Companies are struggling to keep pace with customers’ ever increasing expectation of information transparency. In fact customers now expect companies to match the openness they share in their own lives online. Whilst the idea of sharing intimate details over social media has been normalised, these same sharing norms are bleeding over into the experiences customers expect from companies and brands.
This raises the questions, why are customer expectations for transparency increasing as we progress through the internet revolution, and why should companies take note? To answer both these points, it is worth looking at how consumer’s decision-making has changed over time.
Influences on consumer buying decisions have changed markedly since the era of post-industrial mass production. To pick a year at random, say 1977, a purchase would traditionally be based on a product’s review in a newspaper, a product advertisement on the TV or potentially a recommendation from a friend or neighbour. Skip forward to 2017, and increasingly the decision-making process derives from a barrage of crowdsourced information, often across multiple sites and services.
Consumers now have access to ratings and reviews served up by internet platforms, marketplaces and social media. It is fair to state then that the information asymmetry consumers suffered when making purchases in 1977 was significantly worse than that which exists for consumers today. Consumers are now much more savvy thanks to greater levels of information transparency.
The key driver of this new transparency is the invention of the internet. As a historical public record, it provides constant access to what was said, what was done and what was promised. Consumers are now able to check, compare and contrast competitors. By consumers having greater visibility of the shortcomings and virtues of different providers, more informed decisions can be made. In this sense, companies that are confident in the competitiveness of their offering should embrace the ideals of transparency. Yet the internet can also be a harsh and unforgiving place, with companies who underperform having little room to manoeuvre.
Monzo, a UK challenger bank, can be seen as a company using transparency to compete against incumbents in the consumer space. They demonstrated ‘reactive’ transparency recently after suffering a major card outage due to a supplier fault. Within minutes, they had notified every customer and offered compensation that matched the costs customers incurred as a result. Further, Monzo has since proceeded to take a proactive transparency approach, launching a transparency dashboard to share information and encourage customer engagement. These efforts are bearing fruit too – with the company breaking the record for fastest ever crowdfunding on Crowdcube and acquiring 100,000 users in just two years.
An example of a company adopting information transparency in the business to business space is Ripple Labs. Aiming to build an ecosystem of banking clients, Ripple Labs are targeting developers by opening up their developer centre, building resources that explain their pricing, business model and underlying technology and investing in customer engagement that makes public the company’s roadmap and ambitions. By competing against closed, often secretive competitors, Ripple is hoping that transparency will not only improve their appeal but define their business’ unique selling point.
In fact, information transparency goes further than just product purchases and scales to services and all levels of interaction. There is a plethora of providers improving the information available for decision-making. For example, Glassdoor brings prospective employees insight on a company’s working environment, Trustpilot democratises company customer reviews, whilst Brandwatch creates a barometer of a company’s customer sentiment using social media like Twitter and Facebook.
Another dynamic affecting the prevalence of transparency is the speed at which information can be disseminated via the internet. A pertinent example might be the recent viral video of the United Airlines incident, a passenger being forcibly removed from an overbooked flight and suffering injuries that required facial reconstruction. What would have lost United a handful of customers just 10 years ago, now threatened the CEO’s job, has knocked close to a $1BN off the company’s value and caused irreparable brand damage.
This is the power of the internet, where customers’ experiences become transparent for the benefit or detriment of a company.
As we progress further away from traditional mass-market outreach and further forward into the internet age, information transparency will only grow in importance. Companies will need to transition from a previous default, a closed mentality, to being open as standard. With all stakeholders’ expectations of transparency shifting, companies’ can no longer say one thing and do another. This calls for a greater focus on the customer, with companies needing to create both compelling and consistent experiences for all.