In a world wide web of confusing opinions and misinformation, it becomes difficult for corporations to resist the lure of the shady white lie. When it comes to marketing their product, industries tend to follow a chaotic evolutionary pattern where a new technology is honestly invented and pioneered, followed swiftly by the seedy peddlers who attempt to jump on the bandwagon with overstate hyperbolic claims, which subsequently balances back out into sustainable, long term businesses who build a solid business on that foundational innovation. I like to reach back to the times of pure philosophy to this quote:
“Until philosophers rule as kings or those who are now called kings and leading men genuinely and adequately philosophize, that is, until political power and philosophy entirely coincide, while the many natures who at present pursue either one exclusively are forcibly prevented from doing so, cities will have no rest from evils,... nor, I think, will the human race." – Plato, The Republic, Book VI (Lane, 2013)
I feel, as Plato, that the commercial marketplace will similarly have no “rest from evils” until we are able to find a more pure form of engaging with our customers in a way that is up-front, honest and devoid of the lust for political (or its kid sister… commercial) power. So, how do we incentivize corporations to the path of not just philosophical truth, but a realization that truth equals commercial success? The miracle of big data supplied by the Internet, the Internet of Things, and the Age of Information now gives us unique tools fed by an ecosystem consisting of ever more loyal customers, higher search engine rankings, and new ways to measure how favorable an impression the corporation is making on their marketplace. Let's explore those and learn together as we prepare to engage in our own new business startup or enterprise initiative.
Customer Loyalty Reflects Truth-Telling
Customer loyalty is the ultimate objective of the savvy businessman who has a concept of the “Cost of Customer Acquisition” or CCA. This tenet is based on the idea that every new customer that is acquired by your business will, over the complete acquisition lifecycle, cost you a certain investment to attract them to your brand. Arthur Middleton Hughes quotes in his recent article for the Database Marketing Institute that “it costs about $80 to acquire a new credit card customer who returns about $120 a year in profit…” (Hughes, 2015). In that environment, you would net $40 in the first year that the customer is loyal to you, but look at the ROI on future years? How many years have you had the credit card in your wallet? How much money do you think your credit card issuer has reinvested in your “acquisition” in the last year or so?
The concept of customer loyalty goes even deeper however. The world has completely changed, and many corporations have not recognized the shift at their own peril. In the old days, you could hear a radio program or watch a television show that was being offered on only one of the four available channels on your solid state television or radio. Us old folks remember the days when children’s programming was laced with product placement from Marlboro cigarettes or toothpaste co-branding. In that era, the customer had no public voice other then chatting over the fence with your neighbor and the corporation had the only bullhorn available. Not so today. The Internet has blown the doors open and for good or ill, everyone has their own bullhorn (blogs), their own broadcasting station (YouTube), and their own networks (social media). Not only is personal privacy a concern today, but corporate insulation from critique has also been vaporized.
This concept is highlighted by Jonathan Salem Baskin, of Ad Age Magazine (Baskin, 2010) who introduces the idea that in this new marketplace, lies are so easily exposed, that you shouldn’t even waste your time attempting to veneer your brand. He points out that even the very attempt to cover up an un-truth can now soil your brand, to wit, “Failing to deliver and sustain truth will be indicators of broader operational weaknesses.” He further illustrates his position that corporations have long celebrated the ability to exploit a “truth gap” which enabled them to declare a midrange value to a subpar product and net the difference in return. Because the customer/product relationship is now so vocal and so transparent, he says that the retribution is swift and customer loyalty will be not just impacted, but immediately subjugated to the firestorms of public dissent, giving the company no time to scrape an artificial return on their misguided investment.
At the core of customer loyalty, trust is the DNA that binds it all together. There are specific examples of failures of trust, like the BP oil spill, or the Enron collapse, but customer loyalty and corporate trust can also be influenced by groundswell, foundational elements as well. Even though corporations had established brands that had earned an honest living selling their products, the 911 terrorist attacks in New York City resulted in a near immediate contraction of customer trust in the entire marketplace as a whole. Combined with the financial collapse of J.P. Morgan and the banking institutions, again you saw a groundswell decline in “overall trust” that simply shook the underlying foundation of the entire marketplace as a whole.
We can measure this foundational trust in various ways but I look to the Edelman Trust Barometer which is an annual study of the levels of trust imbued in the four segments of our foundational marketplaces: government, business, media and non-governmental organizations (Edelman, 2014). In a survey of 33,000 people, they compiled metrics based on a nuanced distinction where “unlike reputation, which is based on an aggregate of past experiences with a company or brand, trust is a forward facing metric of stakeholder expectation.” Here they report major trust declines in the U.S. and Hong Kong from 2013 to 2014 which map to major events including the Chinese government leveraging oversight of the electoral process in Hong Kong and an overall suspicion of the government and corporations as Edward Snowden outed the CIA and impugned telecommunications companies’ complicity with cyber-snooping with almost universal consumer disparagement.
Customer loyalty isn’t always a master-slave relationship between a corporation and a customer however. In the specialized services industries where relationship marketing is key, the dynamic becomes much more personal… and brutal. The financial services and investment advice business doesn’t get more personal, in fact it’s an industry that is rife with the daily decisions of “do I tell my customer the truth or not?” In this highly competitive industry where each transaction could put millions of dollars at stake, it is interesting to examine the candor of Jeff Sommer in his article, “The Benefits of Telling the Ugly Truth” for the New York Times (Sommer, 2011). In his article he points out the perils of the little white lie where a stock broker claims credit for a groundswell market upswing that he couldn't have predicted. In his scenario he points out that from a perspective of customer loyalty, those who claim artificial credit for an unpredictable market improvement, will then almost certainly get buffeted by the inexorable certainty that they will then be blamed for the inevitable downturn.
If you pivot that scenario into a truth-telling exercise however, the stock broker who admits that the accidental success was just luck, he having nothing to do with it, becomes inured to the castigation when the subsequent downturn hits. Beyond escaping blame however, he also has built a level of transparent honesty and trust with the client who will listen ever more intently the next time the broker does go out on a limb to predict a stock that is suitable to take a risk on. As with all previous examples, what these authors are trying to establish is the raw, core, inescapable fact that the customer will find out eventually. Even with my own children who chose at times to conceal their report card to cover up a bad grade, the mere act of hiding it decried any protestations later that “it wasn’t my fault.” In an Internet era of big data and high stakes publicity, you might as well accept the fact that the truth will be told. Your big decision to engender more customer loyalty is whether you want to be on the truth telling team when the facts come out… or not.
Search Engines Measure Truth
Many corporations fall prey to the naïve misunderstanding that their only constituents are the customers that they serve. They are missing one stakeholder… a huge one… Google. While many search engines exist, Google and its little sister YouTube tend to exert a primary influence in the horserace to discover who tells the truth from a corporate perspective. It is also home to the largest truth-war in the world as firms purporting to sell search engine optimization or SEO vainly promise to help you lie to climb the ranks of the ever-coveted search engine placement. This has given rise to a cottage industry where Google stealthily conceals the algorithm that it uses to determine corporate veracity, while entire tradeshows are dedicated to illuminate corporate and freelance “branding hackers” on the latest techniques and tricks to game the system and claim victory over the algorithm. My own experience in the field has come down the plain and simple truth, “Tell the Truth.”
Algorithms change, frequently, if not daily. The true test of a proper marketing campaign online is how they survive the Google algorithm updates that issue forth with odd names like “Penguin 3.0” or “Panda 4.1”, each targeting a particularly successful exploit of a former algorithmic loophole. As the new patches to the algorithm roll out, their consequences are aptly, if not ominously, named “tremors” such as the “Penguin Tremor” as the rank position of corporate webpages shuffle about as the new ranking algorithm sets in as illustrated in the Google Algorithm Change History by Moz.com (Moz, 2015).
We can also investigate the truth tellers with open source tools that allow us to poke and prod the Google database to see what is ranking and who owns those positions. One interesting example would be the business to consumer shoe retail industry. Let’s do a search for “online shoe store” on Google (Google, 2015) and see what we find after stripping out the paid advertisements:
This lets us know who is winning the hyper focused war being waged over the phrase “online shoe store” but now we can dig deeper into the hints as to why Google chose to rank them in this order. Google tends to try to follow a theory that websites who take good care of their searching customers, will be taken care of by Google. Google can measure this using a variety of factors including:
- How many pages are included in this site
- How long the site has been in existence (tenure)
- How many other websites link back to this site
- The historical Google quality score named for Larry Page, founder of Google, called the "Page Rank"
We will explore the quantitative measurements for this keyword phrase by tabulating our own results for each of these metrics. These scores are computed from application programming interfaces (APIs) that count and measure website rankings’ underlying data through a tool supplied by Moz.com on the SEO Toolbar (Moz, 2015).
Number of Indexed Google Pages
The first metric we can examine is how many pages Google has indexed from these sites. This gives credibility as a measure of truth telling because as a general measure, spammy websites tend to have very little time invested in them and lack substantial and meaningful content. The Google page indexer is also designed to skip duplicate pages and redundant content so it serves as a sort of spam filter for webpage content.
Here we can see that Zappos was ranked in first place for “online shoe store” and there is a correlating factor that demonstrates that Zappos has the largest number of pages that have successfully been indexed by Google. This follows the mantra that Zappos made the wild claim that they had the most shoes for sale, and Google has validated that yes, in fact, Zappos has the largest number of shoes for sale online, so they are telling the truth. This encourages Google to tend to send their searching customers there first as they will have the highest probability of helping you find the shoe that you were looking for online.
Number of Years of Site Existence
Certain websites earn extra points for having been in existence for a longer period of time. We can measure them by counting how many years they have been in existence. Google tends to give older sites more credibility as they have earned trust over time, reinforcing the reality that they could stay in business this long to continue to maintain a web presence.
You can see several merchants that, while they benefit from a longer age, they are not as truth telling, among other factors, as the Zappos leader, hence they fall further behind in the rankings, despite DSW being a larger brick and mortar physical retailer (in terms of physical assets).
Number of Websites That Link to This Site
Google tends to engage in a type of election of sorts where instead of relying solely on their own opinion of a website (such as how DMOZ.org uses humans to rank websites in a purely subjective manner), they count how many other pages link back to the site being measured. This forms a type of voting system that, while ripe for exploitation by stuffing the ballot box, has become valuable in determining the most authoritative websites.
This reflects the democratic selection of the rest of the Internet having chosen Zappos.com as their go-to resource for links to buy shoes online. It is important to note that in recent Google algorithm updates, they have begun to punish bad actors who spammed irrelevant back links in an attempt to skew the election results here. The key point is to count only those back links that tend to “make sense” or fit the context of the page, instead of relying in spammy webpages that simply link to anyone and everything in a shallow attempt to gain more votes.
Another qualitative metric that is inferred from quantitative sources but heavily influenced by a deeper, unknown algorithm (or perhaps simply an opinion), is the amorphous “Page Rank” metric that Google mysteriously assigns to a website. Despite the confusion many have in decoding the title as a ranking for a given “webpage”, this ranking instead derives its namesake from Larry Page, one of the original founders of Google, who has established his ranking as a Good Housekeeping Seal of Approval for websites. Google itself will disclaim any direct relation between a comparative Page Rank and Search Engine Result Ranking, but concedes that it may be an attributed factor in the algorithm.
This result seems to confirm the fact that while Page Rank may be a contributing factor, just because you have a higher Page Rank doesn’t mean you rank higher on the search results for every phrase. You can see here that ShoeBuy.com has earned a higher estimation of Page Rank but still ranks #2 for “online shoe store.”
Customer Traffic Volume
We also can measure overall traffic with the underlying assumption that websites that are of sufficient quality and truth telling, will tend to attract more customers, who will refer that site to other customers and so forth. We can measure this by simply counting overall traffic numbers in terms of impressions or views of the website in question.
The data seem to reinforce the concept as Zappos.com is overpowering its competitors when you evaluate how many customers are choosing to visit their website compared to the others vying for that business. It also underlies a key conclusion that higher Google ranking corresponds to a higher traffic count, but even further, a relative #1 ranking appears to deliver an overwhelming advantage in capturing customer interest.
Subjectively Analyzing Google Rankings
Quantitative measurements aside, there are other factors that impact or seem to correlate to the simple act of measuring how truth telling impacts natural Google search engine results. Zappos.com is famously known for what it calls “Powered by Service” which lurks directly beneath its iconic logo on the front page of their website (Zappos.com, 2009). Jane Judd, the senior manager of the customer loyalty team (note this company even has one), confirms their corporate passion for quality customer care by explaining that their customer service teams are not given hard time limits on customer calls and are encouraged to “use their personal, emotional connection on every call.” She goes further to joke that “they might ask about the dog barking in the back or send flowers to a bride.” This level of engagement goes beyond the bare minimum of trying to avoid getting caught in a lie, to embracing the entire partnership between customer and merchant as a deep and fulfilling friendship, however shallow the underlying foundation. Such customer care does come at a cost however but they simply have chosen to have a deeper customer relationship which, albeit costly, comes with higher volumes, more industry notoriety, and an overall sense of increase job satisfaction and customer satisfaction.
Customer Impressions Improve with Truth Telling
Customers tell the truth. At least that is what everyone will believe, because customers have far less at stake in the commercial transaction. A corporation has a desire to build a brand, develop a reputation or stimulate word of mouth referrals. They have a lot at stake, but with the advent of Internet anonymity and the blog as a bullhorn, customers can loudly proclaim from the rooftops whatever they want to, whenever they want to, to whomever they choose to. This puts the corporation that is not telling the truth in a terrible predicament but it becomes liberating for the corporation that already has embraced truth telling as a mantra and has incorporated it into their daily business.
Ron Ashkenas develops this concept in his treatise “Why We Don’t Always Tell the Truth” by outing companies that start with a little white lie which soon snowball into large segments of customers who were led to the product through truth shading while the company tries to buy time to convert the hedged offer into an eventual truth. Companies that engage in lies as a stalling tactic soon stumble over their own feet as the customer expectation outraces their ability to deliver and they then get trapped in a cumulative bundle of lies that started with one simple white lie in the very beginning (Ashkenas, 2012).
Telling the Truth is the Law
The hard truth of it is, telling the truth is the law. The Federal Trade Commission (FTC) has established guidelines, laws and principles after long experience with the punitive aspects of allowing corporations to lead customers along, unfettered, with lies and trickery. These guidelines include overall articles such as “Truth in Advertising: Advertising Endorsements” (FTC, n.d.) which target the proliferation of customer reviews that were either paid for or were entirely false from the beginning. Their guidance reinforces cautions about unsubstantiated claims that have no underlying proof that could put you afoul of the law and expose you to lawsuits should your products not live up to the grand claims you established at the time of purchase. The FTC has even modernized their guidelines to factor in blogs and word of mouth campaigns.
Telling Lies May Make Economic Sense
I risk refuting my overall claims that truth telling is an inevitable boon for any business, but there are counter claims that a little fudging here and there tends to succeed in business, and in juxtaposition to the overall morality of telling the truth, may even be good for our economy overall. Customers can be led along by the nose in minor ways to encourage them to buy a product that is being misrepresented, however so slightly.
Pedro Gardete is a professor of marketing from Stanford Graduate School of Business and through his economist lens has come to the conclusion that there are innumerable cases where the less ethical corporations still hire people and contribute to the economy, thereby providing an ancillary benefit to the ecosystems that would otherwise have been harmed by the subtle lies reinforced in corporate advertising campaigns. He makes the claim that consumers are “always worse off when advertisers misrepresent themselves” but he also points out that if an advertiser disclosed the actual, true, financial value of the merchandise they were marking up, some retailers would never get any shoppers at all (Gardete, 2013).
Social Media is the Grand Equalizer
The largest innovation of the last decade has been the loss of dominance of any single advertising medium or network. Where I had a choice of four black and white television stations, my children can’t possibly click through the thousands of cable channels, Netflix offerings, YouTube postings, Vine video clips, Facebook posts, and Instagrams that they have at their disposal during any single day. When seen as an aggregate network rather than any one website, Social Media as an overall zeitgeist is now serving as the chaotic referee of the formerly constrained and often abused television network marketplace we found ourselves in before.
In a 1950s history where Thalidomide drugs were readily and eagerly accepted by an enormous amount of the pregnant population as a new age remedy for morning sickness for years in an era of groupthink and mob adoption of brands marketed through unpoliced advertising networks that caused birth defects en masse within entire populations, we find ourselves in a world where something like that would have been debunked within minutes, if not seconds, through the millions of megaphones granted to social media adherents in our modern society.
Now a modern tactical miss where Obama and John Kerry fail to attend a flashmob rally on the streets of Paris for the “Je Suis Charlie” post-terrorism campaign, is castigated within seconds and the punishment is swift, load and overwhelming. What the social networks say about your brand pales in comparison to what they will say if you try to lie about your product or service. There is no lag time anymore between when you tell the lie and when they find out about it and punish you (Noble, n.d.). There is no public relations honeymoon between the old time of the misstated claim on the front page of the newspaper with the quiet, timid retraction three weeks later buried in the Sports section.
Telling the Truth is Instantaneous
Your brand is in the marketplace now, as a living, breathing member of the current groupthink, and its reputation will only live as long as it lingers on that initial page view of the Pinterest feed as it inexhorably scrolls off the page with the new “moment of the minute” that happens now at the speed of the Internet. By telling the truth as a matter of corporate policy and further as a part of your corporate DNA, you will join the ranks of modern corporations who “get it” and have now embraced their consumers as their electorate, judge, jury and executioner. Your corporate brands now live at the pleasure of the loyal customer who votes with their wallet by returning again and again to support your product, both in sales and through word of mouth. Your human marketing targets are now blended into your robot-targeted marketing campaigns as you embrace the “Algorithm” as one of your key constituents as you vie for search engine placement and ranking. You also have learned that being invited to the social media tea party is not the time to hand out coupons or blurt out promotions as you engage as one of the partygoers and start to engage in less formal, real conversations with individual customers with highly personalized customer service. You are now prepared to face the instantaneity of commerce at the speed of the Internet by becoming a truth teller first but evolving beyond that to becoming a sincere adherent of the Platonic vision that the philosophical quest for truth is the only quest that can set you, and your company brands, FREE.
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