How Transparency Became a Top Priority for Businesses, and Why You Should Care What's your business doing to increase its transparency to consumers?
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Transparency in business requires entrepreneurs to remain open and informative about key points of information, including their business's goals, history, performance and operations. And it's a goal that's risen in importance and continues to do so.
Related: Let's Be Real: Why Transparency in Business Should Be the Norm
According to a recent study by Label Insight, up to 94 percent of consumers surveyed indicated that they were more likely to be loyal to a brand that offers transparency, while 73 percent said they were willing to pay more for a product that offers complete transparency.
Those benefits aren't limited to just external transparency, either. Internal transparency -- the practice of maintaining open lines of communication with employees, and remaining honest about company operations -- is positively correlated with higher employee morale (and therefore, productivity). Transparency in this internal context also builds trust, and makes employees feel that they're working for a company with higher ethical standards.
All of these factors are reasons that companies everywhere are starting to improve their efforts for achieving transparency. Examples include Buffer's open salary list, Whole Foods' efforts to document its food procurement and Patagonia's nearly completely transparent supply-chain transparency.
So, how has transparency become such a top priority for businesses, and what does the future hold for this trend?
How transparency became so important
Transparency is important to consumers and employees alike. This open "reveal" of information shows that a company has nothing to hide, and helps consumers make better decisions -- so that, in a direct comparison, a company that reveals all information related to its supply chain, for example, will likely be chosen over a competitor that keeps its information secret.
Yet, despite these benefits, transparency has only somewhat recently become a bigger priority. What sparked this change?
Distrust of corporations. American distrust of corporations is higher than it's ever been. According to the Corporate Perception Indicator survey, only 36 percent of Americans queried said they felt that corporations were a "source of hope," compared to an impressive 84 percent of the population surveyed in China, whose economy is still developing.
Related: 4 Reasons You Need to Embrace Transparency in the Workplace
Why are Americans so distrustful? Part of the problem stems from the perception of greed associated with CEOs and big businesses.
Less than a decade ago, we collectively witnessed a global economic crash (and personally felt the resulting effects), due in part to greedy, deceitful or misleading financial institutions. We subsequently bore witness to the Occupy Wall Street movement, which criticized the wealth gap that capitalism has created. Not surprisingly, many Americans assume that corporate goals are focused only on profits -- which can lead to unethical practices, especially if those practices are hidden.
Rating and review sites. The prevalence of online ratings and reviews has also led to increased demand for transparency. These days, a visit to a site like Consultants 500 or time spent browsing Amazon Product Reviews can tell you everything you need to know about a company's operations, products and overall customer experiences.
We've grown to rely on these peer reviews so much that today, 88 percent of consumers trust them as much as a personal recommendation from a friend or family member. With such honest opinions openly available, we expect companies to be just as honest.
Social media visibility. At this point, most businesses have at least one social media profile -- with 88 percent of companies using social media marketing to engage with their customers. The social media world is also active 24-7 and publicly available to the majority of consumers.
Information spreads like wildfire, and customers are always on the watch for new developments. All it takes is one piece of leaked information to send a company's reputation tumbling, so it's in businesses' best interests to proactively provide this information and avoid the catastrophe of an unintentional reveal.
Availability of information. This is also the Information Age, where consumers have grown to expect instantly available information on all their interactions.
If you want to know the name of an actor in the movie you're watching, you can expect to find it within seconds of searching. If you want to know where your food distributor gets its raw materials, you can expect to find that, too. Such expectations put pressure on businesses to provide as much information as possible, as openly as possible, to avoid consumer suspicions.
The future of transparency
All businesses that want to build and/or retain the trust of their customers should be working to improve transparency. But, what does the future of transparency hold? Will there be a counter-reaction by businesses trying to remain closed and secretive? Or will all businesses continue growing ever more transparent until all information on all companies is public information?
Related: 3 Ways to Increase Client Retention Through Transparency
Consumer demand has only increased over time, so it seems unlikely that transparency will fade from the American consumer's priority list any time soon. If anything, the demands of transparency will only increase as we become more closely connected. Your business needs to be prepared.