Every year Kantar-Sifo asks thousands of Swedes to assess the reputations of different companies. In 2016 a record was broken that no one wants the title for. Volkswagen lost a whopping 44 points on the list and plummeted from sixth place to third from the bottom.1 The reason was the emissions scandal that broke out in September 2015, when it was discovered that Volkswagen had falsified its emissions measurements for diesel cars in the USA. More than ten million cars globally emitted more NOx than reported. The press dug deeper in this sensational scandal and turned up one new revelation after another.
This is just one of many examples of companies that have been exposed and have discovered how swiftly negative news spreads. We can now talk about total transparency, where all of a company’s faults and misdoings are continuously exposed for public view on the Internet. People have always talked about the quality of different actors, but their opinions have usually stayed within their own immediate sphere. Today’s transparency means that everyone can choose to access these comments. For companies, this change is monumental. The Internet is the modern pillory.
It takes 20 years to build a reputation and five minutes to ruin it. | Warren Buffett, investor and multimillionaire
The ability to scrutinize companies and organizations on the net has literally exploded. We can read what others think about different brands on blogs, discussion forums and in the social media. As customers we have become accustomed to using price comparison services, but these are also becoming more prevalent for B2B companies. On sites like Price It Here, one can quickly find out who provides the cheapest containers, business health services, or credit card management. In the same way we can see other customers’ assessments on Trustpilot and Reco. We can even see ratings for B2B companies on sites like Clutch and Konnecti. On Jobinside one can even rate the company where one works, something that can be useful for an employer keep track of. This type of collective advising means that one false step or minor scandal can quickly move a company into the spotlight. And – for those who are dependent on customers – even positive evaluations.
The relationship between companies and customers has thereby changed. Companies are forced to accept that in the era of total transparency they must provide excellent products and outstanding service. One must paint on a smile and go that extra mile for the customer. Otherwise the whole world will find out about it. There is no longer anywhere to hide – providing high quality is becoming an inescapable requirement.
In this way, the customer has gained new power. In all forms of sales contexts, the seller has traditionally had the information advantage. They have known about a product’s actual value and quality as well as their competitors’ prices. Because of the Internet, this asymmetry of information is largely gone. Customers can now easily compare offers, read reviews, and form their own opinion about what is the best buy. They are many times better informed and armed to the teeth with arguments, even about sophisticated products and services. The situation is almost the reverse of the past – the information advantage is more and more often in the customer’s favor. For sales reps this creates a challenge to be well aware of their competitive situation.
Another consequence is that companies are in the process of losing control of their brands. It is no longer possible for a marketing department to decide how the company should be perceived. Instead, customer perception is steered by the quality of the delivery and customer evaluations. To a large extent, all smart messages and campaigns are becoming irrelevant in comparison to the comments that are spread in different fora and social media. It is what other people think – with the trustworthiness and authenticity that physical people have – that will determine how a brand is perceived.
Obviously, it is becoming important that employees, as representatives of an organization, from beginning to end do their best to provide good service, and even exceed customers’ expectations. Changing and strengthening the internal culture of an organization must become an as-important branding task as what is done in the marketing department. The big dilemma is that one unpleasant employee or one fatal mistake is enough. The company’s brand and reputation can be influenced by anyone, at any time, on the Internet. Completely without control.
One approach to addressing this development is to meet transparency with more transparency. To show things in text and pictures, like manufacturing methods, internal costs and price-setting arguments gives customers the opportunity to look behind the scenes. Some companies have made it a sport to disclose as much as possible. The American Internet company Buffer works actively with “radical transparency” as they call it. They publicize their business plans, product ideas, and pricing motivations. Their point of departure is to be transparent even in adversity. When their web service got hacked and when they experienced financial problems they explained in detail everything that had happened. They even disclose which books their employees are currently reading.
They see transparency as a tool for customers and suppliers to help each other. By being open about their convictions and the bases of their decision-making they avoid “major disclosures” when something really goes wrong. They believe that their employees should be proud over both their successes and mistakes. This tactic is not only brave, it also creates a very high degree of credibility for their customers. If one reveals everything that is in the closet, there can’t be any skeletons in it.
1 Kantar-Sifo (2017, 21 March). Företag som förlorat anseende – och kommit igen. [blog post]. Downloaded 2018-10-22 from https://www.kantarsifo.se/blogg/foretag-som-forlorat-anseende-och-kommit-igen