Customer loyalty and trust are valuable commodities in the brand-consumer relationship, but they are also its biggest hurdles. Poor experiences and a lack of transparency from businesses to their customers contribute heavily to the loss of trust and loyalty – ultimately leading to a loss of long-term customers.
Issues around data privacy and security are key drivers behind customers losing faith in your brand, while transparency plays an important role in whether or not you can successfully earn (or regain) and maintain customer trust and loyalty. This year alone, several big brand data breaches – Marriott being the most recent – highlight our shortcomings when it comes to winning – and keeping – customer trust.
In a recent survey we conducted on consumer attitude to AI in customer experience and trust towards brands, we found that only 21 percent of consumers trust companies with their personal information. What’s more, nearly half of those consumers don’t want brands storing their information due to concern about data breaches and hacks. Improved transparency from brands overall, and more specifically in how they are using, storing and sharing their customer data, is paramount to instilling loyalty. With this in mind, here are three lessons to help understand the role transparency plays in customer trust and loyalty.
Ignorance is not bliss: Consumers want to know everything
In the digital age, people have access to more information than ever before, so naturally they expect to be more knowledgeable as consumers. Conscious consumerism has propelled interest in knowing not only about a product, but what’s in the product, where its component parts are sourced from, how it is made and what business processes and values guide its creation. This goes beyond basic products as well – consumers want this same transparency from service brands such as meal delivery businesses like Hello Fresh and ride sharing companies like Uber.
The fine print at the bottom of an ad or label is no longer enough – especially given that so many consumers engage with brands and make purchases online a place where they have to contend with the threat of data security risks. Your customers want to know everything about your company and how its practices affect them. This is how your customers decide whether or not your brand is trustworthy. If you aren’t being upfront with them, sharing your practices for things like data privacy and how your product is made, then trust – followed by loyalty – will be lost.
The truth should always come from you to your customer
When consumers recognize that you are being honest and open with them about your products, business practices and brand standards, they are more likely to give you their loyalty. When it comes to trust with personal customer information, both brands and consumers need to be on the same page about what data is being stored, how it is being secured and what it will be used for in the future (to drive better experiences). To build this trust, the onus is on the brand to communicate clearly and early with consumers, ensuring there are no blurred lines and instilling confidence in the brand’s approach to data security and privacy. Communicating this in an honest and transparent fashion will breed trust and create an emotional response among your customers – one that makes them feel personally connected to your brand.
In addition, you don’t want loyal customers finding out information about you – either positive or negative – from a third-party source. The idea behind maintaining loyalty is showing your customers that you value not only their business, but them as an individual, and that you understand and appreciate the role they play in growing your business.
If your customers discover details about your company from elsewhere that present it in a negative light, you run the risk of being faced with three different scenarios:
1. They will feel as though you no longer value them enough to share information upfront
2. They will be misinformed, as information tends to change while passing through multiple hands
3. They will form their own opinions based on this misinformation before you have the chance to set the record straight
When you don’t practice transparency with your customers, you risk having your brand messaging and identity misrepresented by someone else, which can be detrimental to how your customers feel about the company.
Transparency leads to lifelong customers
This is simple psychology – show your customers that they come first, give them your trust and, in turn, they will give you their loyalty. Take away your transparency and they will take away their loyalty.
Studies over the years have found that more than half of consumers stay with a brand for life if it provides them with complete transparency. Meanwhile, a 2018 study from Sprout Social showed that 89 percent of consumers would give transparent brands a second chance after a bad experience and 85 percent would stick with these transparent brands through a crisis. Even without these numbers, the concept is easy to understand – when you are truthful and open with your customers, they feel more connected to your brand and will stay with you for the long-term.
Transparency isn’t something for brands to simply strive for, it’s a key differentiator in how you engage with customers and keep them coming back. Customer trust has walked a fine line for quite some time, which means customer loyalty has too. You can set your brand apart by practicing what’s being preached and use transparency to meet customer expectations and to grow lasting relationships.
Hi Brian: I agree with your points that companies need to be transparent with consumers about how their data will be used and if – and how – their information will be protected. I wrote about this in a 2017 article, A Future without Secrets: Why We Need Ethical Data Governance (please see http://customerthink.com/a-future-without-secrets-why-we-need-ethical-data-governance/)
Regarding the pragmatism of “complete transparency”: It’ complicated. I don’t believe it’s well advised for marketers, let alone even possible. I’m reminded of the popular saying, “If you like laws and sausages, you should never watch either one being made.” An extreme example, but a memorable one. For the most part, I’m content to be spared the minutia and performance warts about the products that I use. It’s only when that minutia and those warts matter for my decision making that I want transparency. And by that, I really mean the right transparency. I still don’t feel slighted if the transparency isn’t complete.
And that’s a mutual problem for vendors and consumers. Knowing what to disclose, and how much to disclose is a thorny problem for vendors, which I wrote about in an blog, A Contrarian View of Transparency (please see http://customerthink.com/a-contrarian-view-on-transparency/). At the time I wrote the article, I hewed to the idea that more transparency served vendors and consumers alike. But then there were some prominent instances when being transparent backfired on vendors, and it seemed that consumers didn’t particularly value it, either.
The best advice I have read is to make sure that the information sharing matches the consumer’s need to know, and that withholding information doesn’t cause harm to stakeholders – notably, customers and employees. That’s admittedly fuzzy, and ethics and personal values enter the mix. My first post of 2019 will address how companies can take steps to ensure that good decisions are made in this regard.
Finally, that customers discover product problems and performance issues outside of the vendor’s direct communication is very common in the tech industry where I have spent much of my career. In fact, I have often monitored user groups and third-party online reviews to get insights from the field that my employers and clients could never provide via their own product engineering and marketing teams. While I agree that vendors should never lose control of their own brand message, outsider commentary provides a valuable service for vendors – even if the conversations are not always positive. Vendors benefit learning what customers know. And when there are problems, vendors often have the opportunity to respond, and can demonstrate to prospects and customers that they are listening and engaged. That’s a powerful message.