“Anything is better than lies and deceit!”
– Leo Tolstoy, author and playwright.
When it comes to business, Mr Tolstoy is right. Exaggerations and unreal claims are what we like to call an empty promise – the worst kind of promise you can give to your investors, customers and clients alike. It can be tempting; it can look like a quick way to boost sales or grab the attention of an investor, but trust is the foundation of a successful business. Hyperbolic claims or (even worse) outright lies risk destroying both you and your startup.
Here are five reasons why your startup should never give an empty promise.
You don’t need to lie
Quite simply, you don’t need to lie in order to sell your product or to attract investors. According to a report by Burson-Marsteller, 95% of chief executives believe that reputation plays an important role in the achievement of business objective. Your honesty is valued.
If your company is well regarded by your users and potential customers, they’ll use you over a competitor. What’s even better is that you may get recommended by word of mouth which is the best free advertising you could’ve wished for.
Additionally, investors are more likely to want you onboard and suppliers will be more inclined to trust your organisation if you’re consistently truthful, transparent and honest.
They’ll find out one way or another
Customers, investors and regulators will always find out if you’ve given an empty promise.
Investors are normally experienced individuals that will not be tricked by your over-the-top claims. You’ll be seen as an amateur – not impressive. At one of our favourite events, Startup Weekend, the expert panel of investors, venture capitalists and startup professionals regularly grill pitchers on the details. The most common question in relation to claims (such as parternships, funding or general stats) was “Do you have proof? Let me see the signed paperwork/evidence.”
If an investor misses it, their lawyers and analysts will spot it. The due diligence process is in-depth and the numbers you supply will tell them everything they need to know. It’s an immediate deal breaker if you get caught and your reputation as an entrepreneur will be ruined overnight.
Lastly, your customers will catch you out almost immediately. A false or exaggerated product description might make a sale, but when your customer realises they’ve been misled then your own company apocalypse will start. Bad reviews and negative press is only the brunt of it. One comment or status on social media could be catastrophic. All it takes is a click of the share button.
Remember, your dealings don’t occur in a vacuum, the ripple effect is what can make or break your company.
The cost of getting caught is too high
Company crushing lawsuits and legal battles are a startup’s worst nightmare.
Rather than explain this one, let me show you a few examples where empty promises have led to heavy lawsuits and costly legal battles.
In 2005; Listerine was forced to pull ads that claimed the mouthwash “was clinically proven to be as effective as floss in fighting tooth and gum decay”. The lawsuit did not only lose Listerine huge sums of money, but also their trustworthy reputation.
Naked Juice packaging was rammed with slogans such as “100% Fruit”, “All Natural Fruit”, and “Non-GMO”. However, a lawsuit emerged claiming that Naked Juice products were, in fact, none of these things. Pepsico, the parent company, was forced to make an embarrassing public U-turn and pull the “All Natural” labels from the bottle as well as paying over £6.8million to settle the case.
Skechers ran into a lawsuit after it gave the promise that its shoes could “burn calories and firm thighs with each step”. It was found that they did nothing of the sort. In 2012, Skechers was forced to pay out a £30million settlement to the Federal Trade Commission for making scientifically false claims about its product.
Startups need to be vigilant with their financial resources. You want to spend it on building your brand, not lawsuits you can’t afford.
To be honest, this is what it should come down to. You should pride yourself on being open and honest, both as people and as companies. There is no pride or honesty in dishing out empty promises.
An empty promise results in high costs and bad press as well as an immoral foundation for your company. So let’s not make empty promises and keep our principles. It’s easier that way.