Why Companies Must Build Trust With Transparency
What is most important to modern consumers? Today’s market demands more than just a quality product at a competitive price; it demands companies build trust with transparency.
Consumers want brands they can trust. In fact, a recent study from Label Insight found 94 percent of consumers will be loyal to a brand which offers transparency. Even more eye-opening is 73 percent of respondents said they would be willing to pay more for products which offer complete transparency.
Why is transparency so important? Transparency builds trust.
Customers trust companies who are transparent about the what’s, why’s and how’s of their product and their manufacturing process. CMO put it this way:
“Trust bestowed by the consumer can not only make or break a business, it can also ensure you survive a problem in the future.”
Consumer trust is a brand differentiator which is critical in an environment where consumer expectations and competition increase exponentially daily.
Transparency is the catalyst to trust. Customers must feel like “what they see is what they get.” Maintaining transparency must be an integral part of corporate reputation management -a corporate focused version of online reputation management also known as ORM.
Why Consumers Care About Transparency
Sadly, trust is at an all-time low in America. According to the Edelman Trust Barometer, only a third of the respondents in the U.S. trust their government “to do what is right.” That’s a drop of 14 percentage points from 2017. Only 42 percent trust the media. Trust in business and non-governmental organizations dropped by 10 percentage points in just one year. Edelman has been doing their global research for 18 years and have never seen such substantial drops in trust.
Out of the 28 countries surveyed, the U.S. is home to the least-trusting informed public. Less than a decade ago, Americans witnessed a global economic crash, which was largely blamed on greedy and deceitful business practices, especially among financial institutions. The Edelman report noted, “it’s gotten much harder to discern what is and isn’t true, where the boundaries are between fact, opinion and misinformation.”
All industries have experienced a trust crisis. Uber. Facebook. Equifax. Target. It’s not unusual for our most trusted brands to fail us. Remember in 2010 when Toyota had to appear before the House Committee on Oversight and Government Reform to apologize for safety issues which killed 19 people? Or, who could forget when two peanut butter company leaders received prison sentences for practices resulting in salmonella poisoning which sickened more than 700 people and killed nine? This led to a lot of bad pr which is why all of these companies had to use online reputation services to mitigate the damage to the company.
Simply put, American consumers have trust issues which aren’t unwarranted.
Authentic Communication is Key
Seventy percent of consumers just don’t trust advertising, according to research published by Marketing Week. Why? “Big business scandals and arrogance around brand purpose.”
What does “arrogance around brand purpose” mean? Simply bragging about your product and making big promises is not the advertising approach which connects with consumers. They want words backed up by actions. They want transparency about their products from credible sources. Therefore, authentic communication is key. Here are two ways to accomplish that.
Today’s consumer doesn’t believe what a paid actor says about a product. Focus on teaching customers, not just talking to them. Build trust in your products and services by speaking candidly about them, including their limitations. This will help customers feel you are not trying to hide any defects.
Use brand ambassadors to teach consumers what your product can do and what it can’t. Brand ambassadors are more than just a celebrity giving you an endorsement. They are people who are truly passionate about your brand. They will not just talk about how great your products are, they will teach other customers how to use them.
An Example in Teaching Through Transparency
As Americans are adopting more healthy lifestyles, they are incorporating more fruits and vegetables in their diet, many even becoming vegan or vegetarian. Dole Food Company wants to reach this audience to promote its many frozen fruit options. Frozen fruit, however, isn’t as desired as fresh for this audience. Dole could launch a series of advertisements promoting their products.
However, a better way would be to enlist the help of brand ambassadors. Dole searches for credible social media personalities who focus on a healthy lifestyle and have over 5000 followers. They identify their top three.
These ambassadors are given free products to try, and might even be paid. They, in turn, post pictures of luscious smoothies made from Dole frozen fruit. They tell their audience why they like Dole products (i.e. easy to use, convenient, no sugar added, always top quality).
Followers are excited to learn about new recipes and techniques for incorporating more fruits into their diet. Dole builds trust with this coveted audience. The brand ambassador loves getting promotional products and getting paid for simply maintaining their Instagram account and showcasing their inherent love of the product.
Companies across industries can use this technique. Strategize educational topics you could teach your consumers, and find ambassadors to do the teaching. CEO of JVZoo Laura Casselman says:
“Your product may create satisfied customers, but educational content creates the kind of cheerleaders who will outsell your sales team by a 10-1 ratio.”
Greater transparency leads to increased trust, which gives you greater sales.
Transparency is more than just revealing your hand. It’s about listening to feedback, even if it’s negative.
This is where brand ambassadors are especially effective. Using the example above, Dole’s brand ambassador is promoting the product in an open forum. Followers all across the globe can provide feedback. This feedback, when positive, works to validate the ambassador’s claim.
Let’s say a follower posts a question about where Dole sources its produce. Does it come from organic farms? Is it produced in the U.S.? These questions serve four main purposes.
First, they provide invaluable insights for Dole. The company can find out what concerns their customers the most. They can adjust their sourcing or manufacturing process based on the feedback and draw more attention to sustainable practices they already have in place.
Second, asking questions in an open forum tells customers Dole is not afraid to reveal their practices in a public setting. It gives the perception of transparency. Surely, a company would not open the door to comments if they had something to hide.
Third, Dole may stumble upon future ambassadors from the positive comments.
Lastly, Dole can get valuable feedback for future products. Customers may ask for specific fruit mixes for Dole to consider. Listening to customer feedback creates a partnership-based relationship. Customers feel invested in a company which takes their feedback and concerns seriously, and they trust a company which allows everyone to see the feedback and concerns of others.
Be Transparent with Employees Too
Building consumer trust starts with building employee trust. If employees feel company leaders are not trustworthy, customers will pick up on the perception. Just as is true with building consumer trust, transparency is key to building employee trust.
How are companies doing in this area? One global survey of nearly 10,000 full-time workers found the following:
- Only 46 percent have a “great deal of trust.”
- 39 percent have “some trust.”
- 15 percent have “very little” or “no trust at all.”
Researchers found a high level of trust was associated with happier employees, higher quality work, and more engaged and productive employees. Employers who instilled trust also had employees who stayed with the company longer and recommended the company to others.
Do you consider employee opinions in your corporate reputation management strategy? Here are four behaviors leaders can cultivate to build trust with transparency.
1. Be Unambiguous
Company leaders must be specific when communicating direction. Ambiguity sends a perception of secrecy (the opposite of transparency), which drives mistrust and skepticism. Be clear and direct with the company’s vision and direction. Help employees clearly see their role in the vision. This makes them feel engaged and builds loyalty.
2. Don’t make promises you can’t keep
Don’t make false promises in order to motivate employees. If company leadership makes a promise, be ready to deliver. Failing to deliver a promise violates trust and makes employees think, “what else are they hiding?”
3. Delegate critical tasks
Delegation sends the message you trust your employees, which employees will reciprocate. In addition, it makes employees feel like they are in the “inner circle.” There are no secrets because you have empowered your employees with knowledge to complete leadership tasks. Even those not delegated to will notice this shift in power, decreasing the perception that all tasks are completed by a select few with secret knowledge.
4. Keep the lines of communication open
Just as “listening” was key to maintaining transparency between companies and consumers, it’s also critical to building trust through transparency between employers and employees. Employees have valuable feedback, both about company culture and customer needs. Tap this powerful voice by creating opportunities to gather feedback, whether it’s in-person or via an employee portal.
Treasure the Benefits and Maximize the Pitfalls
Trust is the No. 1 benefit of transparency. However, there are numerous benefits trickling down from there. Loyalty, from both employees and customers, is the backbone of success for any company, regardless of industry. One report noted the link between transparency and loyalty. Ninety-one percent of customers said they were more likely to trust companies with their personal information if they were transparent about how they will use it to improve the customer experience. In turn, 95 percent of customers said they are more likely to be loyal if they trust a company. Ninety-three percent said they were more likely to recommend companies they trust, and 92 percent said they were more likely to buy more products and services.
Forbes explains another lesser known benefit of transparency, greater efficiency. How so?
By spending less time talking around the limitations of your products, sidestepping your customers’ concerns and embellishing your results, you save time for more productive work.
Invest time fulfilling customer needs instead of covering up or making excuses for shortfalls.
With all its benefits, transparency does have its pitfalls, however. It’s not easy to wear the white hat. Transparency requires you always take the high road, offering the whole truth even when it’s not positive. Being transparent means you are vigilant, always fact-checking to stay ahead of the controversy.
Transparency Highlights Your Flaws
You will likely receive push-back from industry peers and other leaders within your organization. However, maximize this pitfall by setting yourself apart from the competition. Using the tips above, build a positive corporate reputation, earn loyalty and establish market dominance.
Being transparent can also be a pitfall because it exposes your shortcomings. However, you can maximize this pitfall too. Consider the example of Airbnb and how they saved their reputation when accusations of discrimination arose. Note, it was transparency which opened them up to criticism, but it was also transparency which saved them. The transparent nature of their business allowed the home-sharing platform to undergo scrutiny from Harvard researchers. In 2015, Harvard released a report revealing travelers with “distinctively African-American names are 16 percent less likely to be accepted relative to identical guests with distinctively White names.” At the same time, social media lit up with negative experiences from African-American travelers, and numerous lawsuits were in the works.
Use Criticism as a Chance to Build Even More Trust
Instead of dodging the problem or becoming defensive, Airbnb proactively addressed it to build trust with transparency. Later, its CEO and co-founder Brian Chesky released a statement of apology, acknowledging the company was too slow responding to the issue. Then, Airbnb hired Laura Murphy, director of the ACLU’s Washington Legislative Office to perform an audit. It ended up being 32 pages, outlining how Airbnb failed to prevent discrimination and measures to put in place to discourage discriminatory behavior. The company publicly launched a campaign of inclusion, climaxing with an ad during the 2017 Super Bowl. So, their quick reaction, willingness to hire an outside expert, and publish her findings gave the public the perception Airbnb was being transparent. Did it work? Well, last year Airbnb reported $2.6 billion in revenue and $93 million in profit.
In conclusion, building trust must be a priority in today’s competitive environment. Markets used to provide consumers with a handful of brands, and now have a global mix of hundreds of brands to choose from. Before making purchasing decisions, customers want to know who they can trust. Build a trustworthy reputation through transparency. Contact the team at Reputation Sciences™, a reputation firm- to learn more about successfully managing your corporate reputation with their many online reputation services.