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Does Transparency Build Trust?

Why something to hide might make you lose customers

9Jun

When major organizations surround themselves with controversy and vagueness they normally have something to hide.

As we have seen with FIFA this month, its insistence on keeping the public in the dark led to an FBI investigation to probe the voting process behind the awarding of the latest World Cups.

Tesco, the UK’s leading supermarket, was found guilty of overstating its profits by £250 million last year, with its leading executives trying to cover up the ground lost to its low-cost German rivals, Aldi and Lidl. The scandal led to £2 billion being wiped of Tesco’s value, with its stock falling to its lowest level in 11 years.

These two examples demonstrate what large organizations are capable of in the pursuit of increased profits. Many companies may be guilty of these acts, but with the punishments so severe, it’s hard to understand why they would be.

Transparency in business is a vague term. Just like us, being totally transparent isn’t feasible. I don’t think people expect them to be either, they just don’t want big companies, which take their money everyday, to lie to them.

A big part of this is trust - and Tesco, for example, cannot rely on this anymore. Would you be loyal to someone who had lied to you? Maybe you would if the price was right, but what happens when someone comes along, like Lidl and Aldi, whose pricing strategies make Tesco look expensive? You lose customers, as there’s no loyalty whatsoever.

The internet has given organizations more opportunity to be transparent about the products they produce. This has particular relevance in the food and beverages sector, where it’s essential that companies don’t advertise themselves as healthy, if they’re adding preservatives to their foods. If you search for Weetabix for example, you’ll see that there’s nutritional information for all its products - this is being transparent and this ultimately empowers consumers.

‘The Whole Foods Market’ took a step towards true transparency when it was announced that by 2018 all the products in its US and Canadian would be labelled to indicate if they contain genetically modified organisms. Supermarkets in the UK have followed suit, with a new ‘traffic light’ pie chart visibly accessible on most supermarkets own branded food. This makes it easier to find out about the nutritional ingredients in their products.

The advantages of being transparent is often customer loyalty and it’s because of this that I was surprised to find out that Apple was recently rated one of the least financially transparent companies about its operations abroad. The study, done by the Transparency International (TI), demonstrates that transparency and success aren’t always connected.

Build a product that everyone loves and you might be able to afford to keep some stuff behind closed doors, but if you’re not confident that your product will be able to save your brand, be as transparent as possible, and never lie to your customers.

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