A hundred years ago — and really, even 30 years ago — it was possible for brands to establish and maintain customer trust without revealing much about themselves or their operations. Today, that’s rarely the case — and with good reason.
Thanks to online reviews and social media, companies can’t hide unsavory practices or subpar customer experiences behind long-trusted brands. Plus, today’s customers have access to more information than ever and can investigate claims, look up executives and otherwise research any brand they may buy from.
The key to earning and winning customer trust in this environment? Transparency. Here’s a look at the business case for becoming more transparent, along with strategies for making the shift.
The Business Case For Transparency
Far from being a buzzword for idealists, transparency is a proven way to boost nearly every measurable business output.
A 2018 study (download required) from food label data company Label Insight found that 74% of customers are willing to switch to a brand that provides increased transparency. Further, 80% of shoppers said they’d be more likely to be loyal to transparent brands and about half are even willing to pay more for transparent products.
These attitudes have also been demonstrated in real-world experiments, as in a study of diners and cooks. When customers could see their food being prepared, their satisfaction rose by 17%. Just as notable: when cooks were visible to diners, service got 13% faster.
Research from HR software firm TINYpulse also found that internal transparency (between leaders and employees) is the single largest factor that correlates with employee happiness.
In other words: Adopting transparency as a business model can lead to happier and more engaged employees, enable you to command higher prices for your products and increase customer loyalty.
Without Transparency, A Cycle Of Mistrust
The issues of trust and transparency are of special interest to those of us in the insurance industry, which is notorious for its mutual distrust between providers and consumers. This Willis Towers Watson report summarizes the problem nicely: “distrust breeds misbehavior, which fuels more distrust.”
In other words, it’s less important to determine which came first — consumer fraud or insurer bad faith — than it is to acknowledge that both problems will continue and worsen as long as the parties don’t trust each other.
The good news is that many companies in the insurance space are now attempting to correct the lack of trust — particularly startups leveraging new technology and new attitudes to solve old problems.
Transparent Practices Any Business Can Adopt
So, what do transparent practices look like? Here are some basics that can push your business forward.
1. Proactively communicate openly with customers. For the insurance industry, this means making an effort to translate policies into plain English (in writing or through customer support) so customers are clear about what you’re offering and what they’re responsible for. In any industry, it might mean keeping a company blog that regularly includes posts about what the company is working on. It might mean encouraging leadership to be active — and honest — on social media. And it should certainly include listening to customers in whatever medium they choose to communicate: email, phone calls, online reviews, etc. Use their feedback to make your offering better and respond to their concerns in a meaningful way. This demonstrates that your company is reachable, engaged and trustworthy.
2. Be transparent with employees. Here’s the thing: You can’t build a culture of transparency without practicing transparency among your employees. You’re not going to answer every customer call, reply to every review or otherwise touch every transaction. If you want your employees to maintain transparency, you have to demonstrate it by clearly communicating company goals, workplace expectations, successes and failures, and more.
3. Hold yourself accountable. At insurtech startups, this often takes the form of constantly assessing and improving our technology. To offer a truly improved experience, our tech platforms must increase efficiency and accuracy while decreasing unnecessary steps that add risk. More generally, this means establishing values for your company and checking in with them daily. Hold your peers accountable for their actions and ask that they do the same for you. It’s a lot easier to be transparent when you’re consistently making decisions that align with the values you’ve established and are in the best interests of your employees, customers and stakeholders.
4. Own up to mistakes — and be clear about what you’re doing to get better. Everybody makes mistakes. Customers and employees (and investors) will be more likely to forgive you and give you another chance if you’ve made your best effort to do right all along.
We’re in a transition period right now. Incumbents in many industries are still dominant because of their hard-earned trust — and in some cases, their genuine efforts at becoming more transparent. But we’re also seeing the onslaught of startups, from insurance to mattresses to clothing to food, that offer a transparent alternative to the status quo. Consumers are gradually coming to expect that transparency. In the long term, it is a strategy for success.
This article originally appeared on FORBES