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Bi-monthly columns from the Atlanta Business Chronicle
Headline after headline recently documents the decline in trust by U.S. consumers. Consider the following:
- The Harris Poll 2014 Reputation Quotient study reports that less than half the population trusts companies to act responsibly with their private data. Six in 10 have decided not to do business with a company based upon something they learned about the company’s conduct. Forty one percent report that company reputations have declined in the past year vs. only 20 percent that say they have improved.
- The 2014 Edelman Trust Barometer found that the proportion of consumers that say they trust businesses “a great deal” dropped to 10 percent, down from 17 percent a year earlier. Just over half believe businesses will do the right thing and only one in five trust business leaders to tell the truth.
- The TRUSTe 2014 U.S. Consumer Confidence Privacy Report found that 74 percent of consumers are more concerned with online privacy than they were in 2013. Almost half (47 percent) are concerned about companies tracking their online behavior to target them with ads and content.
At the same time, recent studies find that the importance of trust is increasing. An IBM Institute for Business Value survey of 28,000 consumers concludes that there is a direct correlation between how much a consumer trusts a company and “their willingness to recommend you, stay with you when your competition begins to offer similar services, and more important, how much they spend.”
The TRUSTe Report found that 89 percent of consumers say they avoid companies they do not trust to protect their privacy. A Brand Z study of the top 100 most valuable global brands compiled by Millward Brown reported that trust and customer loyalty are coming to the front once more as key to success as the economy recovers. “Trust is the essential ingredient for a brand to be allowed to become a vital part of a customer’s everyday life, ahead of price and even value…. So if you want to future-proof your brand you need to start working on trust.”
It is clear that trust matters and it is becoming increasingly important as a competitive factor. Don Peppers and Martha Rogers, coauthors of the enormously successful bestsellers on One to One Marketing, have written a new book, Extreme Trust: Honesty as a Competitive Advantage, that outlines how companies can build trust in the marketplace.
The major theme of the book is that going forward businesses will be expected to protect the interests of their customers proactively, “to go out of their way, to commit resources, and to use their insights and expertise in such a way as to help customers avoid making mistakes or acting against their own best interests simply through their own oversight.”
The authors cite Ally Bank, Amazon, and Peapod, an online grocery store as examples. At Ally Bank, they proactively remind consumers if they have funds in an account that could be earning higher interest. If you order a book from Amazon that you have already purchased from them, they will remind you before they process your order (iTunes does the same). Peapod has software that will check with you regarding a likely typo before you buy something highly unusual (like 120 lemons for example).
Peppers and Rogers compare this with AOL, “the poster child for bad intentions,” where customers who had broadband service were never told they could quit AOL monthly dial up service and still retain their AOL email address.
They also cite Blockbuster’s business model which was based on making lots of money from late fees, so much that customers began to detest them. This opened the door for Netflix, which used a business model more in alignment with how consumers wanted to do business.
Forrester Research, based on its own studies, reports that the attribute that creates more loyalty that any other is “the perception on the part of customers that the firm does what’s best for them, not just for the firm’s own bottom line.
Thus auto companies and homebuilders that follow this proactive trustworthiness strategy would contact buyers when there is 30 days left on their warranty to alert them to get any needed repairs taken care of before the warranty expires. This is putting the customers’ interests above the companies’ interests (at least short term interests) given the additional cost of delivering on the warranties that would be incurred.
The authors cite another great example from one of the most trusted financial services companies in the U.S., USAA. In 1991, right after the end of the first Gulf War, the insurance company, sent refund checks to several thousand men and women who had served in the Middle East for the time spent overseas. They reasoned that these individuals were not using their vehicles while out of the country. Over 2,000 of the checks were sent back to USAA by customers who told the company to keep the money and “just be there when we need you.”
The book describes “trustability,” or Extreme Trust, which is proactive trustworthiness. They cite statistics showing that while 75 percent of CEO’s think they provide above average customer service, 59 percent of customers say they are somewhat or extremely upset with the service of these same companies.
Peppers and Rogers argue that being trustworthy is not enough today, that companies must be trustable. Trustworthy means both doing the right thing and doing things right (that is, reliably, dependably, credibly, respectfully, responsively, openly, and honestly).
To be trustable, companies must also be proactive to protect consumers’ interests. Trustable companies have good intentions. They warn customers if what they are buying might not be right for them. They don’t count on making money from customers’ mistakes. They reward sales people for building relationships not for selling products.
So here is the paradox: consumers’ trust in business is low and continues to decline at the same time that the importance of being trustable is increasing. Consumers today have quick and ready access 24/7 to what other consumers are saying about your company.
Have you talked with your front line, customer-facing employees to identify and eliminate all of the untrustable policies that exist in your organization? There is a big payoff for doing so and a big cost for not doing so.
Ken Bernhardt is a marketing consultant and Regents Professor of Marketing Emeritus at Georgia State University. He can be reached at [email protected].