If you want loyal consumers, then you need to build a transparent brand.
That's the takeaway from a new study by Label Insight, a company that specializes in product data. Dubbed the 2016 Label Insight Transparency ROI Study, the survey targeted more than 2,000 consumers about the impact transparency has on their trust in and loyalty to brands.
While the study focused on brands in the food industry, its key takeaways are relevant to both new and established entrepreneurs seeking to build a company that generates lifelong customers. Here are five lessons the study can teach us about the importance of brand transparency.
1. Consumers want to know everything about a product
No longer can you slap a label on a product and expect it to fly off the shelves. Consumers want to know more than what's in your products. They want detailed insights regarding where you sourced your materials, how the product was made, what values guided the production process, and so on.
Consumers seek out this information in order to determine whether a company is trustworthy--56 percent of those surveyed said that additional product information inspires more trust in a given brand.
While investing in ethical systems and materials may require more costs up front, it can have a massive payoff (in addition to being the ethical choice): According to the study, 73 percent of consumers say they're willing to pay more for a product that promises total transparency.
Meanwhile, 39 percent said they would switch to a new brand in the pursuit of product transparency. Case studies such as Oliver Cabell (a fashion startup) and Zenhaven (a mattress startup) also bear out the idea that consumers are willing to pay more for greater transparency.
2. Consumers want to know about more than your products
The internet in general and social media specifically have allowed brands to develop personalities, value systems, and relationships with other brands and consumers in ways never before seen. Consequently, consumers expect to know more about companies than ever before.
In addition to being totally transparent about products themselves, companies are increasingly expected to be transparent about their overarching value systems and the way they do business--and it better be authentic.
In exchange for this information, consumers are more likely to place their trust in a brand. The study found that almost 94 percent of all consumers are more likely to be loyal to a brand when it commits to full transparency.
3. If your brand isn't transparent, consumers will hunt for information elsewhere
Consumers want all of the product and company insights outlined above--and if the company who makes the product doesn't offer them, then consumers will take to the internet to try to determine these details for themselves.
As the study points out, this means that brands can easily lose control of the available information about their products as consumers turn to third-party sources to determine how products were made. Thus, being completely transparent up front allows brands to retain control of their image and shape the narrative about their own products.
4. Millennial moms are leading the consumer charge for transparent branding
The study found that mothers aged 18 to 34 emphasize brand transparency more than any other consumer demographic. They're also the most willing to seek out product information online and to pay more for products that are produced with transparency. (A whopping 86 percent of millennial moms reported that they would pay more for a product with full transparency.)
Given that this demographic represents upwards of $200 billion in spending power, it's important to keep their preferences in mind.
5. Brand transparency can produce lifelong consumers
These days, there's an unprecedented number of brands competing for consumers' attention. Determining which products are actually worth buying can be a daunting task. So when consumers find a brand they feel they can trust, they're likely to stick with that brand for the long-term.
And what's the best way to build consumers' trust? Brand transparency. In fact, 56 percent of those surveyed said they would be loyal to a company for life if it provided complete transparency. Additionally, 81 percent said they would be willing to sample a brand's entire range of products if they were comfortable with its degree of transparency.
Brand transparency isn't just a nice thing to strive for. These days, it's a business imperative. As trust in business falls to new lows, brands can differentiate themselves by committing to full transparency. In so doing, they can build dedicated consumers for life.