The following is a conversation between Marta Tellado, President & CEO of Consumer Reports, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in NYC.
Denver: If an organization is only as good as its reputation, then Consumer Reports is plenty good. A trusted source for consumers for over 80 years– founded in 1936 just as the advertising industry was coming of age– Consumer Reports was one of the first social enterprises– a nonprofit organization that funded its operations and mission in large part through earned income. But the world is changing, and so is Consumer Reports. Here to discuss all of this with us is Marta Tellado, the President and CEO of Consumer Reports. Good evening, Marta, and welcome to The Business of Giving.
Marta: Thank you so much. It’s a pleasure to be here.
Denver: Share with us, Marta, some of the history of Consumer Reports and the mission of the organization.
Marta: We’ve been around for 80-plus years, and I always like to say that we reveal the truth, and by virtue of that, we grow consumer power. Back in 1936, our founders observed something in the marketplace, and that is that the products and services were getting only more and more complex. They also observed that the power really rested in sellers and manufacturers. They had the information. So, how do you go to the marketplace and have a sense of confidence about the products and services that you need to buy? That was the birth of Consumer Reports.
I think one of the biggest misconceptions is actually also a benefit. Everyone knows us because they see us a competent, trusted partner when they need a product. So, they identify us as a place that reliably and scientifically tests products.
How do you make sure that not just you are safe, but everyone is safe? Perhaps we need to codify a standard, a regulation, and that becomes something that we strive for and we advocate for.
Denver: What do you think is the biggest misconception that people have about Consumer Reports?
Marta: I think one of the biggest misconceptions is actually also a benefit. Everyone knows us because they see us as a competent, trusted partner when they need a product. So, they identify us as a place that reliably and scientifically tests products. But that’s not the only thing we do. We do much more than that. We have a very strong investigative journalism enterprise that really discovers and pursues stories that sometimes do not reveal themselves to us in our testing labs, and we also advocate. That means we, of course, have tremendous impact when we are able to give you advice about the product that is right for you, the service that is right for you. The impact is much broader than that because we also have to codify some of those discoveries. How do you make sure that not just you are safe, but everyone is safe? Perhaps we need to codify a standard, a regulation, and that becomes something that we strive for and we advocate for.
We’re independent. We don’t accept advertising or products to be tested. We have to mirror whatever that consumer journey is that everyone goes through.
Denver: Everything you test, you buy at retail in the exact same fashion that any American consumer would. Who does all that shopping for you?
Marta: We have secret shoppers. We have to go through the same experience that a consumer goes through. We don’t want them to know, the sellers to know, who we are or what we’re doing there. So, that is exactly what we do. We do the same with cars. We accept no products. We purchase all products ourselves. I would say that therein lies one of the things that I want all listeners to know, is that we’re nonprofit. We’re independent. We don’t accept advertising or products to be tested. We have to mirror whatever that consumer journey is that everyone goes through.
Denver: I’ve never really understood how you test a product. Let’s walk through the process a little bit. You test up to 8,000 products a year. Describe for us what goes into this. I, for instance, am in the market for a television set this holiday season. How do you test a television set?
Marta: That’s a great question. Television sets are one of our sweet spots. First thing we do is, we have to look at the market and what television sets are selling; what are consumers most interested in because we want to serve as many consumers as possible? We look at those in the marketplace and the marketplace dynamics, and we send out our secret shoppers, and then we’re off and running. We get the televisions back, and we hope that you come visit our labs; you would see a room full of screens. We look at those screens for a number of things. For televisions, two things. We look at how true those colors are. How gray are they? How deep is the black? We also now have entered the world of Smart TVs. Smart TVs are a whole different ball game because Smart TVs have software coursing through them. They’re hackable. They may be listening to a conversation or the ambient noise in the room. So, in addition to the technology around color and picture and how to optimize for color and picture, we’re now also looking for how much data security and privacy do you have with a Smart TV in your room?
Denver: Marta, tell us about food. You not only do product reviews, but advocacy as well. For many of us, myself included, I really don’t know what I’m putting inside myself. I was at a conference in Maine just a couple of weeks ago, and learned that the average age of an apple you buy in the store is 14 months, probably nothing more than fiber and sugar, and I live on apples. What is something about food that we should all know?
Marta: I’m glad that you have a certain amount of skepticism about the food that you put into your mouth. I think we need to do a lot more. We have been in that food space for a while, but we’re doing much more, and I want to tell you a little bit about where we are on that. We’ve been enhancing our food testing lab because we’re seeing some things that are very disturbing. We’re seeing drug residue on meat, and we’re also seeing heavy metals in children’s food and children’s juices. The one that’s especially concerning is the overuse of antibiotics and the overuse of antibiotics in our food system and food production. The more antibiotics we use in that production, the less effective they are going to be in the rise of superbugs. There are a number of things about food that can really grow into bigger, more systemic problems. That’s why we’re really leaning hard into actual food testing and looking at the food system as well
The one thing that hasn’t changed is safety. We’ve always looked at safety, and we’ve always advocated and prodded for safer driving and safer cars. The good news is that there is a remarkable amount of technology and discovery right now that is saving lives around cars and safety. So, when you think about it, seatbelts; they were not standard in cars when they first came out, and we did advocate for them. And I think we all know how that turned out.
Denver: That’s so interesting. You also have a 327-acre auto test center in Connecticut. What are some of the things that you’re looking at in testing cars today that weren’t even imagined, let’s say, a decade or so ago?
Marta: The one thing that hasn’t changed is safety. We’ve always looked at safety, and we’ve always advocated and prodded for safer driving and safer cars. The good news is that there is a remarkable amount of technology and discovery right now that is saving lives around cars and safety. So, when you think about it, seatbelts; they were not standard in cars when they first came out, and we did advocate for them. And I think we all know how that turned out. Nobody thinks about the fact that seatbelts are not a luxury item.
We now have things like forward-collision warning, emergency braking assist. We know and our testers know that those technologies save lives. The problem however is that those technologies are not standard in cars. They’re still add-on luxuries. So, we’re looking at those technologies. We’re advocating for those to be standard. Then, of course, we think that’s the right approach. We had the same approach with backup cameras that were luxury items, and it wasn’t until 2018 now that every car must include backup cameras.
Denver: I didn’t even realize that. Many people will read a review, let’s say on Amazon, from a person who’s used a product in their home for over an extended period of time. Does CR have anything that mirrors that kind of experience or usage?
Marta: What we know with the incredible platforms that we have and the connectivity that we have to– friends, family, the world out there– is that we crave understanding and experience. What is it that my friend is experiencing in this car or with this product? That’s something that we all crave. But the thing I think most consumers are nervous about and unsure about is who to trust online. While you want to be connected to a peer group that is telling you what their experience is, you also now know that some of those platforms can be gamed, so you don’t know how much of those opinions or thoughts or information is actually advertising. We like to say that, yes, do that. Check that. Be a part of a platform in a community. But know that when you come to Consumer Reports, you’re getting no advertising; a nonprofit that’s absolutely independent testing that allows you to compare and contrast. And understand that we’re trying to keep the market honest.
Denver: You also do lots of surveys and focus groups… probably more than anybody else other than the census bureau; how does that information play into your ratings and all the other things that you do?
Marta: We do do a lot of focus groups. I’d say we survey maybe a million a year, which is remarkable, and we do that because we not only want to understand the experience you’re having with the product and the service when you buy that, but we want to see what the reliability is over time. How are you experiencing that? What pain points are surfacing now that perhaps didn’t before? We go into people’s homes now, and we try to understand the user experience. That has become… that’s a new area for us to be actually not just scientifically testing something, but actually including consumers in that process. And we also have online something we call “You Test.” We give you some tips about how to test something at home, and we want to hear back from you. How did it go? What did you learn?
Denver: So after you have tested a product, how do you go about rating it? How do you express it that something is really good or something is really not so good?
Marta: I think the key to our ratings is the comparative nature of them. We don’t look at one set of headphones and say, “We think this is great.” We look at the whole marketplace, and we say, “How do these stack up to each other? “What are we looking for?” So you get the comparative scientific testing around that, which we think is what consumers really need.
The best depends on who you are. You may be looking for a certain price point, and what we want to direct you to is: what is going to serve you and your family at that price point the best? You may be looking for something that is best for a family vehicle. That’s very different from a sedan…we have to include the consumer in what is the definition of best. It has to perform, but it also has to meet your needs.
Denver: How would you describe the best?
Marta: The best depends on who you are. You may be looking for a certain price point, and what we want to direct you to is: what is going to serve you and your family at that price point the best? You may be looking for something that is best for a family vehicle. That’s very different from a sedan…we have to include the consumer in what is the definition of best. It has to perform, but it also has to meet your needs.
Denver: Marta, is there a challenge in updating the latest models of a product that just seem to be continually coming out? Imagine you’ve done this exhaustive review, and the next thing you know, the company has come out with a new model. How do you handle that?
Marta: Speed to market is one of our biggest challenges. I don’t think we’ve ever seen the kind of rapid product innovation that we see in the marketplace today. Having full market coverage is an extraordinary pressure on us. What we have to do is, one of the things we do is: we look at, as I said, what products are consumers gravitating to? And we make sure we attend to those. But we also try to give consumers guidance. If we don’t have full market coverage on something, we try to give them tips on what to look for. In terms of speed to market, cell phones – there’s constant product stream. What we want to do is we want to get that cell phone and test it, like many other products, right away, and give you our first impression. We have to be right there in a timely fashion. Then we say: “ Come back in a week and see the full rating.”
Denver: So you really try to create that balance between that instantaneous gratification that consumers want, but then a longer-view look in a more rigorous testing to let them know how this thing has looked over time.
Marta: We know some consumers want to know, “Just tell me today. What is it?” And others want to dig deeper.
Denver: What have been some of your more popular features and product reviews that readers just love, that go absolutely gang busters on you?
Marta: The ones that always attract the most attention are those products that you buy that are high-priced items, and you’re investing quite a bit, and you don’t want to get duped. You don’t want to get scammed. You actually want quality. This is something that’s going to be with you for a while. But again, things are getting more complex, and you want an understanding of what those are. Those always are very, very popular, and the ones where people are craving information.
Denver: Like vitamin supplements?
Marta: There’s vitamin supplements. There is something we do and spend most of our time and most of our lives on, is a mattress. How do you get your best night’s sleep? Very opaque.
Again, we look at comparative testing, but we don’t only do that. We try to understand. Are you a side sleeper? Are you a back sleeper? What difference does it make? And how does it impact how you function every day? But there are other things that are even more opaque. Think about car insurance. One of the things we just did is we looked at the data around what determines the price of your car insurance? It isn’t your driving history. There is actually an algorithm that generates your price. What we learned is that there are discriminatory algorithms, and depending on where you live and what your ethnic and racial composition is, your pricing is different. That’s something consumers absolutely cannot discover for themselves.
Denver: Very big downside to artificial intelligence. But again, on the other hand, it’s people who are programming that artificial intelligence.
What do you hear a lot from people who are clamoring for you to test a product that you just haven’t gotten around to yet? What would be at the top of that list?
Marta: I think there is so much distrust right now in the marketplace and about institutions generally, that we’re all trying to navigate the world of connected products. One of the things folks are unsure about is if I have a product today and the software changes, what are my rights about getting a software update in real time? What happens? That is just changing so rapidly that that uncertainty is what we try to address, and I think that pretty much covers a lot of what we’re saying.
And we’re also saying that in cars, of course, we’re now driving computers on wheels. One of the things we discovered… the upside of that of course is in the hardware world, having a recall was really challenging. If you found a faulty product, it’s very difficult to reach consumers where they are and say, “You’ve got to return that product. It’s not safe.” However, when we discovered that there was a problem in Tesla’s braking system, or in the Samsung phone, it was a first ever, over-the-air change on the braking system that secured those brakes for everyone who was driving that particular model. Same with the Samsung exploding phone. When they finally shut that phone down, that was a 100% recall. So, innovation is unsettling. But it also comes with some pretty remarkable advantages.
Denver: Talk a little bit more to us about privacy because that is really at the top of everybody’s list I think these days in terms of their concern. Part of it has to do with their personal information and what is happening to that. But Boy! There are a lot of people, and you’ve talked a little bit about this when you were discussing televisions, who are concerned that their devices may be spying on them. What are you doing in this area around those issues?
Marta: That’s an area that we’re spending a lot of time on, and it’s because – think about all the advances that Consumer Reports have made over the last 80 years; a lot of those protections apply to the analog/hardware world. We’ve got a Wild West in the digital landscape. What defines consumer harm when it’s software that’s imbedded in all your products? That’s very opaque to you. Every day, we’re seeing some headline about your privacy has been breached. What we don’t have in the marketplace are standards around privacy and securing your data. That’s why we created something called the digital standard. That’s where we are experimenting and setting standards for digital products just as we did when we talked about our televisions.
But also peer-to-peer apps are a very popular way now to have transactions among peers. Exchange money. How safe are those? What’s the safest? Are they hackable? We just rated those. The other is, we’re now seeing a great advance in home security systems. But how safe are these home security systems? We just rated those around privacy and data security, and we did find some things. We were able to get one company in two days’ time to make some firmware updates because we did see some dangers for the consumers. This is going to be a real area of growth in a connected world.
Denver: It’s an unbelievably wonderful service that you’re providing for all of us because there is no question that the regulators have not been able to keep pace with the technology. And to have an organization like yours to step in and try to frame things in an intelligent fashion really serves us really well.
I mentioned in the opening that you’re a social enterprise, and the majority of your revenue comes from earned income, primarily subscribers or members. How many members do you currently have– both digitally, and those who subscribe for the print edition?
Marta: Being a social enterprise, I would say we’re probably the longest-lasting, long-standing social enterprise in US history. That means we are purpose-driven; always have been. We have to create products and services that solve real problems for people, and they’re willing to go to market to purchase those. They also have to have a social impact. Six million members today, currently, and we have upwards of 15 million unique visitors to our website every month, and that’s been growing. That’s gone up 40% since the time I arrived, and we’re really proud of that. I think it speaks to the fact that we are a community, a larger community than just our members. We put an extraordinary amount of information on our website that is open to the public, and we think that’s an important public service.
What we know is that demographic is on mobile, and they are digital natives, and they want a tremendous user experience, and they want a frictionless experience when they are engaging on platforms on their devices. So, we have to be where they are. It’s not enough to have a website and draw them to you. You have to be where they are when they are on their social platforms.
Denver: What are some of the things you’re trying to do to have your members skew a little bit younger because the print edition members are about 65… and maybe a decade or so younger on the digital edition; what has been working as you really appeal to that younger demographic?
Marta: What we know is that demographic is on mobile, and they are digital natives, and they want a tremendous user experience, and they want a frictionless experience when they are engaging on platforms on their devices. So, we have to be where they are. It’s not enough to have a website and draw them to you. You have to be where they are when they are on their social platforms. You have to be where they are, however they’re experiencing their peer group. I think we’ve spent the last four years investing in our ability to deliver on those digital. That means a whole new infrastructure and digital capabilities. I think that has contributed to the growth in our visitors and our website. We’re also just thinking about new products that this age group has seen.
Ask CR is a new product. It’s a concierge service. If you don’t want to thumb through and flip through and swipe through all the details, you can actually have a one-on-one experience with the CR expert. The other thing we’re doing that’s in beta right now that we’re extremely excited about is the browser plug-in. If you could be on any platform; we know so many of us now are shopping online. But how do you have that trusted partner with you when you’re shopping on a platform, and you’re surrounded by advertising, and you’re not sure if you’re being shown the right choice for you? If you’re a member of CR, that browser plug-in will actually on your screen show you: Here’s what Consumer Reports thinks. Here’s the choice you might be making. So, you can look at both.
The consumer journey today is not what it was in the past. You have to be where consumers are. You have to be at that point of decision.
Denver: That’s very cool. Shopping assistant, right?
Marta: Shopping assistant.
Denver: That’s so interesting about information because there’s so much out there, but the important thing about information is having it accessible at the very moment you need it. And to be able to do that is a service which is incomparable.
Marta: And it’s in a moment’s notice. The consumer journey today is not what it was in the past. You have to be where consumers are. You have to be at that point of decision. You get a very small opportunity to do that. Usually, you’re on your device.
Denver: You mentioned at the outset that one of the biggest misconceptions that people have about Consumer Reports is that they don’t appreciate or realize all the advocacy work that you do. But you do have an office down in Washington, D.C. What’s on the top of your advocacy list at the moment, beyond what we already talked about?
Marta: I think one of the things– if you think about the safety issue, whether it’s cars; we already talked about how some of the safety technologies need to be standard for all of us. We just got done with the huge report on furniture. Furniture tip-overs. Every year, about 15,000 people are affected or harmed by a piece of furniture tipping over. But the real harm comes every 10 days, one child dies as a result of a furniture tip-over. That means children are crawling on furniture that’s not stable. So, we just did a big report where we did a lot of comparative testing, and that’s something that we’re advocating for. What are the standards? What is furniture? How does that have to impact? It’s not enough to just work with manufacturers. How do we secure that kind of safety for all?
You’ve already mentioned one, and that’s privacy. Regulations have not kept up, and as we know, we see headlines about that every day. How do we start to create and model some of the standards through our testing that we need to see in the marketplace on a broader scale?
Denver: I noted, Marta, that earlier this fall, Consumer Reports has come to television. Seen at least in the New York Metropolitan area on Saturday mornings on NBC during that education block. Tell us about the show and the impact you’ve seen from it.
Marta: As I said, we’re trying to be where consumers are, wherever they are, and however they consume. So, they can watch us on television on Saturday mornings, or they can get us on demand; on Hulu, on the platforms. What we’re trying to do is invite you back into the labs. There is so much cool stuff that happens in our labs, and we can’t host everyone– all 6 million people who are members of the 14 million that visit us on the website. But we do invite you to take a look at what’s actually going on in the labs. And we give you some tips on safety, on product purchasing that you can take with you.
We’ve always had a remarkably diverse team in every sense of the word. Think about it. We have scientists; we have journalists; we have advocates, policy experts, and the one thing we know is that we’ve had to add capacity on the digital side. We’ve seen a lot of change. We have been building up our capacity for all those new products and product development that has to happen. We are investing a lot in the growth of that on the digital side. So, I think that’s essential for us in our ability to deliver.
Denver: I’ve watched it. It’s a cool show and has some really great information. It’s very engaging.
I’d be curious. How has your workforce changed? As you were discussing before, the products you review are no longer just hardware, but there’s also software. It’s a whole different skill set, isn’t it?
Marta: It’s a whole different skill set. We’ve always had a remarkably diverse team in every sense of the word. Think about it. We have scientists; we have journalists; we have advocates, policy experts, and the one thing we know is that we’ve had to add capacity on the digital side. We’ve seen a lot of change. We have been building up our capacity for all those new products and product development that has to happen. We are investing a lot in the growth of that on the digital side. So, I think that’s essential for us in our ability to deliver.
Denver: Speak to us a little bit about the corporate culture at Consumer Reports… what you do to shape it and guide it, and why you believe it is such a special place in which to work.
Marta: We like to call ourselves, our culture, one-CR culture. One-CR culture is that, we have to keep our focus on our mission. Our mission is social impact, making a difference, bending the marketplace and putting consumers first. That means we have to have a very open and collaborative culture because it’s the testing and the journalism, as well as working in tandem with the advocacy that creates change in the marketplace. That means that we have to do a lot of cross-teaming and cross-functional work. That’s challenging to do, but we’re trying to create the spaces and the opportunities for our teams to get out and create teams around those products.
You have the nonprofit; you are creating change; you have the social impact; you’re looking to make change among policy makers, but you’re also running an enterprise. You have to create something that consumers actually want and recognize as something that they need to have.
Denver: You have had a very interesting journey on your way to this role as a CEO of Consumer Reports. Tell us a little bit about that trip.
Marta: One thing that’s been truly consistent in the choices I’ve made, and that is giving back whether it is government service, and I had the privilege and the honor to do that for my state senator. And then it was the nonprofit sector. I spent a number of years in the nonprofit world as well as philanthropy. When I was approached about coming to Consumer Reports, it was marvelous because it combined so many, and it added an extra tweak which I’ve not experienced. You have the nonprofit; you are creating change; you have the social impact; you’re looking to make change among policy makers, but you’re also running an enterprise. You have to create something that consumers actually want and recognize as something that they need to have. That revenue has to get poured back into the mission. I think it’s been a tremendous journey because I like the pressure that it puts on us, but it also opens our eyes to what’s happening on the market. You cannot keep your eye focused internally. You’re always looking at market dynamics, and you always want to have your finger on the pulse of, what are the needs and the pain points of consumers.
Denver: I also think that sometimes when you have a social enterprise, and you depend so heavily on your earned income, it really does keep you in touch, as opposed to an organization that’s getting all their revenues from philanthropy because you can lose touch that way. But here you have that feedback loop that a lot of nonprofit organizations don’t have.
Marta: That’s true; and that sustainability piece, I think we’ve always prided ourselves on being self-sustaining. However, what we now know too is that you need partnerships to really have impact. Just like a private sector company is looking for venture capital to create new and interesting products, we look to philanthropic partners for seed capital and risk-taking. That’s how we’ve stood up our digital standard and our digital lab saying, “We need this capability, and we look for philanthropic partners who share our values.” And that’s how we start to diversify, how we can begin to continually evolve as an enterprise.
Denver: Who are some of your key partners?
Marta: We have a very diverse group of partners. We have the Ford Foundation, the Knight Foundation. Hewlett… many of the foundations that are really addressing some of the issues that we value and that we have been working on.
The consumer journey is constantly evolving. I don’t even think we’re halfway through what it’s going to be. It is going to be a very different journey, whether we have bricks and mortar, whether we have a diverse set of platforms that you could shop online. I think we’re going to continue to see a lot of change in the consumer experience, and I want to be there right at the moment where consumers are needing that partner in a world that’s only more opaque and less transparent.
Denver: Let me close with this Marta. The way consumers behave and how they go about purchasing the things they need… why it has been breathtaking how much that’s changed in the past decade! Where do you see it going in the next 10 years? And what role do you envision Consumer Reports playing in that evolution?
Marta: The consumer journey is constantly evolving. I don’t even think we’re halfway through what it’s going to be. It is going to be a very different journey, whether we have bricks and mortar, whether we have a diverse set of platforms that you could shop online. I think we’re going to continue to see a lot of change in the consumer experience, and I want to be there right at the moment where consumers are needing that partner in a world that’s only more opaque and less transparent.
Denver: Marta Tellado, the President and CEO of Consumer Reports, I want to thank you so much for being here this evening. Tell us about your website, what’s accessible to all visitors there, your subscription and member options, and maybe how people can help financially support the organization through philanthropy.
Marta: Thank you so much. It’s been such a pleasure being here today. I want to hear from all of you. Come visit us at consumereports.org and check out some of the options. We have a wonderful all-access pass as a member. You get to see all the things on our website, but you also get to be part of some of our survey research, and you also get to be part of some of our beta testing on new products. And you get a variety of different newsletters on health and a variety of other things. Have a look at that. We also have donors. A lot of our members are also part of our donor program, and they often come by and get tours of our labs and take a trip out to the test track. We’d love to host you. Please be a part of what we think is a growing movement to reveal truth and grow consumer power.
Denver: Well it’s a great community. Thanks Marta so much for being here tonight. It was a real pleasure to have you on the show.
Marta: Thank you.
Denver: I’ll be back with more of The Business of Giving right after this.
The Business of Giving can be heard every Sunday evening between 6:00 p.m. and 7:00 p.m. Eastern on AM 970 The Answer in New York and on iHeartRadio. You can follow us @bizofgive on Twitter, @bizofgive on Instagram and at www.facebook.com/businessofgiving.