The growing demand for greater corporate transparency, especially among Millennials, should not be news to anyone. Trust in business has reached new lows, as reported by the latest 2014 Edelman Trust Barometer (e.g. only 50% of Americans trust financial service companies), and insufficient transparency has been one of the key reasons. Yes, businesses are trying to develop and promote more their “corporate social responsibility” (CSR) initiatives, but these will never win over customers unless the details and results are transparent enough to re-build a trustful relationship. Supporting this, Tove Malmqvist at GlobalScan reported that 79% of experts surveyed in July 2014 believe corporate transparency is essential for a company’s sustainability performance.
Why has “transparency” become such a critical virtue for younger people, yet such a complicated challenge for many global companies? Consumers used to believe most advertising and political propaganda. Not anymore. With ubiquitous accessibility via the internet, younger people can see thru such skewed marketing messages or advertising claims. Today only 6% of Millennials trust advertising (source: Edelman research). In light of the extensive corruption throughout the world, business and government–plus their track record of misinformation–Millennials are demanding more and more transparency in this “openness revolution”. In short, the relationship between transparency and trust for a corporate or product brand is irrefutable.
In addition to building trust, the other value which transparency drives for these Millennials is authenticity. Wally Olins describes in his new book, “Brand New: The Shape of Brands to Come”, how consumers today crave authenticity, and his core message to brand managers – “don’t fake it.” Authenticity can be a fuzzy concept for many, however. Julie Napoli, a professor at Curtin University, stated in The Journal of Business Research, that consumers see three important dimensions to brand authenticity: heritage, sincerity and commitment to quality.
As consumers increasingly become less naïve or more knowledgeable about the realities of corporate performance, they are also more sensitive to promises that are unfulfilled. Gallup’s State of the American Consumer Report in June 2014, concluded that the primary problem for business is that consumers don’t really know what a company stands for, or how their brand is special, because its promises are “weak and vague” – a disturbing challenge for managers trying to re-build trust via more transparent, credible communications. Furthermore, consumers don’t believe brand promises are kept or delivered. To address these problems, Gallup experts suggest that companies focus on improving their “brand alignment” (i.e. brand promise and deliverability) to restore trust. According to Gallup, this alignment currently varies by category. For example:
- Retail 90%
- Hospitality 84%
- Financial Services 40%
- Food & Beverages 39%
- Automotive 35%
Gallup offered some useful recommendations for a more balanced brand alignment, all with the underlying assumption that greater transparency and integrity are needed for each suggestion:
- Develop a stronger, more compelling brand promise, AND deliver on each promise
- Emphasize consistency across all touch points – for a consistently great experience
- Use metrics that matter – and even measure the emotional satisfaction
- To use social media more effectively (i.e. to inspire customer engagement):
- Authentic – want to interact with a human, not a “brand”
- Responsive – timely, open, available 24/7, admit mistakes
- Compelling – make content more interesting, original, relevant, personal, but not hard “sales/marketing” pitches
Beyond brand advertising claims or promises, corporations are being forced to open up in other areas such as tax and government contracts, anti-corruption and sustainability programs. Howard Schultz, head of Starbucks, said in 2013 that “the currency of leadership today is transparency.” Three forces are driving this increase in transparency around the world:
- Many governments (e.g. Britain, Denmark, Norway, etc.) are demanding greater corporate accountability, triggered by the recent recession.
- The rise and influence of investigative journalists, exposing dubious practices such as sweetheart deals for multinationals.
- The growing sophistication of NGO’s like Transparency International (TI) and Global Witness.
While the world is still full of murky shell companies, the trend toward greater transparency to combat corporate and government secrecy is clear. Company boards are increasingly accepting the notion that openness should no longer be feared, especially in areas like social responsibility, and even appreciate the reputational benefits. Millennials prefer to work for firms that are leaders in disclosure, and even see it as their civic duty to leak information on shady or secretive deals. Most important, both consumers and progressive business people recognize that transparency is essential for building a trustful, authentic corporate brand image.