Earlier in 2019, online furniture retailer Wayfair made what could be considered a solid yet otherwise unassuming corporate sale: a $200,000 order for office furniture to a US government agency.
The problem was that the buyer was the US Immigration and Customs Enforcement agency, which had become controversial in the US for its actions at the US-Mexican border, particularly its practice of separating undocumented immigrant children from their parents and holding them in cages. Wayfair’s employees discovered the sale and promptly staged a walkout. Perhaps worse from the company’s perspective, the walkout caught the attention of the media and a boycott of the company was triggered.
Wayfair, an international company with headquarters in the US and Germany, did what it could to calm the situation and made a $100,000 donation to the Red Cross, with the funds to be used to help with the border crisis in the states of Texas, Arizona and New Mexico.
Taking a position
Wayfair is not the first company to get caught up in the intensely polarised landscape in the US and it is unlikely that it will be the last. The US populace has become sharply divided along political lines, with disagreements even spilling over into their shopping patterns. Increasingly, American consumers are pressing companies to take a stand on the issues of the day, such as immigration and climate change. In an even more recent development, employees such as those at Wayfair have begun applying pressure on employers for similar reasons.
This situation has long been in the making but tensions were ratcheted up with the election of US president Donald Trump. “Political polarisation is extraordinarily high in the US and it is likely to increase further with the talk of Mr Trump being impeached,” says consumer psychologist Bruce Sanders of Assessment Resources.
Mr Trump has taken an unusually active role in the US business community, using his position to make it clear to companies exactly what he expects of them. To name one example, in August 2019, in response to China slapping $75bn of retaliatory tariffs on US goods, Mr Trump ordered US companies, via Twitter, to start thinking about leaving China. He had the authority to do so, he said in a further tweet, under the International Emergency Economic Powers Act of 1977.
It can be a bewildering landscape for companies to navigate, especially foreign-based companies in the US. They must walk a fine line of not angering the US president and his fan base, while also keeping in mind that a significant portion of the US population dislikes Mr Trump and his policies.
On a tightrope
This balancing act is exacerbated when regulations come into play. The Trump administration has been remaking numerous regulations in its image and more than once, foreign companies have been caught in the crosshairs.
For example, in July 2019 BMW and Volkswagen joined Ford and other US automakers who supported the state of California's efforts to set fuel economy and emissions standards that were higher than those proposed by the government. The administration retaliated, launching an antitrust investigation and then later revoking California’s authority to set the standards. The state is suing in response.
A similar dynamic played out when the Trump administration revoked regulations on methane gas emissions from oil facilities. BP and Royal Dutch Shell were among the oil companies that voiced opposition.
None of these companies, both domestic and foreign, have much influence or control over these events. The most common response is to register objections when possible, placate the US president when necessary, while also making overtures to his critics.
There are some steps companies can take, however, to make sure they are in the best position to react to events, starting with keeping up to date on events, according to Robin Lee Allen, managing partner at Esperance Private Equity, which has offices in New York, San Francisco and Paris.“This means not only being aware of market trends, but also the general consensus around national interests,” he says.
Knowing the players and their histories is equally as important, Mr Allen adds, saying: “It will not serve a technology company to know the background of the American president while remaining ignorant about the forces that shaped the outlook of the Chinese premier. Likewise, a shipping company will want to be apprised of developments in Greece, Malta and Panama as well as the US. All relevant factors should be taken into consideration.”
Another step that companies should consider is banning political talk in the workplace – something that Google recently did, to some controversy, according to Morgan Taylor, chief marketing officer and financial adviser at online financial services site LetMeBank. “It creates a toxic and tense professional environment where co-workers become enemies, which damages productivity,” he says.
Companies might also want to delve into the psychological profiles of their likely audience, says Mr Sanders. “Foreign parents of US companies are almost surely aware of the polarisation, but may not be sufficiently aware of how to appeal to Republican or Democrat customers without the risk of blatantly labelling themselves as embracing one or the other party,” he adds.
Know your customer
Republicans and Democrats tend to have distinct psychological profiles and these can be used by companies to cement their loyalty, even – and especially when – the national discourse gets ugly, says Mr Sanders. For example, Republicans prefer to have decision making decentralised. They think of political leaders as reliable and practical, but as not paying enough attention to what is best for the locals, he explains. Democrats see politicians as intelligent, empathic and interested in individual needs, so they are more willing to grant centralised authority.
Republicans, more than Democrats, are typically more likely to fear for the future of free enterprise and react to fear-based ad campaigns, while Democrats tend to respond to smiling reassurance. “Competence over intelligence is favoured by Republicans, while intelligence over competence is favoured by Democrats,” says Mr Sanders.
This may sound like hocus-pocus to some observers but even if they do not accept such theories it still always pays to profile your customer base, according to marketing expert Christine Michel Carter. ‘Bucketing’ your audience based on their shared characteristics, attitudes, beliefs and behaviours is not only cost-effective, but it also makes consumers feel as though the company is talking directly to them, she says – which, given the current political environment, may be the best course of action of all.