Nowhere to hide: why transparency is a business necessity

FIFA, Thomas Cook and Alton Towers prove concealing flaws is riskier than revealing them.

Nowhere to run

Marketers are not renowned for their honesty. In fact, alongside politicians, estate agents and journalists, their profession is often named among the least trusted in the country in opinion polls. However, recent crises at Thomas Cook, Alton Towers and FIFA show that having an open and transparent approach to business is no longer just favourable, it is an absolute necessity.

Tour operator Thomas Cook went through a PR storm in May when it initially refused to apologise for the deaths of two children while on holiday in Corfu in 2006, denying liability for the incident at an inquest. Brand perceptions measured by YouGov’s BrandIndex fell from a score of 15.1 at the beginning of May to a low of -9.2 on 14 June, using a four-week moving average. Conversely, Alton Towers’s owner Merlin Entertainments has been praised for quickly offering compensation to 16 people injured in a rollercoaster crash in June, and for publicly communicating details of the incident while acknowledging “full responsibility”.

Meanwhile, the successor to Sepp Blatter as FIFA president will need to introduce greater transparency into the world football body’s processes – in particular distributing funds and voting on World Cup hosts and executive positions – in order to avoid a repeat of the FBI’s ongoing investigations into alleged bribes paid between officials.

Reacting in the right way when the stakes are highest requires being open and honest not just in a crisis but as a matter of routine. Yet as Marketing Week columnist the Secret Marketer pointed out last week, proponents of business transparency often find themselves clashing head-on with more risk averse colleagues and legal advisers. The challenge for marketers is to demonstrate that the greater risk lies in concealment and opacity.

Making transparency a habit

In 2014, John Lewis was named the UK’s third most authentic brand in Cohn & Wolfe’s ‘Age of authenticity’ study, after also ranking as the third most transparent company in the PR agency’s 2013 paper ‘From transparency to full disclosure?’.

John Lewis director of marketing Craig Inglis says: “Consumers are more empowered with information today than they have ever been and that means their expectations are high. There is nowhere to hide for brands that are anything other than fully transparent.”

He believes the biggest challenge is being equally open with both positive and negative messages but striving to do so “drives much stronger trust in the long term”. Inglis says: “We’re a 150-year-old business and have always been open and honest about our weekly trading figures. We release them every Friday and they’re accessible to anyone. The idea of these figures is to highlight our performance and to give reasoning behind it, whether it’s good or bad.”

John Lewis prioritises building trust with consumers and its staff

John Lewis also exercises this strategy through its ‘Never knowingly undersold’ guarantee, whereby if a consumer finds the same product on sale cheaper at another high street retailer, John Lewis will immediately reduce its price to match the competitor.

Not only does the strategy build trust externally with consumers, it also promotes confidence among employees, he says. “Our partners [staff members] own John Lewis and as a consequence they rightly expect transparency within their business.”

Cohn & Wolfe’s 2014 study found that 91% of consumers value brands that communicate honestly about their products and services, while 87% say it is important that businesses are up-front about their sustainability efforts and environmental impact. This compares to 72% who believe innovation is important, 60% who go for brand appeal and 39% who value popularity, suggesting that honesty and openness outweigh other positive attributes in driving consumer brand preference.

“Transparency is an essential ingredient in building credibility and trust with employees, stakeholders and customers alike,” says Adam Elman, global head of Plan A delivery at Marks & Spencer, which came out top in both of the Cohn & Wolfe studies. Plan A is the name of the retailer’s ethical and environmental programme.

Elman believes it is critical for businesses to share their shortcomings as well as their successes in order to be seen as genuine.

“We think we’re always open about Plan A, whether we’re forging ahead or facing unexpected difficulties,” he explains. “We know that we can achieve our ambitions only by working with others so they need to understand the specific issues and challenges we’re seeking to solve. In truth, although we’ve achieved many more Plan A successes than failures over eight years, our difficult moments have taught us just as much, [if not] more, than our easy wins.”

M&S recently reported 47 Plan A commitments as ‘achieved’, 39 as ‘on plan’, nine as ‘not achieved’ and two as ‘behind plan’.

Elman says: “We’re determined to learn from [the commitments not yet achieved] and each is dealt with individually in the 2015 Plan A report. The good news is these 11 commitments aren’t clustered around one aspect of Plan A, which convinces us there’s no underlying bigger issue below the surface.”

In some cases, Elman says deadlines were simply too ambitious, but nevertheless he stresses there is no point in pretending it has achieved something when it has yet to do so.

Making the business case

While M&S and John Lewis both extol the virtues of honesty, it can be a hard sell internally, particularly where the business and its communications practices are more traditional and executives are therefore wary of airing their dirty linen in public.

Opel looked to change people’s perceptions about the brand by speaking about its bad brand image in a humorous way

Sue Unerman, co-author of the book ‘Tell the Truth’ and chief strategy officer at Mediacom, believes that “the CMO should be the focus for the brand and how it behaves in every consumer-influencing respect”, including driving forward the transparency agenda. Other, less customer-focused, business functions have a tendency to be more risk-averse – particularly legal professionals, whose instinct may be to say as little as possible in order to minimise liability when disputes arise.

However, Unerman believes anyone who thinks they can hide behind carefully weaved stories is deluded.

“The art of spin is dead,” she says. “People who are still investing in spin rather than communicating their best brand properties are making a massive mistake and are opening themselves up to a fall.”

The rise of the internet and the fact we live in a connected world means consumers can find out whatever they want about a brand in a few seconds. “In the 1960s, David Ogilvy said the consumer is not an idiot, she’s your wife. Well, today she’s a woman with a smartphone and she can easily find out how your product is made, how ethical your business is and what people think of your senior management,” warns Unerman.

Telling the truth is not necessarily about “being completely naked”, she says, but if brands try to cover things up that cannot ultimately be concealed, it will backfire.

“It’s not about walking out with no clothes on, but if you walk out in a suit of armour, of course people will start poking at it,”.

Sue Unerman, Chief strategy officer at Mediacom

Unerman suggests that a “blemished sell”, which acknowledges the potential downsides of your brand, can help to build consumer confidence. “Admitting your limitations gives you credibility,” she says, referencing an experiment in which two ads were created for the same walking boots. The first ad explained how great the boots were – they’re waterproof, they don’t give you blisters, you can wear them up Mount Everest and they will last forever – while the second ad also included the fact that ‘they only come in black and brown’. “The second ad sold more than the first,” she says, because declaring a potential weakness helps to build trust.

It is a strategy that worked for car rental firm Avis in the 1960s as it made the bold move of admitting it was ‘only number two’ in the category but as a result promised consumers it would ‘try harder’ to impress and win their approval. The move resulted in market share increasing from 11% to 34% over a four-year period. Avis revived that strapline in a new TV ad last year.

Patagonia shares the progress of all its activities via its blog

Admitting flaws builds trust

German car marque Opel has taken a similar approach in order to re-energise its tired image after consumers described the brand as “old fashioned, boring and dusty”. Rather than trying to cover it up, Opel chose to hit the problem head-on by owning its flaws.

“People driving an Opel car in Germany felt like they had to hide the key in their pocket because they didn’t want anyone to know they were driving the brand,” said CMO Tina Müller at the Financial Times Marketing Innovators Summit last month.

After updating its ageing vehicle portfolio with models such as the Adam and Mokka, Opel looked to change people’s perceptions by “daring to talk about our bad brand image and low social acceptance in a humorous way”, said Müller.

Through a series of executions, the car marque addressed the negative preconceptions people had by first running an unbranded out-of-home teaser campaign that encouraged people to be more open-minded, with messages such as ‘18% of German people hate olives but 60% have never tasted one’, followed by the strapline ‘Repark your mind’.

After revealing that Opel was behind the campaign, the brand then enlisted German celebrities to share their views of the brand for a TV ad before test driving one of the new models and giving their honest impressions, which were also shared via a digital content hub.

“People who have seen the campaign have a better image of Opel than those who haven’t so there was a big shift in terms of perception,” explained Müller. Opel achieved an uplift in market share for the first time in more than a decade and is keeping up that momentum. Between January and April this year, sales increased by 3.3% while the overall European car market grew by only 2.6%.

“Being honest and authentic with our brand, bringing in new products and publishing consumer feedback on digital channels, including criticism, opened the door for us to treat the brand with realism,” she added. “Internally, [it’s important to be] realistic about where your brand is and see it from the customer’s perspective.”

The Opel business is looking to replicate the turnaround in the UK (where it is badged as Vauxhall) with the launch of a campaign for the Viva, which again pokes fun at the stale image of the old model with the strapline ‘Just like the old Viva but completely different’.

https://www.youtube.com/watch?v=7VRVkAAuFvE

The limits to openness

Sir Stephen Bubb, CEO of charity leaders’ network Acevo, believes there should be limits to transparency, though, particularly with the thorny issue of salaries in the third sector.

“Transparency is the best policy with regard to senior executive pay in charities [because] good pay means that boards, beneficiaries, supporters and employees agree that it provides value for money, so they need a transparent discussion,” he says. “However, I do not believe charities should adopt an accounting approach. They should use common sense and adopt the broad principles outlined in our Good Pay Guide [such as being fair and consistent, and open about how pay is set] rather than stick hard and fast to dogmatic rules.”

He also believes charitable organisations should not be forced to share their political affiliations.

“Charities are allowed to be political but not partisan,” he adds. “Their political activity is driven by their missions, so it is inappropriate to ask staff to disclose their political involvement in their private lives. This demand wouldn’t be made of staff in other sectors. Indeed, it violates democratic principles.”

There is also an argument that excessive openness can mean giving up commercially sensitive information and therefore competitive advantage. Technology start-up Groove has ignored this by promising to share everything “from ‘aha’ to ‘oh shit’” in its company blog, as it has in the latest post called ‘What we learned from failing to hit our 12-month growth goal’. But CEO and founder Alex Turnbull says the potential risks are overblown .

“No competitor that is focused on building a strong business is going to be worrying about our numbers and what we’re doing, because they know that they need to concentrate on building their own business,” he says.

“I wanted to write the blog that I wished existed the first time I started a business – one that came from a place of empathy for the entrepreneur, and respected the fact that starting a business isn’t just ‘wins’, it’s a lot of ‘fails’ too and it’s generally very messy. We’ve worked to include as much of that in our blog as possible, and have learned that people really relate to it.”

It is an acknowledgement that consumers’ ability to see through ‘spin’ is only going to get better as their access to information rises. Brands need to switch to radical honesty or risk a terminal loss of trust.

Case study: Chipotle opts for full disclosure

Two years ago, Mexican-style food chain Chipotle began labelling genetically modified ingredients in its food at the same time as announcing a commitment to end their use.

Communications director Chris Arnold says: “When the conversation about labelling genetically modified organisms started to percolate and [some US states began petitioning for better] labelling on packaged foods, many of which we have endorsed, we decided to label GMOs in our own food. If consumers want to know, we’ll tell them. We have believed in that kind of transparency from the beginning.”

Chipotle has always had an open kitchen in restaurants, for example, so customers can see food being prepared. Arnold says consumers’ reaction to its admission of using GMOs was “largely positive” although he admits that there were some who believed the chain was already GMO-free.

This April, Chipotle achieved its goal to eliminate all GM ingredients, claiming to be the first chain to do so in the US.

“It was important to us [to bring consumers along on the journey]. There’s a lot of debate about GMOs, and we were in a position to eliminate such ingredients from our food. Because it was something we could accomplish relatively easily – largely because we had few GMO ingredients to begin with – we decided to do that,” he says. “By committing to transparency and finding the best ingredients we are able to develop loyalty among our customers.”

The struggling for sustainability

Adam Fetcher, director of global communication at clothing brand Patagonia, says that any company claiming to have sustainability or corporate social responsibility figured out is lying.

Patagonia shares the progress of all its various activities via The Cleanest Line blog, such as a recent post explaining how a deeper dive into its supply chain revealed migrant workers in Taiwan were having to pay extortionate fees to labour brokers in order to get a job, which led to the creation of a new procurement standard at the company.

Yet Fetcher believes an honest approach to sustainability efforts, which includes revealing difficulties and missteps, pays off in the long term.

“Showing there’s good and bad in everything we do as a global company – even as a company that tries hard to be responsible – shouldn’t be defined as ‘exposing’ anything. We should all know from our experience as humans that nothing is perfect and we can only strive harder to soften the footprint we have on our planet and on the people involved in the production of our products. Transparent communication is easy once you start with that assumption.”

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