In March, 2014, StubHub announced a novel “all in” pricing policy that displayed online ticket prices inclusive of add-on fees and other service charges. The company was responding to consumer research “showing that fans hate nothing more than to see their final ticket price jacked up with additional fees and service charges when they reach checkout,” according to a Wall Street Journal article (The Truth? Customers Don’t want to Hear It, March 26). Good move. Give customers what they want. Nothing wrong with that!
But then something unexpected happened: StubHub sales dropped as fans began to buy from sites that listed lower base prices. Ticket brokers who bought from StubHub reported that sales declined by 15% to 50% since the new pricing policy was implemented. In case you haven’t bought a concert ticket lately, ancillary fees can escalate the final cost by as much as 50% of the list price that draws in online shoppers. The Wall Street Journal article cited a $400 Justin Timberlake ticket on VividSeats.com in which the company assessed a $199.50 service charge. eCommerce has brought new meaning to the sales cliché, “But wait! There’s more!”
Processed food brand managers can relate to the conflicts that occur when there’s dissonance between what customers say they want and what they really want. “When you tell people something’s healthy, they think it doesn’t taste good,” said Sarah Bittorf, Chief Brand Officer of Boston Market. General Mills recently cut the per-serving amount of sodium by up to 50% in more than 27 varieties of Hamburger Helper. They jazzed up the product by adding other strong flavors like garlic, onion, tomato, and spices. “But the company was careful not to tell consumers about the sodium cuts,” according to another Wall Street Journal article, Food Makers Move Gingerly on Changes (June 24, 2014).
So, if you’re following the pattern here, indiscriminate transparency can put the brakes on sales. Ugh! Did I just do that – qualify transparency with an adjective? How about partial transparency? No, I don’t like it! Selective transparency? Nope – the same! You can see where this is going, opening up a can of distinctly un-tasty sales worms. For business developers, it’s more comforting to believe that in an era of unprecedented “customer information power,” transparent, socially-responsible enterprises will prevail over shadier ones that pull the wool over their customers’ eyes, or maliciously manipulate what they can see.
But in fact, the ideal of a fully-transparent enterprise is Pollyanna. It doesn’t matter how egalitarian the organization’s purpose. Consider the challenges surrounding corporate transparency about data breaches. “There is this crazy hysteria” about cyber-attacks, said Dawn-Marie Hutchinson, head of information security for Urban Outfitters. In August, The Wall Street Journal reported that some executives “argue that many breaches don’t lead to harm and can be handled quietly. Not every corporate document is a valuable trade secret; credit-card numbers may be exposed but never stolen, or stolen but never used. Disclosure can cause its own problems, prompting consumers to waste time replacing credit cards, for example. Most seriously, they say, going public could expose weaknesses that others could exploit.” Damned if we do, damned if we don’t. It’s an untenable position.
Compared to sales of concert tickets and hamburger supplements, transparency about compromised information security seems to scare the bejeebers out of legislators, and has garnered great regulatory interest. Only four states, Alabama, Kentucky, New Mexico, and South Dakota, do not have a data breach notification law. Ahhhh, to the surprise of no one, a loophole the size of Texas has already been uncovered: “We actually don’t use the term breach,” Ms. Hutchinson said, because that could trigger disclosure laws,” according to The Wall Street Journal. Clever.
Many executives huff that honesty and transparency are among the core ideals their companies and employees have embraced. Get with the program! I have advocated it, too. But how straightforward is the act or effort of being transparent?
Not very, it seems. Do customers always benefit when companies are open and honest? Do consumers persistently perceive corporate transparency in positive ways? If not, how should companies define ethical boundaries when it comes to disclosure – about anything? These are complex questions which undermine the often-held assumption that corporate transparency, customer-centricity, and shareholder value all play together nicely in the same sandbox. It’s harder than it looks. More transparency does not always equate to better outcomes.