Transparency and Trust

The following is republished with the permission of the Association of National Advertisers. Find this and similar articles on ANA Newsstand.

By Henrik Johansson

The impact of consumers’ newfound super powers

In May 2018, the manager of a local Starbucks franchise called the police on two African-American men after they used the restroom without making a purchase. Police escorted the men off the premises in handcuffs. Several customers caught the incident on camera and posted it on social media, generating millions of views and widespread news coverage within hours. People saw a clear disconnect between Starbucks’ brand image and the treatment of these two men, who had simply come into the store to meet a friend. It created a huge social media storm with a severe backlash for the company.

The media scandal that occurred when airport security violently dragged a passenger off a United Airlines flight in 2017 was even worse. The passenger, a Vietnamese-American doctor, had been assigned a seat and already boarded, but after taking his seat, he was told to deboard because the seat was needed for airline personnel. When he refused, he was dragged off the plane by several security guards and was injured in the process. Several passengers captured the incident on video and posted it to social media.

Twenty years ago, before social media or smartphones, these incidents would probably have occurred in isolation. Most of the public might never have found out about them. Today, however, with everyone recording everything and posting it everywhere, Starbucks and United had nowhere to hide.

Such incidents affect more than just a company’s image or reputation. In the case of United, it also immediately hurt its enterprise value. Many social media users, particularly in the United States, China, and Vietnam, called for a boycott of United Airlines. According to Business Insider, the company lost nearly $1 billion in market capitalization in a single day as social media mentions went from 90 percent positive to 70 percent negative overnight.

The Starbucks and United stories are just two examples of the speed and scale at which simple actions by employees can have global implications within hours or even minutes. The simple fact is, today the public will expose what a company is doing, and if it doesn’t align with that company’s stated values or brand image, the public will complain — loudly.

The combination of the growing consumer demand for transparency and the rise of social and mobile platforms creates the perfect storm. It’s unstoppable, and it’s going to impact every business. The black box is quickly becoming a glass box — everything that happens in a company will become visible to the general public.

The global rise of mobile, social, and crowd-sourcing technologies has given customers superpowers. Customers now have virtual X-ray vision and can see most anything going on in any company: how they treat and pay employees, how they make and price their products, and how they treat their suppliers and partners. In addition to X-ray vision, they can also use their social “super voice” to share what they see with nearly everyone on the planet.

This new era of super customers brings unprecedented levels of transparency, which profoundly changes how brands are defined. The brand is no longer what a company says it is; it’s what the company actually is. The brand is how its products and services are experienced, how its employees show up every day, and how it interacts with its customers.

So what can organizations do to prepare for an increasingly transparent future? The first step is to assess their current level of transparency to identify potential risks and opportunities. In that process it can be helpful to look at three aspects of transparency having to do with products and services, culture, and the supply chain.

Product and Service Transparency

Until about a decade ago, consumers didn’t have much behind-the-scenes information about the quality of products and services other than, perhaps, reading Consumer Reports. However, in recent years, there has been a game-changing transformation due to online ratings and reviews and the amplification of customer sentiment through social media platforms.

In parallel, the expectations of marketing teams have evolved from just marketing to prospects and customers to actually taking ownership of the customer experience. There is no longer any way to “out-market” disappointed customers and negative reviews. The customer experience is the marketing.

As Forrester stated in its 2016 report on the rules for post-digital marketing: “Sure, it may take a lot of MarTech and AdTech to win in today’s environment, but our latest research shows that to win in a post-digital world, you need to abandon the advertising mindset, be accountable for your brand promise everywhere, and apply the best of what you’ve learned from brand, product, direct, and digital marketing to delight those entitled customers.”

Marketers are already well positioned to understand customer behavior, and now they must use those insights to help drive improvements in product and service delivery. Providing organization-wide visibility into customer metrics is a good start, thus creating internal transparency for how customers actually perceive and interact with the company. By establishing a shared vision of the current state of customer relationships, marketers can become change agents, aligning the organization and taking a leadership role in designing, creating, and improving the customer experience.

Culture Transparency

The second level of transparency has to do with the internal culture and values that companies espouse. These are becoming more open and visible to the general public. The culture one creates is no longer hidden behind the walls of a building. While culture has always been a part of any brand, it’s increasingly becoming the most important part.

A corporation can’t hide how it treats people — and how it treats people will define the brand.

A telling sign at the 2019 ANA Brand Activation Marketing Conference, employee engagement was one of the most frequently recurring topics on the agenda. Why would that be so important for brand activation? Because engaged employees who live and act in accordance with the organization’s core values become an organization’s most powerful brand ambassadors. Beyond the actual product or service, nothing has a bigger impact on the customer than the interaction with the employees who help deliver that product or service. In some cases, the interaction is even more important than the product.

A company’s culture can both be a great asset and a great liability. Uber experienced a day of reckoning on February 19, 2017, when a former employee, Susan Fowler, published an essay detailing the systemic harassment of women that had been an intrinsic part of the company’s culture. In a 3,000-word essay published on her blog, she revealed that company leaders routinely protected “brilliant jerks” and high performers, despite numerous reports of sexism.

Fowler’s article ultimately led to the ousting of Uber’s co-founder and then-CEO Travis Kalanick, along with 20 other employees who had been accused of harassing female coworkers. As Fowler later said in an interview with Recode, “It seems to me that this year, our country finally stood up and said that awful treatment of women will not be tolerated.”

The bottom line is clear: how employees behave, how frontline employees treat customers, and even how a company treats — and pays — its employees all become part of that company’s brand.

Ultimately, the culture and values a company exhibits both externally and internally are known. A corporation can’t hide how it treats people — and how it treats people will define the brand.

Supply Chain Transparency

Over the past couple of decades, consumers have become increasingly aware of the impact their purchasing decisions have on themselves, other people, and the planet.

Whether it’s a call center located in the Philippines, outsourced accounting in India, a coffee plantation in Colombia, or a lettuce farm in Arizona, the actual supply chain a company uses to manufacture and deliver products and services is inseparably linked to its brand. Consumers don’t make a distinction.

What are conditions like at the factories where a company’s products are assembled? Long before the raw materials even arrive at the factory, where do the fabrics come from? Where does the thread come from? What chemicals are in the dyes that are used to color the products? As details of company supply chains are becoming increasingly accessible, consumers consider every part of the supply chain the company’s responsibility.

Unwanted transparency has caused damage to many well-known consumer brands, for example, with discoveries of products being made in sweatshops, by child labor, and even slave labor. When the public learned that conditions at iPhone assembly factories in China were so bleak that factory workers were committing suicide, it created a public scandal. Though the problem was occurring far from Apple’s boardroom, leaders were forced to address it.

However, transparency can also be used to differentiate in a positive way, as demonstrated by many fashion brands (Patagonia, Stella McCartney, Everlane), food and grocery brands (Unilever, Beyond Meat, Whole Foods), and even technology companies (Intel, HP, Tesla) that created very loyal customer bases, in large part by being great stewards of our environment.

Since supply chain transparency can be a strength or weakness, marketers must become internal leaders and drive organizational change. They should start to demand internal transparency to assess and address risks, with the goal of making it a competitive advantage.

Customers Who Care Impact Sales

More than baby boomers or gen Xers, millennials and generation Z expect companies to be completely open and transparent about who they are, how they operate, and even what they stand for. And they will vote with their dollars. These generations believe that the brands they associate with reflect who they are, so they will walk away if they don’t see alignment with a brand. Conversely, they will spend their money and support brands they trust to reflect them well.

Customers today have X-ray vision and a super voice and, since younger generations care more, they are more willing to use these transparency superpowers and shape the dialog about every brand with it.

Brands must ensure they are ready for this level of transparency, and marketers must employ their own superpowers to lead the charge within their organizations.

Henrik Johansson is the CEO and founder of Boundless, a partner in the ANA Brand Activation Partner Program.