How being truthful can positively impact businesses
The world is changing fast, and so is the way people consume. Currently, there is an overwhelming variety of products and services available on the market, making it more difficult for organizations to stand out and attract customers’ interest. However, authenticity has proven to be key to creating a bond with and inspiring loyalty in customers, as well as retaining talent due to the positive results that a transparent culture can bring to the company. We investigate how authenticity can help connect with customers, retain talent, and build a purpose-driven brand.
Gaining customer loyalty with authenticity
Authentic communication is a trust-building experience for customers; this can reduce costs in the long run and increase consumer retention. Loyal customers not only spend more time and money on brands they believe in, but they create word-of-mouth marketing by recommending them to their friends and family, giving rise to the possibility of sales growth. According to a survey conducted by JCDecaux and Clear Channel, 81% of customers believe that trust is a determining element when purchasing a new product.
Nowadays, truthfulness is one of the attributes that consumers expect from companies. According to a survey conducted by Edelman, around 40% of survey respondents agree they have stopped buying from brands they like due to a lack of trust in the company behind the product; on the other hand, 70% are likely to buy again from a brand they trust.
When consumers trust a brand, they will stay loyal, spend money, and share the company’s products and services on social media.
Sportswear brand Nike proved their authenticity with NFL quarterback Colin Kaepernick’s ad named ‘Dream Crazy’. Nike took a risk by associating itself with Kaepernick’s message, which had garnered some controversy, when he decided not to stand for the national anthem back in 2016 as a protest against racial injustice.
As a result of the ad, Nike was mentioned on social media more than 5.2 million times. Its share price increased by 36%, adding six billion US dollars to Nike’s market value. Nike’s ad demonstrated that being authentic, caring about social issues and standing up for its diverse customers can positively impact the brand and connect with people.
Connecting with consumers
People are looking for genuine and authentic companies; 90% of consumers agree that authenticity is crucial when deciding which brand to believe and support – up from 86% in 2017. Building a stronger brand is essential to connect with people, and social media enables brands to connect directly with their audiences. Around 90% of consumers believe that social media can connect people, and 78% want brands to create a community across social media.
The younger generations seek brands that care about their values and are authentic with their customers; 65% of Millennials confirmed that they had boycotted a brand that took advantage of a social issue. Millennials and Gen Z will be the largest demographic groups in the world, so businesses must win their favor if they hope to continue growing in a changing marketplace. These new generations are the ‘most educated and productive’, however their wages remain low and life expenses continue to rise. High prices and low salaries lead these generations to opt for organic companies where they can have authenticity over perfection.
Retaining talent while reducing expenses
Transparency in the workplace has proven to bring good results to companies, increasing trust between people and helping reduce stress levels, reflecting better performance. Studies have shown that 75% of people agree that more transparency could increase confidence, and as a result, boost the company’s success. Furthermore, people want to be heard within the company, and 73% of people expect to be included in planning decisions at work.
People want to work for an organization that brings purpose to their lives, and companies should fulfil this to avoid losing talent. In addition, if the company’s purpose aligns with people’s values, it could bring further benefits such as higher engagement and stronger levels of loyalty. However, surveys have shown that only 18% of people obtain the purpose they would expect from their jobs. Consequently, businesses need to reevaluate their priorities, including employee well-being and resilience.
Authentic organizations could reduce costs over time if they can attract and retain new talent. The impact of talent turnover can cost a company dearly – it’s estimated that each person who leaves will cost around one and a half to two times the person’s salary, resulting in a significant loss of revenue. In addition, approximately two-thirds of resources lost to turnover are intangible, such as knowledge and level of productivity; 33% of losses are due to the cost-per-hire. Authenticity in a company has proven to give good results, retaining talent, and avoiding turnover costs; but what can an organization do to build authenticity?
Building an authentic brand
To establish authenticity as a cultural value in an organization, everyone needs to work in the same direction with a clear goal. So how should companies start being more authentic?
Be consistent. Consistency is key, as it will help share the organization’s values through a clear message, so the public will understand what thecompany stands for. Surveys have shown that consistency can result in between 10% and 20% revenue growth. The message and the values must be closely connected and follow the same structure and tone of voice across different communication channels. Inconsistent statements can lead to confusion, leading to people losing trust in the brand.
Actions speak louder than words. The transmission of core values to the public alone is not enough. Actions matter and consumers can tell whether a company is being authentic or not. An excellent example of a brand putting its words into action is coffee company Starbucks. Starbucks has expressed its commitment to tackling hunger in the US. So far, the company has invested $45 million in hunger relief and donated 33.7 million meals, demonstrating their concern on social issues and taking action to solve them.
Be authentic. Businesses need to identify their purpose and what matters to them, making sure it matches what the company stands for. Organizations could begin by asking simple questions to establish their identity, such as who they are, what the company’s vision is, and what their purpose is. 71% of people will purchase from a purpose-driven company over similar alternatives when they have the same quality-price ratio.
The world is changing, so the way companies operate must also change to satisfy their teams, partners, and customers. Customers are more demanding than ever, and they can quickly identify whether a company’s claims are legitimate or far from reality. Transparency has proven to be the best way to confront this shifting market. Building transparency in a company can take time, but it will be rewarded with customer loyalty and a healthy working environment.
We believe that transparency is key for doing business in the 21st century, and that purpose is more important than perfection. Find out more.