Editorial
The Gist
- DEI rollbacks trigger financial consequences. Trump's Executive Orders 14151 and 14173 eliminated federal DEI programs and created pressure on contractors, forcing major corporations, including McDonald's, Target, Walmart, and Meta to scale back diversity initiatives despite consumer preferences for inclusive brands.
- Boycotts prove more consequential. Target's DEI rollback resulted in nearly $500 million in missed Q1 2025 sales expectations, 12% stock decline, and 10 consecutive weeks of declining foot traffic, while Costco maintained DEI commitments and saw 7% foot traffic growth during the same period.
- Inclusive marketing remains a crucial CX advantage. CMOs must balance political pressures against alienating diverse customer segments who increasingly make purchasing decisions based on brand values alignment.
Our society finds itself at a critical juncture, particularly within the realm of marketing and customer experience. The nationwide boycott of McDonld's and Walmart—planned for August by The People's Union USA over the company's rollback of diversity, equity, and inclusion (DEI) initiatives—exemplifies the complex challenges facing CMOs today.
While DEI initiatives have demonstrably enhanced consumer relationships and internal operations, a growing wave of corporate rollbacks presents a complex paradox for marketing leaders. The challenge for IT and marketing leaders today is to understand not only the intrinsic value of DEI but also the tangible costs of its abandonment, and how to proactively champion inclusive practices amidst political and social pressures.
And here in August, on National Black Business Month, there is no better time to foster this dialogue and help chief marketing officers develop some action steps amid rising political division and pressure on corporations to pull back. CMOs and CX leaders have a critical opportunity to lead with intention—making diversity and inclusion a core strategy for long-term growth and brand credibility.
Table of Contents
- The Unquestionable Value of DEI in Elevating Customer Experience
- The Hidden and Apparent Costs of Retreating From DEI
- 5 Core Actions for CMOs to Encourage Diversity
- Thinking Ahead About Customer Experience While Addressing Inclusion
The Unquestionable Value of DEI in Elevating Customer Experience
Humanizing the Customer Experience Through Representation
DEI initiatives are not merely social endeavors; they are powerful strategic tools that bolster the authenticity of customer experiences. A commitment to DEI creates a better understanding of customers, enabling businesses to empathize with and serve a diverse customer base effectively. This leads to more personalized service and stronger customer relationships, ultimately improving customer retention. A diverse customer experience team can also translate into better access to new markets, helping companies reach previously misunderstood areas.
The Business Case for DEI in CX
Inclusive strategies do more than drive social value — they deliver measurable impact across customer relationships, loyalty and retention.
| Benefit | Impact on CX | Strategic Value |
|---|---|---|
| Team Diversity | Improves cultural competence and personalized service | Helps brands enter new markets with deeper customer understanding |
| Inclusive Messaging | Builds trust and emotional connection with diverse audiences | Drives brand loyalty and advocacy |
| Multilingual Support | Reduces customer effort and increases retention | Captures underserved and growing market segments |
| Diverse Voices in Innovation | Accelerates problem-solving and unique CX offerings | Creates competitive differentiation in experience design |
From Inclusive Marketing to Measurable CX Impact
Beyond understanding, DEI enhances marketing effectiveness and customer trust. When marketing teams reflect diverse perspectives, they create campaigns that resonate authentically with varied customer segments rather than relying on generic messaging.
This inclusive approach helps brands develop community-focused marketing that highlights genuine investment in local services and diverse suppliers. A diverse and inclusive workforce provides multiple perspectives on marketing campaigns, helping brands avoid distasteful messages that could make audiences feel excluded or mocked.
Related Article: Building Customer Trust — Statistics in the US for 2025
Language Access: A Critical Yet Overlooked CX Differentiator
DEI also reduces language barriers in customer service. Many companies in the U.S. primarily offer English support, excluding millions of potential customers. A diverse and inclusive workforce, including bilingual contact centers, allows customers to speak their native language, boosting retention and customer relationships by creating ease and streamlining the experience.
Innovation Thrives Where Diverse Voices Are Heard
Finally, a diverse and inclusive work environment offers additional opportunities for CX innovation. When staff feel appreciated and empowered, they bring a wider range of unique insights and perspectives to the table, leading to more innovative and effective services for customers. This diverse input makes problem-solving and brainstorming quicker and more effective, helping organizations stay ahead in providing personalized customer experiences.
The Hidden and Apparent Costs of Retreating From DEI
When Political Compliance Collides With Consumer Loyalty
Despite these clear benefits, many major companies and organizations have recently scaled back, renamed, or eliminated their DEI programs. President Donald Trump signed two executive orders this year — Executive Orders 14151 and 14173, on Jan. 20 and Jan. 21, respectively — that eliminated DEI programs within government agencies and contractor projects. This created an antagonistic environment, forcing corporations and universities to adjust or eliminate long-standing programs in an appeasement effort.
But as companies altered their programs, they found that those decisions carry significant financial and reputational risks for brands, as Target's recent experience starkly demonstrates.
Boycotts can be effective for social change, such as the 1960 Greensboro sit-ins during the Civil Rights era, where students refused to leave a Woolworth lunch counter in Greensboro, NC. Yet only recently have boycotts proven to be influential on the consumer’s decision to purchase.
The internet era, which has allowed consumers to interact with retailers and brands more frequently, has altered how messaging is managed, especially for brands built on inclusion.
When companies pull back on DEI, they risk alienating a significant portion of their consumer base. A 2022 Harris report commissioned by Google found that 82% of consumers “would prefer a consumer brand’s values to align with their own”. Another 75% of respondents reported parting ways with a brand over a conflict in values.
This reflects a personal connection consumers have to brands, with a shifting number of people seeing themselves directly affected and taking action based on their identity and support for causes.
Related Article: Double up on DEI: The Real Impact on Customer Experience
The Real-World Costs of DEI Rollbacks
Recent data highlights the financial and reputational damage that can result when brands pull back from diversity and inclusion efforts.
| Company | Action Taken | Outcome |
|---|---|---|
| Target | Rolled back DEI initiatives | Missed Q1 2025 sales by $500M; 12% stock drop; 10 weeks of foot traffic decline |
| Costco | Maintained DEI commitment | 7% YoY increase in foot traffic during same period |
| McDonald's | Scaled back supplier diversity programs | Faced week-long boycott and reputational scrutiny from consumers and advocacy groups |
Target's experience serves as a cautionary tale: the company missed analyst sales expectations by nearly half a billion dollars in Q1 2025, with net sales falling nearly 3% to $23.8 billion, down from $24.5 billion in Q1 2024. Foot traffic declined 5.7% year-over-year, and for 10 consecutive weeks following its DEI rollback announcement, Target experienced declining store traffic, down 9% year-over-year in February and 6.5% in March. The company's stock plummeted 12%, erasing billions in market value, while Target revised its sales projections downward, now expecting a "low single-digit decline" for fiscal 2025 instead of the previously forecast 1% growth.
In contrast, Costco, which publicly defended and maintained its DEI commitments, saw its foot traffic rise 7% year-over-year during the same period.
McDonald's now faces similar pressure, with The People's Union USA organizing a week-long boycott claiming the fast food giant went back on its promised investment in diversity initiatives. McDonald’s representatives acknowledge a change in some initiatives, including a supplier program. But they claim the changes will not minimize their commitment.
The Emotional Cost of Broken Brand Promises
The damage from DEI rollbacks extends beyond immediate sales figures. It results in eroding trust, diminished brand perception, and a weakening of emotional loyalty and long-term equity. As Valeria Piaggio, global head of sustainable growth and transformation at Kantar, notes in a Mediapost article on the rollbacks, marketers want to be "loved, trusted and believed in," and this emotional connection, which drives value, is "at risk."
For brands like Target that spent years building a purpose-driven identity centered on inclusion, walking back these commitments "breaks the brand narrative" and "the consumer contract," causing the emotional foundation of the relationship to collapse. This volatility means even a "fringe boycott" can cause "outsized reputational harm."
Moreover, CMOs must recognize the immense purchasing power of diverse consumer segments. Black consumers, according to Nielsen in its latest report, have an annual purchasing power expected to reach $2 trillion by 2026, up from $1.7 trillion in 2024. Organizations like the NAACP are responding to DEI cuts by empowering Black consumers to be intentional about where they spend their money, launching initiatives like the Black Consumer Advisory to highlight companies that promote diversity.
According to eMarketer, a February Harris Poll cited by Axios revealed that 50% of Black consumers have recently stopped shopping at companies with differing political views, the highest among all demographics surveyed. Deprioritizing diversity can leave "significant growth on the table," doing a "disservice to shareholders."
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5 Core Actions for CMOs to Encourage Diversity
In an age characterized by political polarization and corporate appeasement, CMOs have a golden opportunity to proactively embrace actions that reinforce diversity and inclusion as a strategic imperative for sustained growth and brand integrity.
1. Cultivate a Marketing and CX Team That Can Deepen Customer Understanding
The most effective way to understand a diverse customer base is to have a diverse team that reflects their backgrounds and experiences. CMOs should prioritize hiring individuals across all ethnicities, races, ages, abilities, religions, cultures, genders and sexual orientations. This diversity provides invaluable insights, leading to more personalized service and expanding access to new markets.
2. Champion Authentic, Inclusive Messaging While Reaffirming Brand Value With Customers
Customers increasingly align with brands whose values resonate with their own. CMOs must ensure that their teams understand multiple perspectives, avoiding ad messaging that could be offensive. This commitment demonstrates genuine awareness and alignment with consumer priorities like community service and equity. Customers reward that commitment with their customer loyalty.
E.l.f. Beauty, for instance, has leveraged its diverse employee base and loyal following of younger, diverse customers, featuring transgender and non-binary models. According to Black Enterprise, E.l.f. Beauty has seen its stock price increase by over 700% since 2020, building a loyal young customer base that trusts the brand.
3. Invest in Multilingual Support and Accessible Customer Journeys
A significant portion of the population prefers customer service in their native language. CMOs should advocate for multilingual support in contact centers and digital channels, allowing customers to feel at ease and streamlining their experience. This proactive step not only boosts customer retention and relationships but also captures a broader market segment that may otherwise seek out competitors offering such support.
4. Foster an Environment for CX Innovation through Diverse Perspectives
DEI is about recognizing and valuing the unique experiences each individual brings. CMOs should cultivate a culture where all team members feel appreciated and empowered to share their thoughts and unique ideas. This inclusion leads to a wider range of insights, making problem-solving and brainstorming for customer experience initiatives quicker and more effective, ensuring the brand stays ahead of the curve.
5. Oversee Ethical AI/ML Application in Customer-Facing Technologies
As data increasingly represents customer interactions from personalized recommendations to AI-generated models, CMOs must ensure that data modeling technologies apply ethical standards so that inclusion efforts do not begin to operate with the systematic approaches that were used for exclusion.
One way is to advocate for "human-in-the-loop" protocols with AI. The protocol is valuable when AI is used to generate visual imagery. One example is the fashion models of various body types, ages, sizes and skin tones that Levi's is doing with Lalaland.ai. It is crucial that algorithms and datasets do not craft visualizations of people with negative social biases. Brands must ensure the design and deployment of algorithm-based systems avoid discriminatory outcomes.
Thinking Ahead About Customer Experience While Addressing Inclusion
The current environment, marked by both a strong consumer preference for inclusive brands and political pressure against DEI, presents a unique challenge for CMOs.
However, by understanding the proven benefits of DEI for CX, recognizing the costs of retreat and proactively implementing strategies that embrace diversity, CMOs can not only protect but also enhance their brand's perception, loyalty and long-term financial health.
The true business risk lies not in maintaining DEI values but in retreating from them. Even a brand’s perceived retreat from ethics in the eyes of its customers leaves significant future opportunities for building customer trust and fostering great customer experiences on the table.
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