opinion

Social responsibility helps mortgage lenders connect with millennials

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General Mills has committed to sustainable packaging and ethically sourced ingredients for their food products. Warby Parker has become a household staple for eyewear, in which every pair of glasses sold provides another pair to someone in need. Fashion companies, like Everlane, tell consumers exactly where and how their clothing is produced.

The largest companies in America are building their businesses by leading with social impact and cause marketing. John Mackey, CEO of Whole Foods, is quoted in a well-known statement about the evolution of social enterprise as saying: "I believe our philosophy of conscious capitalism will eventually be widely adopted primarily because it is a better way to do business." Modern business is social entrepreneurship, meaning it has a double bottom line of both profitability and impact.

Millennials and Generation Z consumers are enforcing the double bottom line by voting with their wallet. "More than nine in 10 millennials would switch brands to one associated with a cause," according to a 2015 study by Cone Communications. In addition to appealing to millennials, cause marketing is often crucial to building trust in underserved communities. Communities of color, particularly Latino and African-American, were hit the hardest in the financial crisis of 2008, many of whom were the victims of predatory lending. Housing-related companies must work extra hard to gain the trust of an apprehensive market.

In a time when most mortgage lenders are tightening their budgets, it can feel counterintuitive to consider social impact initiatives as integral to a company's business model. However, today's consumers are raising the bar for corporations across the world, demanding that companies maintain ethical behavior, inclusive and sustainable business models and transparent marketing in order to get their business. Applying social impact strategy to a product, like Cheerios, shoes and clothing may be straight forward. Companies in the housing industry require more strategic consideration of community partnerships, authentic messaging, and employee engagement to effectively emulate this model.

After assessing cause marketing strategies led by the fastest-growing companies, the most successful approach includes social impact as a prominent part of their brand, along with key community partners.

All businesses solve problems. A cause marketing campaign or social impact strategy makes this problem solving central to the brand. Choosing a "cause" or purpose for an impact strategy can also be as simple as understanding the core value being offered to consumers and building a strong company culture around it.

For example, Alterra Home Loans has grown in the U.S. Hispanic community, after being built as a response to the housing crisis that devastated this population. Alterra's founder and CEO, Jason Madiedo, explained, "Our mission is central to everything: build wealth through homeownership." Their approach to underserved markets taps into a fast-growing segment of consumers, while simultaneously solving a serious social issue.

The average wealth of Hispanic households in the U.S. is $20,700 in comparison with $171,000 average wealth of non-Hispanic white households. "We've created a culture that caters to the unique needs of our community," says Madiedo. This mission continues to drive their business forward, as they recently announced their #OneMission campaign, in which they encouraged people to sign a pledge to move this mission forward together. The social impact narrative is clear at every area of the company’s messaging and product.

Even individual salespeople such as loan officers and title agents are leveraging social impact as a competitive differentiator.

Implementing a cause marketing strategy is most successful when a business partners with a community organization, particularly one that aligns with the company mission. For example, Wintrust Mortgage partnered with Chicagoland Habitat for Humanity in 2017 to finance a four-year $40 million project in below-rate mortgages for affordable housing. This initiative has been so successful for Wintrust that it has expanded its partnership to Milwaukee. The relationship creates both social impact and profitability in largely underserved areas.

Companies may choose to partner with community leaders, advocacy groups, housing counseling agencies, or others who are active in underserved markets. These relationships may involve co-hosting events, establishing volunteer days, offering financial support, or creating a channel for internships or job hiring.

Companies often make the mistake of placing these partnerships or initiatives in a philanthropy-only box. Or they may be a box to check to fulfill the Community Reinvestment Act. To be successful, initiatives should be central to the company's marketing strategy, in which the brand invites its consumers and employees to join them in supporting a cause.

Ultimately, to be effective both in profitability and social impact, companies must tie the partnership back to the brand and craft a story of connection with the community and purpose. Many companies are "doing social impact," but they're not tying it back to the brand or marketing strategy. To maximize profitability with impact, it needs to be a team effort. Marketing departments, PR consultants and leadership should be in tune with impact-oriented messaging and initiatives to effectively communicate them through their channels.

While a social impact strategy may seem like a "nice thing to do," it is crucial to winning more business, particularly with today's young consumers. Companies who integrate the double bottom line approach into their business model through a strategic approach will experience positive returns for all shareholders involved.

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