Online apparel retailer Everlane is the poster child for the radical transparency movement. Since launching in 2010, the brand has displayed a breakdown of costs for each item on its website. This includes things like materials, hardware, labour, duties and transport. It is an approach that has earned the fashion brand an army of socially conscious and style-savvy followers.
But over the past year, this transparent way of working has spread to just about every sector imaginable. Cosmetics startup Beauty Pie, for example, gives people a price breakdown of the factory costs for each product it sells. Insurance startup Lemonade publishes statistics on the revenue it’s generating, the number of policies sold and the average monthly charges.
Emerging companies in the financial industry – one of the sectors most distrusted by consumers – are also putting transparency at the heart of their operations. New US bank Aspiration gives customers an insight into the impact of their purchases by scoring companies based on how they treat their staff and the planet. The bank also rates companies against their closest competitors so customers can easily see which brands best reflect their own personal values.
Similarly, Clarity Money is an app that analyses users’ spending to recommend better deals and even negotiate lower subscription fees for them – forcing companies to be clear and upfront about their pricing strategies.
Who do you trust?
With startups redefining what it means to be honest and open, brands will soon face increased pressure to meet these new expectation benchmarks and highlight their own transparency credentials. For example, research conducted by J. Walter Thompson, London, found that transparency is one of the key ingredients in earning people’s trust (along with honesty, integrity and reliability). And according to research by Label Insight, 39% of people would switch to a new brand if it offered complete transparency and 73% would pay more for such products.
The message is clear: transparency is moving from a ‘nice-to-have’ option that helps startups create differentiation and into a need-to-have asset that all companies must consider. Today, being open and honest is an effective way of building trust. Tomorrow, it will be an essential means of boosting your bottom line.