In Transparency We Trust

Strengthening Customer Relationships through Transparency

When I was in middle school, I swore off Hershey’s chocolate because of the lack of transparency in their supply chain. I don’t know where I learned about labor practices as an 11-year old, and though it didn’t last long, I still remember the disappointment I felt when I found out. It’s the same disappointment I feel when I see an Instagram ad for a product I was just talking about.

I’m a consumer that thinks companies should be upfront, especially in areas where their processes intersect with their values. And it’s not just me. Whether it’s about data mining or sourcing chocolate, consumers have continued to demand transparency from business. Research by Sprout Social found that 86% of Americans say that transparency from businesses is more important than ever before. Of those respondents, 58% say that brand transparency is increasingly important because companies are morally obligated to be transparent. Consumers are serious about transparency, and the business world needs to make sure it doesn’t fall behind.

According to Jamie Gilpin of Sprout Social, there are three transparency strategies organizations can use: reactive transparency, preemptive transparency, and proactive transparency. What transparency looks like can and should change from business to business, based on the overarching goals of the organization.

Reactive Transparency

Reactive transparency focuses on open communication after a disruptive event. At its worst, this strategy seems like a shallow PR statement. But, if executed effectively, this strategy can build consumer confidence and improve company reputation. Starbucks is an example of what reactive transparency looks like. In April of 2018, two Black men were waiting for the start of a business meeting at Starbucks when the store manager asked them if they wanted to order drinks. When they declined, the store manager called the police, who arrested them for trespassing. The incident prompted social media uproar and protests against racial discrimination.

Starbucks’ initial response was rocky. The company first released a statement that critics said didn’t address the issue at hand.

After this misstep, Starbucks’ pivoted its transparency strategy to get back on track. The same day, CEO Kevin Johnson released a memo reassuring customers that “Starbucks stands firmly against discrimination or racial profiling”. Johnson then released a video taking ownership of the event. Finally, Starbucks announced they would close stores for 4 hours to deliver a racial bias training to staff. Systemic racism can’t be solved in 4 hours, but Starbucks’ stance showed a visible commitment to change. Instead of hiding behind legal statements and deferring responsibility, Starbucks’ communicated their values openly to customers.

Preemptive Transparency

This transparency strategy focuses on getting ahead of a change customers may not support. Through this strategy, organizations can ensure they provide context around their decisions. We can see this strategy at work throughout Google’s acquisition of Fitbit. In November 2019, Fitbit published a press release announcing the acquisition. Fitbit is a brand consumers trusted with their health data, so the acquisition by Google, an organization that makes money through selling consumer data, raised some concerns. In the initial press release, Fitbit stated,

“Consumer trust is paramount to Fitbit. Strong privacy and security guidelines have been part of Fitbit’s DNA since day one, and this will not change. Fitbit will continue to put users in control of their data and will remain transparent about the data it collects and why. The company never sells personal information, and Fitbit health and wellness data will not be used for Google ads.”

When Google completed the acquisition this January, James Park, Fitbit’s CEO, released a statement that re-emphasized the commitment to data privacy:

“The trust of our users will continue to be paramount, and we will maintain strong data privacy and security protections, giving you control of your data and staying transparent about what we collect and why. Google will continue to protect Fitbit users’ privacy and has made a series of binding commitments with global regulators, confirming that Fitbit users’ health and wellness data won’t be used for Google ads and this data will be kept separate from other Google ad data.”

Throughout the acquisition, Fitbit and Google have been open about one of their customers’ chief concerns — data privacy — and have provided information intended to reassure customers.

Proactive Transparency

Gilpin describes proactive transparency as “actively providing insight into the behind the scenes of [the] business.” In this strategy, transparency must become an ingrained way of working. As companies build their proactive transparency muscle, they can build trust. Clubhouse is an organization that has exhibited this strategy. Every Sunday, Clubhouse’s leaders host a Townhall, the proverbial town square of the organization. Clubhouse super-users and new joiners alike gather to listen to co-founders Adam and Rohan share product updates. The team discusses their priorities, ambitions, and answers to several pre-submitted questions about product features. If the team has considered the feature in question, they discuss where it is on the roadmap or why it’s not on the roadmap. If it’s a feature they’ve never thought about, they discuss potential use cases and how they might fit into their current plans. It’s a little like being in a work meeting, but with no responsibilities and the guarantee that you won’t have any resulting action items. So actually completely different from being in a work meeting.

Clubhouse Townhall is a great operational and branding decision. The team can get feedback to improve the product while bringing users into the process. The co-founders don’t agree with every suggestion users submit. But, by sharing the necessary context, users can understand why decisions are made and gain a greater appreciation for the work the team has prioritized.

Transparency and trust aren’t just about making users feel comfortable; trust drives financial results. In a study conducted by Edelman, 81% of survey respondents listed brand trust as a deciding factor in purchasing decisions. Their study also showed that consumers who have trusted a brand for a long time are more loyal than consumers who don’t fully trust the brand. For example, there’s a reason I’ve brought up Clubhouse in two of my latest articles (and no, I’m not being sponsored). I’m a loyal user that trusts the organization because they’ve been open with me about where they’re going. Edelman’s research shows that openness and trust are the lifeblood of customer relationships. If organizations want to build lasting and meaningful relationships with customers, they need to create and execute a transparency strategy.

My postings reflect my own views and do not represent the views of my employer