Can The Truth Set Your Profits Free?
Current events give us daily examples of the toxicity of dishonesty in politics, sports, entertainment--and the business world bears high-profile examples of the same. So what is everyone missing? Clearly, broad discussions of ethics and morality haven't done the trick, so I propose that we skip the mushy-squishy stuff and go straight to the bottom line. Here are five ways to use honesty to drive profits:
1. Honesty increases customer retention and sales.
Customers who feel like they've been lied to will not be customers for long. We have found that brutal honesty with our customers, especially when we admit our mistakes, helps cement and improve our long-term relationships. This may seem like a no-brainer, but how many companies (or even employees in your own organization) use white lies to skirt responsibility? For us, admitting our mistake (even when the customer would not have known about it otherwise) and collaborating on ways to fix the problem has resulted in very high customer retention and strong referrals.
2. The truth helps you close more prospects faster.
Every item for sale has drawbacks of one kind or another, and honestly addressing those drawbacks builds trust with prospects. If they believe in your integrity, they are less likely to pick apart your contract or terms or shop around and make a decision based on price alone. In other words, you'll close more deals faster. We have found that discussing both the pros and the cons of our publishing model up front makes prospects realize that we don't try to gloss over potential tough spots. Establishing this trust also sets the tone for a partnership dynamic in which problems are solved together.
3. Honesty is a simple way to get better terms and pricing from vendors.
Vendors are a treasured group of people--too few business owners realize this. You must treat your vendors with the same respect and honesty that you extend to your customers. If you push a vendor to lower a price or give you a refund based on dishonest practices or forecasts, you'll lose their confidence and, over time, your ability to compete. On the other hand, if your vendors believe in you the same way your customers do, you'll create partners in your industry (referral sources) and you'll get better prices.
4. Openness with your staff creates goodwill and motivation, resulting in greater productivity.
Your employees are bright--otherwise you wouldn't have hired them, right? They know when you're hiding something from them. If you're up-front and honest with them through hard times and you candidly discuss mistakes by management, employees are far more likely to stick with you. Openly addressing problems with your staff as soon as they happen builds trust and loyalty. They might not like every decision you make, but if they know that you always act with integrity, they'll follow you anywhere.
5. Honesty makes people feel ownership in your company--and that's how you create evangelists.
Word-of-mouth marketing is the most powerful form of promotion, and your staff and customers hold the keys to the kingdom. Forcing your staff to parrot policies they feel are dishonest or misleading will create resentment and a lack of commitment. If, on the other hand, your staff and customers believe in what they're saying (or what you're saying), their passion will come through every time they talk about your company. Create an open, honest culture, and your staff, partners, and customers will boast to all of their friends and neighbors about your incredible company.
It's a simple principle, but by making honesty a central part of your business practices, you'll grow your company by leaps and bounds. Adopt these five ways of instilling honesty into your business and watch your bottom line improve. No lie.