Why Politics is Bad Business

Today, Reebok decided to make a political statement about the President of the United States of America. President Trump complimented French President Emmanuel Macron’s wife, and as with everything these days, it instantly created a split left/right narrative. Reebok jumped in on the action with a graphic scolding the President for what he said.

http://archive.is/Deg7U

Now generally speaking, people on one side of the aisle will love a political statement and people on the other will detest it. Those in the middle will usually either ignore it, or be annoyed by politics entering their life.

Why is this bad for business? Because of how people remember things, and how it affects their decisions. Negative things create stronger memories than positive things, it’s just how people work. It’s one reason that so many political ads are negative ads, and why they’re so effective. So a political statement from a company will have a stronger effect on those that dislike it than it will on those that like it.

Most companies’ potential markets are spread across various socioeconomic groups, and are not restricted to one side of the political spectrum, unless their product or service is somehow tied to politics. Even if their customers are split unevenly along political lines, they still have a vast number of potential sales on either side.

When a company takes a political stance, they have a chance to alienate any customers on the opposite side of their stance, as well as garner some support from those that like it. The political teams in the USA are approximately even, so it’s safe to assume that a similar number of people have negative and positive reactions to the statement.

However as we discussed, the negative reaction to the statement will usually be stronger than the positive reaction, unless somehow it’s crafted in order to not offend one side or the other. (Something that is becoming more and more difficult to accomplish) The people that are unhappy with what is said will remember it longer, and likely be more influenced by it when they decide on purchases from a company. In some cases where it is a very strong political stance, it could drive many potential customers away from the company permanently.

Brand loyalty is important to a company, and losing it costs far more than a single sale. (Particularly with markets that are subject to trends and fashion.) It is also harder to persuade someone to switch their brand loyalty unless they have a negative experience with a company. This is the reason that Amazon is popular, especially for their customer service. Negative experience drives customers away permanently, while positive experience is not guaranteed return patronage. Amazon works to ensure as little negative experience as possible.

Hypothetically, we will assume that this is a strong statement on Reebok’s part, with a very strong influence. Reebok could lose most of the sales from people on the political side they offended, but those numbers are not likely to translate into new sales from the side they supported. The customers that are driven away may never return due to negative feelings towards the company, and also due to brand loyalty towards whomever they bought their new shoes from.

People on the political team that the company supported will not be as influenced (negative is stronger than positive) towards the company, nor will they remember the stance taken for as long (negative memories last longer) as those offended. They also still have brand loyalty towards their current purchases, and unless the other company has dissatisfied the customer that is still a major hurdle to overcome to convert them into sales. This translate into fewer sales gained versus those that were lost.

Alienating a portion of your customer base for any reason does not translate into an equivalent number of new sales from potential customers. Politics is not profit.