Reports of Hampton Creek buyback underscore transparency's importance
Last week, a Bloomberg investigation into a reported buyback scheme at Hampton Creek put a dent into the reputation of a company that was seen as a "trailblazer" in food technology.
The startup, with its simple ingredients and to-the-point business practices, has represented a movement for transparency in the food industry for many consumers and colleagues alike. It has yet to be seen if reports of secretive and shady business tactics will erode the trust that Hampton Creek built with its consumer base.
What is clear, many industry analysts say, is that the trust between manufacturer and consumer is imperative, and transparency needs to fit into that equation.
"Building trust with consumers is about providing them with complete, accurate product information at the moment and in the format they want it," said Patrick Moorhead, CMO at Label Insight.
"The more transparent you are, the more likely consumers are to be willing to trust the information you provide them, and perhaps be more willing to accept those ingredients or those processes," said Charlie Arnot, CEO of the Center for Food Integrity.
By those definitions, transparency is a necessary component of building trust with consumers in all situations. It plays a role at every level of the trust-building and engagement transaction between manufacturers and consumers.
Communicating shared values
For many brands — but particularly lifestyle-oriented brands, like natural and organic — building trust with consumers starts with a perception of shared values.
"That perception of shared values creates a special affinity," said Arnot. "There is then an expectation of a certain level of transparency that goes with that perception of shared values."
When consumers believe a brand values the same things they do, such as creating a convenient but healthy meal for their families, they tend to trust the brand more. Trustworthy brands in the minds of consumers are open about their values and how they influence certain decisions, such as choice of ingredients or animal welfare.
Alignment with consumers' expectations
Transparency is a key part of establishing an initial relationship with a consumer based on shared values, but it also enables growth with the consumer over time.
"The more transparent you are, the more information consumers have, the more feedback you receive, (and) the more likely you are then to modify and change what you're doing to make sure it's aligned with your customer's expectations," said Arnot. "Not only are you more likely to change what you're doing, but you're also going to be in a position to do a better job of helping consumers understand why you do what you do today."
Being transparent can expose companies to consumer backlash. But it also opens up collaborative communication in a way that builds trust, while allowing the company to address issues with its products, operations or supply chain — particularly those that matter to their target audience.
"(It’s) just little things like that where you go out of your way to listen to your customers and then respond based on what their needs actually are, not what you think they are," said Sam Slover, cofounder and CEO of the Sage Project.
Engagement with consumers
Manufacturers trying to be more transparent have to be willing to communicate directly with consumers in open, public forums that allow feedback and responses from both sides.
"Consumers are looking for that opportunity to provide feedback and to be acknowledged," said Arnot. "That's one of the standard things that we’ll continue to see, and that's one of the things that companies are continuing to try to figure out: How do we research that? With whom do we engage, how do we engage, where do we engage?"
In answering those questions, Arnot believes social media will be the key tool for industry transparency and building trust, "because that's a critical area where those consumers who are interested want to be able to engage," he said.
In a similar light, messenger apps are becoming a popular way for consumers to communicate, and they may come to expect brands to also engage them on those channels.The brands that identify and seize the opportunity to engage with consumers in those channels first — such as Mondelez recently partnering with Facebook to create "mobile-first" experiences — may have the upper hand.
The main challenge manufacturers have in the area of engagement is the risk of facing trolls and those "only interested in trashing the brand," Arnot said. Having a strategy in place specifically for responding to trolls — or negative commentary in general — is a necessary element of any consumer engagement and trust-building strategy.
Consumers demand information that is clear, accessible and written specifically for them. The wrong tone or word choice can botch a manufacturer’s message and squander an opportunity to build trust, regardless of the situation.
"(Consumers) don't want to feel like they're being manipulated or that they're being fed propaganda," said Arnot. "If I have a specific question about an ingredient, I want a straight answer… You're not talking down to me. You're relating to me as you would a colleague or a friend."
This kind of language can be critical when being transparent after times of controversy, such as following a product recall or reports about questionable company practices. Hiding behind language that isn’t clear can make the situation worse.
To be transparent is to be open and honest no matter the scenario, whether they’re releasing a new better-for-you product line or rebounding from a damaging recall or lawsuit.
"It's actually being fully transparent to say, 'Hey, we're working on this. Here's what we know, here's the facts. There are some gaps that we're trying to figure out,'" said Slover. "It's almost giving your customer a little bit of credit to know that they're smart enough to meet you halfway."
If a manufacturer makes a mistake, the company can use it as an opportunity to build trust. The manufacturer can be fully transparent about why certain decisions were made and why they were ultimately wrong, Slover said.
"That's being transparent about your business practice in a way that consumers appreciate," said Slover. "Because I think everyone understands you're not going to always be correcting everything that you do. But if you open up the decision-making process to consumers and why you went down the wrong path, that's how you can actually regain trust or be a brand that people can just say, 'Hey, nobody's going to get it right every single time, but I value the way that brand thinks about these issues.'"
It’s unclear what kind of impact reports of questionable business practices may have on a company, its sales, its level of trust with consumers or on other companies with similar positioning and products.
SEE ALSO: Here's why you can't buy Hampton Creek
"It can be particularly damaging to lifestyle brands because that level of trust is built on a perception of shared values," said Arnot. "If the activities or the actions of the brand are fundamentally inconsistent with those professed values, then it's a violation of trust that is likely to result in a certain level of outrage."
But ultimately, being transparent about what’s happening, for better or worse, can help manufacturers save face in a tense, controversial time.