11 / 03 / 2020

What The Invisible Man Learned Too Late (or the Perils of Being Too Transparent)

In the 1933 horror classic, a doctor’s experiment in invisibility leads to disastrous consequences. But the same thing can happen to companies that reveal too much.

Carey Smith | Founding Contrarian

A friend recently shared a Harvard Business School study examining the effect on buyers when an item’s total costs of production are displayed as opposed to the ingredients alone. My first reaction was why tell people exactly what it costs to make something, unless your goal is to turn your pet product into a commodity as fast as possible? And how could you put a price tag on the entire creative process anyway?

Interestingly, the study found that when allowed to choose, consumers proved 21 percent more likely to prefer the soup or other item that advertised the precise costs of materials and labor over the one that didn’t. The conclusion was that people value connections with people, and that includes the ones who work in the fields and factories to make the ingredients that go into products. When reminded of their existence, consumers are drawn to them and, by extension, to what they make.

This is hardly a new concept. Advertisers have long used “employees” to connect to consumers. One of the first that I remember, and also one of the best, was Juan Valdez, the face for years of Colombian coffee growers. Conjuring up the image of workers by disclosing the costs of production is taking it a step further and goes against conventional wisdom. But in this age of transparency, the study suggests, maybe it’s wise to flout convention, if disclosing costs can “humanize” your product.

In my former life as founder and leader of a fan company, we were inveterate flouters, but we found other ways to establish the human connection. As a direct-sales company, our sales reps could recite in their sleep what set our products apart, because they were on the phone with customers all day. We also featured employees in our marketing campaigns, constantly solicited feedback from customers, welcomed visitors, conducted seminars, sent out slightly salty mailers and doled out free souvenirs to the masses. I’m sure I’m forgetting something, but the upshot was, we connected.

In the end, there are lots of ways to make personal connections with customers, and detailing labor costs might make sense in some situations. I know some retailers have been successful building their brand around total transparency — Everlane comes to mind. But it still strikes me, ironically, as somewhat impersonal and commodifying, like those crazy estimates of the costs of raising a kid that come out every now and then. If you love something — whether it’s a child or a brainchild — can you ever really calculate how much it costs?