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Towards a new model of transparency in business

Toward a new model of business transparency

By Jamie Gilpin / September 19, 2018

Everyone knows that truly “cool” brands don’t ever call themselves cool–they just are.

I think the same is true of transparency. Brands that wish to communicate transparency (which should be all brands) shouldn’t say it–they should live it.

The reasons are obvious. Your company can say, “We value transparency,” but that doesn’t really hold much water if your business practices suggest otherwise. Without action, “transparency” is just another buzzword that marketers throw around.

But the payoff is huge for those brands willing to put in the work. Our latest “Brands Get Real” report found that 85% of people are more likely to give a business a second chance after a bad experience–and stick by it during a crisis–if it has a history of being transparent. Unfortunately, only 15% of people believe brands are actually delivering.

So where’s the disconnect? Some businesses just don’t know where to start. Others are still relying on outdated, ineffective solutions.

Then there are the well-meaning organizations that make transparency the responsibility of marketers and customer service representatives to own in a silo. What these companies don’t realize is that transparency goes so much deeper than a campaign or customer conversation, and that every member of your brand has the power to drive (or curb) honest communications.

Plus, people are smart. They see right through (pun intended) transparency as a marketing initiative. When Wells Fargo released a new ad campaign to help improve their image and reassure their customers after a massive scandal, it was met with widespread criticism. Many viewers felt the messaging was insincere and inauthentic, and could have benefited from the presence and humility of an actual company executive vs. vague rhetoric.

But while consumers define transparency primarily as being open, clear and honest, every business leader needs to decide for her/himself what this will mean in practice for their brand. That’s why leaders need a plan–a roadmap to define what functional, actionable transparency looks like for their entire business.

Strategy #1: reactive transparency

“We know there’s an issue, and we’re working to resolve it.”

This is the most basic approach to transparency, but don’t discount it. When faced with a public recall, challenge, scandal or PR crisis, your response matters.

Many brands still heed the historically cautious advice to lay low and keep quiet, but they need to start rethinking their strategy. Paul Holmes, founder of The Holmes Report, an annual list of the worst PR crises, believes, “the brand’s response is a bigger contributor to the overall result than the initial problem.”

So what makes a good response? 89% of people say a business can regain their trust if it admits to a mistake and is transparent about the steps it will take to resolve the issue. And 56% say they want that transparency on social–more so than traditional communications channels like print ads or email.

But past headlines suggest this may be easier said than done. In 2017, after a video of a passenger getting dragged off a United Airlines flight went viral, the company’s CEO added fuel to the fire when he first apologized only for having to “re-accommodate” customers. Both the public and the people affected wanted a genuine apology, but received what many saw as a non-apology instead.

The lesson here is that there’s a difference between apologizing and actually admitting to a mistake and accepting responsibility for the situation and its rectification. This requires a big dose of humility and an even bigger dose of humanity.

Contrast United’s response with that of T-Mobile CEO, John Legere, in the wake of the Experian data breach. While the breach was not T-Mobile’s fault, Legere did accept responsibility of informing and reassuring customers, as well as providing resources to monitor and manage any potential problems. But it wasn’t just that he offered details and information, it was the sincerity of his response that resonated:

“Obviously, I am incredibly angry about this data breach and we will institute a thorough review of our relationship with Experian, but right now my top concern and first focus is assisting any and all consumers affected. I take our customer and prospective customer privacy VERY seriously. This is no small issue for us.”

And he didn’t stop there. After the statement went live on the company website, Legere tweeted the link to his own personal Twitter account and then proceeded to personally answer customer questions. Even after a T-Mobile Help Twitter account took over, the CEO continued to post updates and further responses well into the late evening.

The statement alone was good, but it was the personal response and open communication with a top executive that put T-mobile’s dedication to transparency on full display.

Strategy #2: preemptive transparency

“We’re making a change or decision that we know not everyone will love or agree with, so here’s the thought process behind it.”

Brands that want to more deeply commit to transparent practices won’t wait until the you-know-what hits the fan. Preemptive transparency means identifying questions or issues that may arise before someone else makes them public and getting ahead of the message.

This requires brands to elevate both their own self-awareness in order to identify or predict potential issues, as well as their empathy in assessing how those issues may affect those around them (including both customers and employees).

It’s important to call out that sometimes people just want a little context or explanation. Not all changes your company makes are going to cause outrage, but some may cause confusion or division among your customers. In those instances, transparency goes a long way in ensuring that confusion doesn’t turn into backlash.

Executing a preemptive transparency strategy is similar to a reactive one, except you’re choosing to get ahead of the conversation by anticipating your audience’s reactions and preparing additional messaging accordingly. So you first give people a clear window into what’s happening and second need to provide a well-prepared plan for action and ongoing communications.

And sometimes it may even mean righting–and reporting–your own wrong. Take Lush Cosmetics for example. In the summer of 2018, Lush publicly revealed that an internal investigation had uncovered the company had been unknowingly under-paying thousands of retail and manufacturing workers over the course of eight years.

While it would have been easy to keep the whole thing quiet, or deflect blame to the “serious payroll system errors” that occurred, instead Lush Australia director Peta Granger publicly apologized saying, “We are deeply sorry to our valued staff and customers that we’ve failed to uphold the values that we have always believed in and the high standards that we’ve always sought to achieve.”

But the company’s response didn’t stop there. Remember there are always two parts to these strategies. Clueing people in and giving them the most helpful information is the first step, but then you also need to be transparent about your plan and/or vision for the future.

Granger continued, “”Whether it’s $1 or $1000, we are committed to connecting with every employee who’s been affected by our mistake. We are doing everything in our power to pay the money we owe as quickly and as transparently as possible. We know we’re far from perfect, but we always strive to do the right thing.”

Not only was the apology human and sincere, it came from a top company executive who accepted responsibility and promised to make things right no matter the cost.

Strategy #3: proactive transparency

“This is important to us, and we know it’s important to you, so here’s a look inside one of our factories or where we source our ingredients.”

While reactive and preemptive transparency are both important, transparency isn’t always just about crisis management; it’s also about trust.

Brands seeking to create a strong foundation and reputation of trust and transparency should start employing a more proactive strategy now, by actively providing insight into the behind the scenes of their business.

Building trust takes time. It’s not enough to simply be open during an isolated incident. Brands must become an open book, shedding permanent light on traditionally proprietary topics like employment practices, business operations, pricing decisions and more. These are the issues about which people want more information. 46% of people want brands to be transparent about their employment practices on social and 53% want brands to be transparent about product or service changes–and the same number want transparency around company values.

Brands that employ this strategy not only meet–and in some cases exceed–today’s heightened transparency expectations, but they also open up more opportunities to create real connection by sharing their own brand beliefs and values.

And while proactive transparency allows brands to showcase what they care about, it also demonstrates to the public that they also care about people and the issues most important to them. It’s really to say, “Hey, we know this is an issue you care about. We do too. Here’s everything you might want to know about how we handle it.”

Patagonia does this often as they remain faithfully dedicated to environmental and social activism as a core component of their brand. In an effort to better communicate their sustainability efforts to their customers, Patagonia created The Footprint Chronicles, an interactive digital experience that allows people to follow their supply chain and trace back the origins of the jacket or t-shirt that want to buy–even as far as the farms where the cotton was grown.

Patagonia places a high value on sustainability, and they also know that the general public is now starting to as well. This transparency allows them to both live out their brand and also connect with those consumers whose beliefs and values align with their own.

Another winning aspect of The Footprint Chronicles is the medium. Some brands think to demonstrate transparency all they have to do is publish a few annual reports. But as Forbes Contributor, Solitaire Townsend, puts it in her article on the evolution of brand transparency, “Young consumers are transforming the definition of trust in ways most companies are only starting to understand. Institutional processes like audits are losing relevance.”

When Patagonia set out to better communicate their sustainability efforts, they knew they had to do better than a single CSR report. When the brand ultimately decided to create a series of highly engaging videos, they tapped into what people reported as the most transparent content format on social.

But this isn’t the first transparency initiative for the brand. After years of social and environmental activism from the very start, Patagonia is now the gold standard for brands living out their values and purpose.

By making transparency a habit first it will naturally become a part of your brand. For brands looking to create real connection, true transparency must become an overarching business pillar–even when the focus is on social. Channel investments deliver the best results when they’re holistic. So make a plan. First, define what transparency looks like for your business. Then decide on a strategy, or even a thoughtful combination of the three approaches laid out here. Put your strategy into action, let your actions become habits and then watch as transparency transforms your business-consumer relationships.

Jamie Gilpin

Jamie Gilpin

is the CMO at Sprout Social. She is an experienced marketing leader with demonstrated success in growing brands in the technology space through strategic positioning.
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