Increasing sales, loyalty and trust: an academic study into operational transparency

Ryan W. Buell’s research findings, summarised in this Harvard Business Review article, challenge conventional management theories that consider customers to be “environmental disturbances” (a blocker that prevents businesses from working efficiently). As a result, this traditional way of thinking has led businesses to implement processes and technology to hide the work that goes into delivering a product or service.

Yet this new line of research reveals that if you erect those barriers too high, customers’ understanding and appreciation of value decreases. They no longer understand the effort or intricacies put into the process.

“As a result, they [customers] are less satisfied, less willing to pay, less trusting and less loyal to the company over time.”

Ryan W. Buell, Harvard Business Review

 

Why we find this interesting:

Buell undertook a number of experiments to test the impact of transparency on the relationship between brands and customers. This uncovered significant value when brands took a strategic approach to transparency.

“We found that sales of the wallets with operational transparency went up by 26% relative to wallets where the costs were not shared.”

Harvard Business Review

For example, by researching an online retailer that shares the costs behind its products, (including markup), Buell and his colleagues discovered that products with transparent pricing sold 26% better than the same products without any transparent pricing.

“We’ve learned that voluntarily providing operational transparency not only increases sales but also increases people’s trust and satisfaction”

Harvard Business Review

The article goes on to reference multiple examples of transparency in different formats. All of which delivered a positive impact on key business metrics:

  • Increased sales
  • Customer satisfaction
  • Brand trust
  • Likelihood to return/repeat purchase
  • Employee engagement

To implement transparency strategically, Buell recommends management take a thoughtful approach to define ‘What, When, and How’ to be transparent, and not to ignore the importance of “closing the loop” to ensure that transparency flows both ways. This includes enabling customers to engage and share with the business as well as empowering employees to improve and connect with customers.

Our work with Provenance member, Fuchsia Shoes, echoes Buell’s findings on transparency. Embedding transparency into their e-commerce, they were able to achieve a 31% increase in sales. Learn how Fuchsia worked with the Provenance platform here.

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About Provenance

Provenance is a platform that empowers brands to take steps toward greater transparency. With our software, businesses can share information and stories about products and their supply chains, including verified data to support those statements powered by blockchain. By connecting this information to things – in store, on pack and online – we can all discover the origin, journey and impact of our products to enable more positive, purposeful purchases.