Hollow brands in an age of scrutiny

Hollow brands in an age of scrutiny

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We’re all tempted to do it at some stage: to overstate the advantages; to push the benefits of what is on offer past the point of credibility; to state that what we are doing or offering is better than what others are offering, but with no substantiation for that belief.

The obsession with short-term growth coupled with natural competitiveness and the intensity of competitors come together to motivate brands to disregard the boundaries of responsible advertising. In New Zealand, we’ve had a case recently of caged eggs being sold as free-range and at free-range prices. Business Insider Australia highlights a number of other examples of false claims that have collectively cost companies many millions of dollars, including: Activia yoghurt (which claimed the nutritional benefits of its product were clinically and scientifically proven when they weren’t); Taco Bell (whose seasoned beef was seasoned with oat filler); and New Balance (which claimed its sneakers were calorie burning when there was no evidence of tangible benefits).

It doesn’t stop there of course. Ads are retouched to make things look bigger or smaller than they really are, offers are rendered useless by their terms and conditions, products are advertised as available at a certain price but in reality they aren’t, environmental claims are made that prove groundless … the list goes on.

At best, these are mistakes or oversights. At worst, they are snake-oil deceptions. Leaving aside those who deliberately set out to rip others off, often, it seems to me, the brands that are inclined to engage in hollow practices are those where sales have become an obsession at the expense of other aspects of the relationship. That’s a very old-fashioned view of business as we all know. And yet it persists because focusing on the numbers and incentivising people to do what it takes to make the sales targets can be seen as easier than connecting with customers and building valued relationships.

The human factors driving deception

Why do we behave like this? Why do human beings exaggerate and even falsify? Is it just money? Apparently not. Novelist Sarah Jio talks about the very human factors that drive people to deceive in this article in the Huffington Post. She quotes Dr Robert Feldman who says we are programmed socially from a very young age to make ourselves look better. Feldman points to a study he led in which 60 percent of people lied during 10-minute conversations with strangers – not once but two to three times on average. Most of those who took part had no idea they had done this until they saw the replays on video of their conversations.

Success only adds to the incentive to mis-shape the truth according to Professor Dan Ariely. The most dangerous deceptions occur when people can rationalise/justify their right to lie and when the stakes for telling the truth become higher than the perceived dangers of continuing the pretence. Repetition endorses the belief that the falsehood is really true. We self-actualise.

Brands are easily drawn into the same hollow circles. Every brand owner wants to be proud of the product they are responsible for. For some, the temptation to overplay what they are in charge of is too great. Initial consumer reactions to these hollow brands encourage the mindset and the behaviour. Shoppers are naturally drawn to things that seem too good to be true despite all the warnings for them not to do so. So, brands see that they are making money. They repeat a statement, and sales go up again. And on it goes. In time, and with success mounting and sales hitting targets, companies tell themselves that such behaviours are okay; that they are worth it. Brands will even justify the “shortcuts” they take on the grounds that it’s what they have to do; their customers “demand” it. They reach a point of what feels like no return.

The trust revolution

As with people, when the repercussions of coming clean (media attention, recalls, legal action) appear to outweigh the benefits of continuing (incentives, rewards, bonuses, promotions), companies and individuals can easily default to what seems to be an easier and more comfortable future. They may even have talked themselves into believing that they are telling the truth.

Brands used to hold all the information. What some are grappling with is how transparent they now need to be.

It goes without saying that hollow claims hurt brands when they are unearthed. Suddenly, a brand isn’t just questionable, it’s also vulnerable (in terms of reputation) and potentially liable (legally). The repercussions are not new. What has changed in the last ten years is the likelihood of being discovered. Brand accountability has entered a new era of scrutiny – and that is shifting the risk to return profile for hollow brands. Search engines, reviews and social media have fuelled what Bono has referred to as the “Transparency Revolution”. Not only is this exposing bad business practices, it is also correcting the information asymmetry that has encouraged brands to push unreasonable claims and/or to align in self-interested ways that are hidden from consumers.

Robert Pera: “Traditional company business models aren’t built to empower customers and pass on value to them. They are built to extract profitability from them. And information asymmetry gives them the perfect cover. But, with an increasingly connected world paving the way for more and more information transparency to the customer, all of this is about to change.”

As Michael Lazerow explains in this interview, the Internet of Things is being replaced by the Internet of Customers. “We are in the midst of a trust revolution where everything is transparent. As we saw with the NBA recently, you can’t do stuff that is stupid. If you do, there is always a camera, always something on.”

Profit is increasingly accountable

Every brand must make a profit. No dispute there. What’s new is that profit is increasingly answerable to a widening set of ethical criteria. Brands that look to keep information back, that re-touch their claims to make them look more appealing and/or who fail to align margin to value will find their products under public gaze and themselves under increasing pressure to retract.

The next era of challenges for brands it seems to me lies in “accountable profits”: in explaining to consumers that the returns that the company is making from what it puts on the shelf are reasonable, sustainable, prove-able and responsible. Some are going to find that very hard indeed.

Photo of “AndYaDontStop” taken by The Legion of Shhhh!, sourced from Flickr

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