“A brand is simply trust.” — Steve Jobs
The definition for brand success has fundamentally changed. Once, businesses were focused on the acquisition of new customers and growth was measured solely by dollars. It is now widely understood that customer retention is a far more profitable strategy. Research from Bain & Company says increasing customer retention rates by 5% increases profits by anywhere from 25% to 95%. In this sense, it is more economical to satisfy the customers that you have. Building trust and loyalty with existing consumers is important to business growth. With that in mind, it is crucially important that brands understand what consumers want. Businesses must be attuned to societal shifts, such as sustainability movements and the demand for brand transparency.
Brand transparency is a key factor for customer retention. Consumers are increasingly demanding honesty from the brands and businesses that they engage with. In fact, 66% of consumers think transparency is one of a brand’s most attractive qualities. Another study found nine out of 10 people are more likely to stick by a business during a brand crisis if it has a history of being transparent.
What is brand transparency?
Gartner defines transparency as “a condition where the material facts of an enterprise are made available in a timely, and preferably reusable, manner”. In other words, brand transparency is about being open and honest about all aspects of the business with the end consumer. Brands can no longer hide behind misleading marketing or vague promises. In the modern world information is widely and readily available in the palm of consumer’s hands and attempts at greenwashing will no longer be tolerated by the public. Consumers’ care about more than the products that a brand is selling, they demand to know where materials are sourced, how and where products are made, the impacts that processes have on people and the environment and the values of the businesses at the helm.
A transparent brand should define its values clearly. Communication should be honest and processes and operations should be publicly available. Conscious consumers are looking to connect with authentic brands that are willing to be accountable for their actions.
Transparency builds consumer trust and drives loyalty
In order to understand how important trust is for business, lets first explore distrust. Roy Morgan research shows that distrust is one of the most significant, yet least recognised risks to Australian business and society in general. Furthermore, three in four Australian consumers believe brands are lying in their marketing communications. In a world of fake news, privacy breaches and greenwashing, its no surprise that trust is a key differentiator and competitive advantage. Brands can mitigate distrust by being transparent and honest.
There is no doubt that trust drives loyalty, particularly in a post-pandemic world. The 2020 the Edelman Trust Barometer found that 70% of people say trusting a brand is more important today than in the past. The majority of people with high brand trust (75%) say they will buy the brand’s product even if it isn’t the cheapest, it is the only brand of the product they’ll buy, and they will immediately check out a new product from that brand to purchase. Transparency is a highly effective way to build trust. Transparency signals that a brand is decent and has integrity. Once a brand has established trust it can then build loyalty.
Empowered consumers can make better brand decisions
In the modern world consumers demand to know about the brands they buy from. An impressive 83% of millennials stress the importance of value alignment. Moreover, millennials view trust and ethics as important drivers when they’re buying products. Transparency is key aspect of demonstrating values to the world.
Consumers have changed and brands must change with them. The reality is that the product journey is interesting to consumers. In fact, 77% of Australian consumers say end-to-end transparency is important.
Transparency ultimately shows consumers respect. It presents facts honestly and empowers people with knowledge. People want to know that their spending decisions align with what they truly care about. Empowered consumers can make better brand decisions about how and where they spend their money.
A brand cannot be ethical without being truthful. It is through honest and open communication that brands can show who they are and what they stand for – mistakes and all. In order to be successful in business, brands must value transparency. Being transparent in business is a commitment that wins the heart, and loyalty, of consumers for years to come.