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The Brand Value of Transparency

The Context:

Transparency and trust are increasingly becoming central issues for brands, alongside a growing demand from customers to know what is in their products, where they come from and how they were made. Combined with growing concerns around access to data and how that data is used, brands need to consider what transparency means for them and how they should navigate it.

 

Key Insights:

  • Transparency can build trust between brands and customers
  • There are different kinds of transparency, including: pricing, process, labeling and data use
  • Not all forms of transparency are right for all categories, companies and products
  • Brands should evaluate the need for transparency based on their market segment and its alignment with their brand message and brand values

Transparency is a term that has been used in a lot of different marketing and business contexts. In this white paper, we will explore what the different forms of transparency are, who values it and why, how it fits into branding and the ways in which it can be used. At its core, transparency invites consumers to join in the product’s journey, highlighting a brand’s commitment to an open relationship with the customer and to building trust in that relationship. However, all forms of transparency are not equally valued across all products, and they should be mobilized above and beyond regulatory requirements and market practices only when it aligns with a brand’s purpose and promise to its particular target segment and customer base.

 

Increased transparency about your product’s contents, manufacture and journey to the consumer inspires trust in your company, its values and what it is offering. Transparency is not a marketing technique to tell the story of your brand: when done most effectively, it is the story. And it is one that many customers demand to hear in today’s marketplace.1

 

Transparency is both a value and a way to add value. Consumers are increasingly interested as much in process as final product quality as they evaluate how and where to spend their dollars. They have a huge amount of choice, and, more than ever, they prioritize products that are being good by doing good, and with whose brand promise they feel comfortable aligning.2 Brands often become part of one’s identity; customers are thinking hard about the values behind their brands as they ask what their brands say about them as people. They also have unprecedented access to information, accurate and otherwise, through reviews, product contents and company histories. A brand that seems to be trying to hide something runs a big risk; at the same time, not all information is relevant to all customers. Brands need to be proactive about controlling the flow of information and provide customers access to what they want to know.

 

The Different Kinds of Transparency

There are a number of different aspects to transparency; it is important to locate the version that aligns with your brand story and your product. Some forms of transparency simply do not speak to your target market’s priorities, or may not make sense in the context of your particular product. Most (although probably not all) customers aren’t looking for the narrative behind their toilet paper. However, if toilet paper is one of the products within a larger brand that promises sustainability, then transparency is a necessary part of that promise. It depends on your market segment, your product, your brand values, the relationship with your customer and the kinds of transparency that make most sense for you.

 

Transparency can mean being clear and upfront about sourcing, manufacturing, delivery, contents and pricing, as well as the labor that accompanies each of these steps. It can also mean letting customers know what the company will do with their data and personal information, particularly for companies whose primary business is the sale of data itself. Some brands are embodying transparency by highlighting every stage of the product’s journey, while others are more selective in what aspects of transparency they employ.

 

Social Justice and Transparency Amongst Millennials

Millennials in particular resent traditional forms of advertising and marketing. They dislike being interrupted by commercials, and want to connect directly to brands on the basis of authenticity rather than feeling manipulated. They are looking for relationships formed on the basis of a connection, and they make their decisions based on how brands showcase their values. They put their money where their values are: 73% of millennials are willing to pay more for products if they are from a sustainable brand. And they want to know details: 81% of millennials want companies to be public about their corporate social responsibility activities, and they will favor those trusted companies with ongoing relationships, even if their products are more expensive.More than nine out of ten millennials would switch from a brand without a broader social message to one associated with a cause, even at greater expense and more than three out of four millennials have highlighted sustainability in particular as something they are willing to pay a premium for.4

 

But they have to know about the company’s commitments, and they have to trust them in order to enter into these relationships: according to recent studies, well-crafted personalized messages and relationship-based approaches can deliver significant ROI and boost sales.Both authenticity and transparency reflect a company’s commitment to honesty; the former in how the brands values are represented, and the latter in how they are implemented. A transparent marketing strategy showcases implementation and brings the customer on the journey, cementing current relationships and growing market segments in the long term. These relationships can be quite powerful: over 80% of customers will return to brands that are transparent following a bad experience and will even support them during a brand crisis.6

 

Pricing Transparency

There are many factors that contribute to a product’s final price; some brands break down each factor so that customers understand exactly what they are paying for and how much of the cost is due to these various considerations. Low-cost airline Southwest has long been a leader in this arena, dividing the final cost of the ticket into various government fees, taxes, and other pricing considerations, giving customers the option to add on features based on preference. This form of transparency is part of Southwest’s overall brand positioning as an accessible and customer-focused airline that is doing its best to serve customers in an honest and affordable fashion and making it as easy as possible for people to fly.

Southwest

Southwest employs one form of transparency around pricing, but is strategically limited in how much information it shares with its customers: it doesn’t provide breakdowns around the cost of the planes, the fuel, the salaries of its employees and other details contributing to the base cost of the fare. It doesn’t need to, and it shouldn’t: that’s too much detail for what its customers want and need out of their flying experience. Southwest is positioned around value, so pricing transparency makes sense for their brand message. Other brands are positioned differently; their way of using of transparency should reflect their particular positioning.

Transfarency ad by Southwest Airlines
Transfarency ad by Southwest Airlines

Some brands position themselves as socially conscious and environmentally sustainable; they need to fulfill that promise with information about every aspect of their product’s journey including transparency around how these factors contribute to the final price. As customers track their product’s journey, they gain an appreciation for what each stage costs and how this translates to the final price. The behind-the-scenes information helps customers understand exactly why their products are situated at particular price points, and gives them the tools to decide to opt in to a more expensive item. They are paying not just for the quality of the item, but the qualities it embodies at every stage of its production and delivery.

 

The breakdown of the final cost, which includes sourcing the sustainable raw materials, the fair trade labor that goes in to the item, the environmentally responsible mode of delivery, the overhead and the profit margin is not just a way to practice pricing transparency but to embody the brand values and communicate them to the customer while making the customer a partner in the process. By paying more for sustainable and socially conscious products, customers join the company in giving back to the causes to which they are mutually committed. In a radical move, clothing company Everlane has experimented with allowing customers to select a price based on what they wish to pay for during their sales, letting the customers have the experience of translating their values into action.

Everlane

Online clothing company Everlane has made a name for itself providing durable classic pieces without the retail markup. As part of their mission, they have embraced what they call radical transparency, giving customers detail on every aspect of their product’s journey, from the factories to the final item. The pricing breakdown includes materials, labor, transport, hardware and duties and offers a comparison to traditional retail items. Their website tells the stories of each stage of the product journey through text and images, and invites customers to participate in their brand values by purchasing their goods. During their sales, they go one step further, giving customers the option to purchase a given item at various price points depending on how they value the various components of the breakdown. They can choose to pay for a shoe’s overhead in addition to the materials, labor and transport, voluntarily opting to part with more money to participate in the company’s mission.

Clean Label Transparency

Radical transparency may not be right for every brand or product. When it comes to highly synthesized or processed items like many food or hygiene products, people want to know what is inside the things that they put on or inside their bodies. This is a significant opportunity for transparency contributing to the overall brand story. “Clean labeling” drives brands to take out or change ingredients or processes to make their products cleaner, and then talk about it. Clean label brands can highlight product attributes that appeal to their customers, particularly in the case of voluntary transparency, in which brands offer information that is not mandated by consumer regulations.

 

An easy-to-read, clear and decipherable label showcases a brand’s commitment to transparency while at the same time representing the overall brand values and brand promise. Some transparency is required by consumer regulations, the number of which has been increasing in response to customer demand and health requirements. Brands can use additional transparency through labeling as a form of differentiation as a way to develop a competitive advantage ahead of the industry curve by identifying a set of customer demands that are not yet being met about product contents and process. Johnson & Johnson recently changed their approach to labeling as a way to meet customer demands and showcase their commitment to health through transparency.

Johnson & Johnson

CPG giant Johnson & Johnson recently made waves with its announcement that it will voluntarily reveal details on the chemical composition of its “fragrance” element in baby products. Federal regulations permit the use of the term fragrance in place of more specific details on some chemical compositions; these may have allergy or health implications for the customer using the product. As part of its increased commitment to transparency in labeling, J&J is offering more information about fragrance components greater than 0.01% to allow its customers to make informed decisions about the safety of its products for the baby market. The industry as a whole has resisted calls for greater disclosure; J&J is making a bold move to meet the needs of its customers, strengthening trust by signaling its commitment to the concerns of the baby market.

Process Transparency

For many people, knowing where your product came from and how it got there is just as important as knowing what it consists of. Transparency about sourcing, labor, manufacturing and supply chain allows consumers to evaluate the process by which their product was made. The quality of the product is important; for these customers, process is a fundamental and inseparable part of quality. A commitment to process transparency invites customers to participate in the product’s journey and allows the brand to highlight its values through its marketing.

 

There are a number of ways to implement process transparency, from websites that track every stage of the journey, to scannable codes that tell the particular details of the particular purchased item and its contents, to the thoughtful use of blockchain technology to accurately account for every aspect of the product’s lifecycle, to interviews with and details about the various participants in the supply chain. Customers make decisions based on value and quality; process transparency gives them more information about both, emphasizing how (brand) values contribute to value (to the customer), and how quality is not just about the final product but the way it was made.

 

Many are willing to spend more to support a transparent and socially just production process: The 2015 Nielsen Global Survey of Corporate Social Responsibility shows that 72% of millennials will pay more for brands that reflect values of sustainability and positive social impact.3 They want to support brands to be committed to broader social issues and are willing to pay a premium for it. But they have to know that brands are doing it: transparency is the best way to highlight a brand’s values in a way that is authentic and accessible.

Allied Feather and Down

Allied Feather and Down is a down supply company that has revolutionized how down is sourced by working directly with farms and other elements along the supply chain rather than brokers and aggregators. These relationships have allowed the company to track the source of all of its down, ensuring its uniform quality and offering guarantees that none of the birds were live-plucked or force-fed. An industry leader in sustainability, Allied Feather and Down implemented its sourcing policies well before current standards required better treatment of down-source birds. The company offers a certification for farms that adhere to its rigorous standards and allows customers to use a scannable code to track the source of the down in their product, be it a jacket, bedding or other apparel. Sourcing is one aspect of the company’s transparency, but as part of their larger brand values, they ensure that everyone along the supply chain adheres to strict chemical management policies that entail best practices from an environmental standpoint.

Data Transparency

The connection between transparency and trust is strong. The lack of transparency can fundamentally erode trust, particularly in terms of the relationship between the customer and the company around the customer’s data and personal information. Customers seek personalized messaging, which has led to the monetization of data for marketing purposes. But randomized or poor use of targeting can and will backfire for the company as customers resent messages that don’t align with their interests, particularly as concerns about the unauthorized use of data continue to grow.

 

Transparency about how companies are collecting and using data instills trust and can help incentivize customers to share their data, a growing necessity with the implementation of the General Data Protection Regulation (GDPR) in the EU. As part of data transparency, brands allow customers to customize their privacy settings in a straightforward and easily visible way. They also share information about exactly how their data is being used and with whom it is being shared, giving customers the option to opt out. But they also highlight the advantages of sharing data for the customer: for example, data collection fuels recommendations from sites like Netflix and Amazon, helping the companies curate options that meet the needs of the customer.

 

But it’s not just about privacy. It’s not always clear who owns data about products; customers can sometimes access inaccurate data online and make their decisions based on that information. Brands need to be aware of what is being disseminated about their products and use transparency to become the most trusted source of information. Organizations like GS1 work hard to standardize trusted product data as a way to combat the proliferation of inaccurate or untrustworthy information. By being transparent about their products, brands can be proactive in combating inaccurate product data from other sources.

 

Conclusion

Transparency is not just a marketing technique but a way to highlight the brand’s values in action, cementing a relationship with the customer that is built on trust and shared commitments. Millennials in particular seek brands that are good by doing good; their evaluation of quality is based not just on the final product but the process by which it came about, and they are willing to pay a premium for that process if it embodies a larger social good.

 

However, not all forms of transparency make sense for all products and brands: it is important to carefully consider your target customer, current market conditions and the expectations around your particular offering. Different aspects of transparency can be applied for different products: transparency around pricing, process, labeling and data speak to various customer commitments and highlight unique brand values and brand identity.

 

As you consider your marketing strategy going forward, how will you use transparency as a way to highlight your brand’s values?

 

Selected sources:

  1. Skyword.com; Transparency as Disruptor in Retail Brand Storytelling
  2. Forbes.com; Millennials Driving Brands To Practice Socially Responsible Marketing
  3. Nielsen.com; Green Generation: Millennials Say Sustainability is a Shopping Priority
  4. BerkeleyHaas; Millennials and the Rising Demand for Corporate Social Responsibility
  5. Mckinsey.com; Personalizing at Scale
  6. MartechToday.com; Report: Customers are More Loyal to Companies that are Transparent on Social Media

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