By Harry Cruickshank
Trust is a fundamental building block for effective business relationships with employees and customers. In his acclaimed book The Culture Code¹, Daniel Coyle identifies 3 common characteristics that define high-performance teams in the workplace: one of these is shared trust among team members. Regarding customers, trust is a driver of loyalty and customer loyalty is the primary determinant of business growth as Fred Reicheld demonstrates in his book The Loyalty Effect².
The advantages of building and maintaining trust with employees are clear. The higher levels of engagement, productivity, performance and retention have a positive effect on the bottom line. Strong and consistent operational performance underpins a better customer experience. Lower attrition supports higher morale, minimises unnecessary recruitment costs and boosts the human capital return on investment (HCROI).
On the customer side, a high level of trust supports revenue growth through retention, re-purchasing and new business generated through better brand visibility, customer advocacy and referrals. It’s also a competitive advantage and a defence against competitors wooing customers away.
A trusted relationship even allows for some negative impact. Companies which are trusted in the eyes of their customers can make mistakes and recover, if they handle the situation well, but care must be taken. Sandra Sucher, co-author of The Power of Trust³ puts it well: “The challenge is that it takes a sustained history of right (actions) to wipe out one wrong. A company will have to be on the right side of trust again and again.”
The downside of breaking trust with customers is well known. Who can forget the United Airlines broken guitar fiasco⁴?
Boeing, once widely admired, has yet to recover from the 737 Max plane crashes in 2018 and 2019 and the fallout from the public reaction⁵. Most recently, P&O Ferries provided a graphic account of how to damage a brand⁶.
What’s become clear, particularly in the last decade, is that society expects businesses to work harder to win and maintain their trust. According to the Edelman Trust Barometer⁴, trust is the new brand equity. Thus, the bar has been raised for organisations. According to Edelman, people are demanding that companies demonstrate a higher purpose than profit and are proactive in demonstrating social value. This trend has been growing steadily over the last 5 years. It holds true for all social groups but is highest amongst younger people. Their opinion of brand relevance to them and their willingness to invest their trust has hardened.
Even for B2B buyers, these concepts are not merely conceptual. Bain carried out an analysis into what mattered to buyers, using quantitative and qualitative data from client studies. They developed a 5-level Value Pyramid⁵, using a model rooted in the hierarchy of needs described by Maslow in the 1940s. Near the top, at level 4, what they termed “Individual Value” focused on how well the individual buyer’s personal priorities were addressed. At its highest level, which they called “Inspirational Value”, social responsibility and purpose were paramount.
In all cases, the basis for establishing trust will always depend on your ability to deliver what your customers need and, more to the point, meet or exceed their expectations. Customer needs may not vary much over time, but expectations can change quickly and radically. COVID has underlined that fact.
Understanding customer expectations and your performance against them provides a baseline from which to operate because it shows you what really matters to them and shines a bright light into areas where you’re not delivering effectively. You can also include your customers’ perspective on your competitors! This step will show you exactly where, and why, you need to take action to demonstrate that your customers’ trust in your business is justified.
Treat trust as a priority. Ensuring you avoid deficiencies in your core business operations will protect your profit and give you an advantage in the battle for differentiation.