In a world where marketing-speak is not just pervasive but increasingly uniform, consumer scepticism has reached record levels. Brands are widely regarded as dishonest, messages are mistrusted and people increasingly crave authenticity from the companies they buy from, sell to or work for. In essence, consumers are looking for businesses that seem honest, principled and prepared to admit to mistakes. These companies are rewarded with loyal custom and a reputation for integrity. They also benefit from rising sales and profits. ​

MARKETS

 

MARKETS

Honest to

goodness

A recent study, by communications agency Cohn & Wolfe, revealed that four out of five consumers across the world do not believe brands are honest. Western Europeans were found to be the most cynical of all surveyed consumers, with only 7 per cent in the UK, France and Germany agreeing with the statement that most brands are “open and honest”. Americans were more trusting at 23 per cent, while 36 per cent of Chinese respondents still expressed faith in brands.

Growing consumer scepticism is pushing all types of businesses to enter what some thought leaders, such as Harvard Business School senior fellow Bill George, describe as an “age of authenticity”.

Nowhere to hide

It’s a time in which consumer savviness, combined with an immunity to boilerplate marketing-speak, drives a growing demand for corporate transparency. In this new environment, authenticity – rather than popularity, or utility – is the new gold standard for attracting and retaining customers. Businesses that hope to thrive are increasingly being advised to conduct an ‘authenticity audit’ – a large-scale evaluation of their messaging, products and services, to ensure they are not hiding behind a well-crafted image, but are interacting with clients and customers from a place of authenticity. 

A recent study, by communications agency Cohn & Wolfe, revealed that four out of five consumers across the world do not believe brands are honest. Western Europeans were found to be the most cynical of all surveyed consumers, with only 7 per cent in the UK, France and Germany agreeing with the statement that most brands are “open and honest”. Americans were more trusting at 23 per cent, while 36 per cent of Chinese respondents still expressed faith in brands.

Growing consumer scepticism is pushing all types of businesses to enter what some thought leaders, such as Harvard Business School senior fellow Bill George, describe as an “age of authenticity”.

Nowhere to hide

It’s a time in which consumer savviness, combined with an immunity to boilerplate marketing-speak, drives a growing demand for corporate transparency. In this new environment, authenticity – rather than popularity, or utility – is the new gold standard for attracting and retaining customers. Businesses that hope to thrive are increasingly being advised to conduct an ‘authenticity audit’ – a large-scale evaluation of their messaging, products and services, to ensure they are not hiding behind a well-crafted image, but are interacting with clients and customers from a place of authenticity. 

Transparency first

But what is authenticity anyway? The Oxford English Dictionary defines it as “the quality of being genuine or true”. In the context of a brand-consumer relationship, however, authenticity often comes down to transparency. In 2017, consumers no longer believe that companies are perfect or infallible. Brands that attempt to project a picture-perfect image can risk coming across as false. Recently, communications company Bonfire Media invited 12,000 respondents across 12 industries around the world to offer their own definitions of corporate authenticity. The most common responses included: not sweeping problems under the rug, and being honest about the processes that go into producing products and services and the environmental impact of consumer products.

Breeding loyalty

Speaking on the survey results, Bonfire’s then leader of corporate affairs, Geoff Beattie, said he was “astonished” by how clearly customers seemed able to articulate exactly what corporate authenticity is. Over and over again, respondents said they would be drawn towards “a brand that has values and morals and stands by them no matter what, while honestly divulging its practices – flaws and all”.

While authenticity would be easy to write off as the latest corporate buzzword, the study also revealed that a company’s perceived authenticity is closely related to profits and return on investments. A full 91 per cent of customers – including those of B2B businesses – were more likely to stay loyal to companies they perceived as authentic. Nearly half (47 per cent) of those surveyed said they were more likely to seek employment from an authentic company, while 23 per cent were more likely to back it financially.

Sensitive souls

Millennials – the generation of 20 to young 30-somethings born from 1982–92 – are especially sensitive to brand authenticity. They grew up witnessing the collapse of Enron and the 2008 crash. They also entered their prime spending years amid global destabilising events and declining faith in the government and media. This age group tends to be particularly sceptical of corporations that try to appeal to them with slick advertising. They are accustomed to interacting with brands (and celebrities) through raw and immediate social media platforms, and they expect and feel entitled to an open dialogue with the brands they use. Of all consumers surveyed, millennials were most likely to make strong associations between spending and social responsibility, with nearly 50 per cent saying they were more likely to use the products or services of a brand that shares their values and point of view. 

Point of view

“Point of view” is one of the common qualities to emerge from discussions of corporate authenticity. In an article for Harvard Business Review, Amy Jen Su and Muriel Maignan Wilkins argue that companies that are happy to share a specific world view “demonstrate both strength and flexibility”. These companies don’t bother to cultivate a generic identity intended to appeal to everyone. Instead, authentic companies target their messages and their products towards a smaller set of consumers who share their perspective and are likely to develop a long-lasting loyalty.

In recent years, companies such as The Honest Company – which sells products targeted at environmentally conscious mothers – have benefited from turning a specific point of view into a corporate ideal. Honest’s mission, to “reduce the ubiquitous presence of toxic chemicals in our natural environment, man-made environments, and our personal environments” is clearly stated on all messaging and products, while the company itself invites an open conversation with customers about the processes behind its products and the ingredients it uses. 

The impact of selling honesty – both in the company’s name and as a key component of the company’s products and business mode – has paid off hugely. In 2012, its first year of selling products, the company hit $10 million in revenue. Just a few years later, it is bringing in over $250 million and is valued at $1.7 billion. 

Open for business

Authenticity can always come into play when a company deals with a setback, such as Honest did in 2016. That year, the firm faced a class action lawsuit alleging that its baby formula contained unsafe synthetic preservatives. Instead of settling the suit behind closed doors, Honest’s executives decided to address the issue directly. They released a statement denying the claims, and listing the various levels of testing products undergo to meet safety standards. They also discussed how Honest’s executives use the baby formula for their own infants, and admitted how unsettling these accusations had been to them on a personal degree. This degree of transparency helped the company bounce back and continue to grow with its brand intact, as customers seemed reassured by the direct and authentic response.  

Khalil Grell, a branding strategist with Siegel+Gale, who speaks regularly on authenticity, says companies’ fear of alienating customers by taking a point of view is often misplaced. “In fact, consumers become much more loyal when brands connect with their values,” he says. US company General Mills, for example, recently ran a major advertising campaign for Cheerios, including both interracial and same-sex families. The advertising campaign not only succeeded in starting a conversation, it showed a new side of Cheerios and suggested that the company itself is progressive and willing to take risks in order to share that viewpoint. 

Taking a stand

In 2016, Apple took a stand on a particularly divisive issue. After a terrorist attack in San Bernardino, California, the FBI requested that Apple write software to create a back door that would allow it to crack open the suspect’s locked iPhone. Apple refused to comply with the request. In an open letter to consumers, Apple CEO Tim Cook presented an authentic and impassioned reason for the company’s refusal, saying: “The United States government has demanded that Apple take an unprecedented step which threatens the security of our customers. We oppose this order, which has implications far beyond the legal case at hand. This moment calls for public discussion, and we want our customers and people around the country to understand what is at stake.”

Apple went even further than just making a statement. The next generation of its operating system, iOS 8, features new encryption tools that would make it nearly impossible for anyone to hack into a locked phone – including the government – thus integrating its philosophy and perspective into the product itself.

Cook and Apple’s stance was controversial, with 50 per cent of Americans in opposition to the company’s decision. However, in its refusal, Apple established itself as a company that puts customers first and holds their security and privacy as sacrosanct, even in difficult times. 

No beef

Among the list of top global brands perceived as authentic, one towards the top of the list may come as a surprise: McDonald’s. But McDonald’s is another company that, like Apple in 2016, dealt with adversity by facing it head-on, and choosing to be transparent with customers.

In 2010, a viral video alleged that McDonald’s hamburgers were not made of entirely real meat but, rather, ‘pink slime’ – beef trimmings treated with ammonia. The company surprised many by addressing the pink slime issue head-on. It launched a new advertising campaign where it invited an outside investigator to come into its food preparation facilities and report for himself whether he found any pink slime. The company spoke openly about the myths surrounding what goes on in McDonald’s kitchens and invited customers to see for themselves. The result was that consumers – whether or not they enjoy eating at McDonald’s – began to view the company as more authentic, and essentially honest in its mission and relationship with customers.

The B2B perspective

Cultivating authenticity isn’t just important to consumer-facing businesses. B2B businesses can also benefit from making it the cornerstone of every interaction and service. Alan Cohen, chief commercial officer of security start-up Illumio, is a firm advocate of authentic communication and realistic expectation-setting, suggesting that B2B firms can adopt these values to great advantage. Empathy is fundamental to authenticity in the B2B world, he says. “Empathy can take the form of not just performing a service – such as financial services or consulting – in a vacuum, but by clearly taking the time to find out each individual client’s needs and adjusting your business accordingly,” he says.

He notes that the best B2B businesses communicate in a way that is direct and data-driven, giving clients a full and honest picture of what their services can – and cannot – do. In many cases, clients don’t want to be told that you are a fix-all for every problem, but they do respond well to being presented with reasonable and reliable performance metrics.

When interacting between businesses, as when interacting with consumers, an authentic business strives for candour, openness and transparency. In this new era of authenticity, it may be the greatest sustainable advantage 

Back to articles

A full 91 per cent of customers were more likely to stay loyal to companies they perceived as authentic”​

B2B businesses communicate in a way that is direct and data-driven, giving clients a full and honest picture of what their services can – and cannot – do”​

In 2012, its first year of selling products, The Honest Company hit $10 million in revenue. Just a few years later, it is bringing in over $250 million and valued at $1.7 billion”​

Authentic companies target their message and their products towards a smaller set of consumers who share their perspective and are likely to develop a long-lasting loyalty”​

In 2012, its first year of selling products, The Honest Company hit $10 million in revenue. Just a few years later, it is bringing in over $250 million and valued at $1.7 billion”​

Apple established itself as a company that puts customers first and holds their security and privacy as sacrosanct, even in difficult times”​

A full 91 per cent of customers were more likely to stay loyal to companies they perceived as authentic”​

Transparency first

But what is authenticity anyway? The Oxford English Dictionary defines it as “the quality of being genuine or true”. In the context of a brand-consumer relationship, however, authenticity often comes down to transparency. In 2017, consumers no longer believe that companies are perfect or infallible. Brands that attempt to project a picture-perfect image can risk coming across as false. Recently, communications company Bonfire Media invited 12,000 respondents across 12 industries around the world to offer their own definitions of corporate authenticity. The most common responses included: not sweeping problems under the rug, and being honest about the processes that go into producing products and services and the environmental impact of consumer products.

Breeding loyalty

on the survey results, Bonfire’s then leader of corporate affairs, Geoff Beattie, said he was “astonished” by how clearly customers seemed able to articulate exactly what corporate authenticity is. Over and over again, respondents said they would be drawn towards “a brand that has values and morals and stands by them no matter what, while honestly divulging its practices – flaws and all”.

While authenticity would be easy to write off as the latest corporate buzzword, the study also revealed that a company’s perceived authenticity is closely related to profits and return on investments. A full 91 per cent of customers – including those of B2B businesses – were more likely to stay loyal to companies they perceived as authentic. Nearly half (47 per cent) of those surveyed said they were more likely to seek employment from an authentic company, while 23 per cent were more likely to back it financially.

Sensitive souls

Millennials – the generation of 20 to young 30-somethings born from 1982–92 – are especially sensitive to brand authenticity. They grew up witnessing the collapse of Enron and the 2008 crash. They also entered their prime spending years amid global destabilising events and declining faith in the government and media. This age group tends to be particularly sceptical of corporations that try to appeal to them with slick advertising. They are accustomed to interacting with brands (and celebrities) through raw and immediate social media platforms, and they expect and feel entitled to an open dialogue with the brands they use. Of all consumers surveyed, millennials were most likely to make strong associations between spending and social responsibility, with nearly 50 per cent saying they were more likely to use the products or services of a brand that shares their values and point of view. 

Point of view

“Point of view” is one of the common qualities to emerge from discussions of corporate authenticity. In an article for Harvard Business Review, Amy Jen Su and Muriel Maignan Wilkins argue that companies that are happy to share a specific world view “demonstrate both strength and flexibility”. These companies don’t bother to cultivate a generic identity intended to appeal to everyone. Instead, authentic companies target their messages and their products towards a smaller set of consumers who share their perspective and are likely to develop a long-lasting loyalty.

In recent years, companies such as The Honest Company – which sells products targeted at environmentally conscious mothers – have benefited from turning a specific point of view into a corporate ideal. Honest’s mission, to “reduce the ubiquitous presence of toxic chemicals in our natural environment, man-made environments, and our personal environments” is clearly stated on all messaging and products, while the company itself invites an open conversation with customers about the processes behind its products and the ingredients it uses. 

The impact of selling honesty – both in the company’s name and as a key component of the company’s products and business mode – has paid off hugely. In 2012, its first year of selling products, the company hit $10 million in revenue. Just a few years later, it is bringing in over $250 million and is valued at $1.7 billion. 

B2B businesses communicate in a way that is direct and data-driven, giving clients a full and honest picture of what their services can – and cannot – do”​

Open for business

Authenticity can always come into play when a company deals with a setback, such as Honest did in 2016. That year, the firm faced a class action lawsuit alleging that its baby formula contained unsafe synthetic preservatives. Instead of settling the suit behind closed doors, Honest’s executives decided to address the issue directly. They released a statement denying the claims, and listing the various levels of testing products undergo to meet safety standards. They also discussed how Honest’s executives use the baby formula for their own infants, and admitted how unsettling these accusations had been to them on a personal degree. This degree of transparency helped the company bounce back and continue to grow with its brand intact, as customers seemed reassured by the direct and authentic response.  

Khalil Grell, a branding strategist with Siegel+Gale, who speaks regularly on authenticity, says companies’ fear of alienating customers by taking a point of view is often misplaced. “In fact, consumers become much more loyal when brands connect with their values,” he says. US company General Mills, for example, recently ran a major advertising campaign for Cheerios, including both interracial and same-sex families. The advertising campaign not only succeeded in starting a conversation, it showed a new side of Cheerios and suggested that the company itself is progressive and willing to take risks in order to share that viewpoint. 

Taking a stand

In 2016, Apple took a stand on a particularly divisive issue. After a terrorist attack in San Bernardino, California, the FBI requested that Apple write software to create a back door that would allow it to crack open the suspect’s locked iPhone. Apple refused to comply with the request. In an open letter to consumers, Apple CEO Tim Cook presented an authentic and impassioned reason for the company’s refusal, saying: “The United States government has demanded that Apple take an unprecedented step which threatens the security of our customers. We oppose this order, which has implications far beyond the legal case at hand. This moment calls for public discussion, and we want our customers and people around the country to understand what is at stake.”

Apple went even further than just making a statement. The next generation of its operating system, iOS 8, features new encryption tools that would make it nearly impossible for anyone to hack into a locked phone – including the government – thus integrating its philosophy and perspective into the product itself.

Cook and Apple’s stance was controversial, with 50 per cent of Americans in opposition to the company’s decision. However, in its refusal, Apple established itself as a company that puts customers first and holds their security and privacy as sacrosanct, even in difficult times. 

No beef

Among the list of top global brands perceived as authentic, one towards the top of the list may come as a surprise: McDonald’s. But McDonald’s is another company that, like Apple in 2016, dealt with adversity by facing it head-on, and choosing to be transparent with customers.

In 2010, a viral video alleged that McDonald’s hamburgers were not made of entirely real meat but, rather, ‘pink slime’ – beef trimmings treated with ammonia. The company surprised many by addressing the pink slime issue head-on. It launched a new advertising campaign where it invited an outside investigator to come into its food preparation facilities and report for himself whether he found any pink slime. The company spoke openly about the myths surrounding what goes on in McDonald’s kitchens and invited customers to see for themselves. The result was that consumers – whether or not they enjoy eating at McDonald’s – began to view the company as more authentic, and essentially honest in its mission and relationship with customers.

The B2B perspective

Cultivating authenticity isn’t just important to consumer-facing businesses. B2B businesses can also benefit from making it the cornerstone of every interaction and service. Alan Cohen, chief commercial officer of security start-up Illumio, is a firm advocate of authentic communication and realistic expectation-setting, suggesting that B2B firms can adopt these values to great advantage. Empathy is fundamental to authenticity in the B2B world, he says. “Empathy can take the form of not just performing a service – such as financial services or consulting – in a vacuum, but by clearly taking the time to find out each individual client’s needs and adjusting your business accordingly,” he says.

He notes that the best B2B businesses communicate in a way that is direct and data-driven, giving clients a full and honest picture of what their services can – and cannot – do. In many cases, clients don’t want to be told that you are a fix-all for every problem, but they do respond well to being presented with reasonable and reliable performance metrics.

When interacting between businesses, as when interacting with consumers, an authentic business strives for candour, openness and transparency. In this new era of authenticity, it may be the greatest sustainable advantage 

Back to articles

Authentic companies target their message and their products towards a smaller set of consumers who share their perspective and are likely to develop a long-lasting loyalty”​

Apple established itself as a company that puts customers first and holds their security and privacy as sacrosanct, even in difficult times”​

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Bridgepoint  |  The Point  |  May 2017  |  Issue 31