Friday, May 8, 2015

Foundations of Trust

In attempting to win the loyalty and advocacy of customers, many firms focus on offering a cheap price, a quality product, and a fast-and-simple acquisition process.   All of these things are important to some degree – but none of them are as important as earning the trust of the customer.   Customers can routinely be seen to pay a high price, accept a mediocre product, and suffer through a difficult and time consuming process to obtain products from companies they trust – and recommend these brands to others.

Trust, however, is difficult to pin down.  What makes a customer trust a brand?   There’s a great deal of literature on the topic of trustworthiness, from Aristotle’s virtues to the Scout Oath, but it doesn’t seem sufficient.   In many instances, it is entirely tautological – being trustworthy means deserving trust.    In other instances, it seems to identify peripheral characteristics like honesty – which contributes to trust, but a person can be honest and still not be trusted.

I’ve spent some time pondering the matter, reviewing the literature that suggests which values cause a person to be trusted, and considering whether they really work in practice.   Much of what I found was “useful but not essential” – but there are three basic qualities that I was unable to eliminate: beneficence, competence, and reliability.  And while it’s an ongoing study, I feel confident enough in my progress to share what I’ve come to realize about these three foundational qualities for earning trust.

1. Beneficence

The importance of beneficence is, ironically enough, that people are interested primarily in themselves – and so they look to engage with others (people, organizations, brands) who are likely to give them something that will benefit them personally.   A good company that does nothing for me, personally, is not one in which I seek to engage, or in which I place much trust when they insist I ought to pay them for doing their work.

That is not to say people are entirely one-sided and selfish – they are generally willing to give something of fair value in exchange for what they get (cost for benefit), but only if they trust that the other party will indeed render them some benefit – or to render a benefit for another person for whom the product is being purchased.   They expect that the others with whom they deal are also self-interested, and recognize that striking a deal means that the outcome will be mutually beneficial.

As such, they are wary of deceitful individuals – those who do not intend to give the promised or intimated benefit in exchange for what they ask in return.   There are many individuals and companies that seek their own profit and to escape the responsibility of giving anything in return.   And the expense-reduction approach to business seems to encourage charging as much as possible while doing as little as possible in return.  Great for shareholders, horrible for customers.

To be perceived as beneficent, a provider must be trusted to deliver the benefit that has been promised, and not all are.   Many companies are quick to process payment but slow to process shipment and utterly inaccessible to resolve problems after the sale, and earn the poor reputations that they have.  Meanwhile, companies that are known for going the extra mile to ensure that the customer gets the benefit he paid for will earn loyalty and recommendations.

Customers’ primary motivation in purchasing products is to receive the benefit, so being able to trust that the benefit they are paying for will be delivered, and that the provider is earnestly interested in ensuring that the benefit is delivered, is the first and most critical element of earning trust.

2. Competence

Competence pertains to the technical capability to deliver the benefit as promised.   It is not enough for a firm to wish to deliver a benefit, or even earnestly intend to do so – it must actually be done, and to be trusted, a firm must create the perception that it is competent to do so (and to get the second sale, it must actually demonstrate this competence in delivery).

This component likely needs little elaboration – firms are well aware that customers value competence, and current marketing shows no deficiency in making claims and offering proof of a firm’s competence.  And it is very important to establish competence, though it should not be done so emphatically as to exclude any other consideration. However, there are at least three significant areas in which competence remains a serious issue:

1.     Services.   There is far more trust in physical goods than in services – whether service is the entire product or merely essential support for a good.   People trust that one toaster is as good as the next, but not that one repairman is as good as the next.
2.     Customer Competence.  Many firms still take the attitude that the customer is sole to blame if he fails to gain the benefit promised because he configures or uses a product incorrectly.  The need to provide guidance and support is still great, and is greatly neglected.
3.     Relevance.  Very often, the things at which a firm is most competent are irrelevant to the customer – but firms brag about them anyway, pointedly neglecting (or hoping to distract from) areas in which a relevant competence is sorely lacking.

Ultimately, satisfying this criterion means that there is competence in delivering the benefit – and one’s intentions, skills, and capabilities are meaningful only if they are instrumental in doing so.

3. Reliability

A reliable provider is one who can be counted on to do what they have promised.   There are many instances in which a person or firm is genuinely interested in doing something and has the capability to do it, but simply does not – whether they encounter an obstacle or simply lack the integrity to follow through on their commitments.

As with other qualities, it is largely the perception of reliability that leads prospects to engage in their first transaction – they believe, based on claims or secondary evidence, that a firm can be counted on to deliver the value it promises.   Reliability is a particular problem for firms that are engaged only once, or once in a great while.  Unreliable firms can fake evidence of reliability, and reliable firms have a difficult time getting prospects to believe in their reliability.  It’s largely a matter of faith.

But for the second and subsequent transactions, the perception of reliability is based on each customer’s individual experience with the brand.   If a transaction is satisfactory, the customer will return to re-engage and will likely encourage others to do the same; if it is not satisfactory, the customer will seek a different solution and may discourage others from engaging with a brand.

Companies speak of their desire to have “loyalty” and “advocacy” from their customers – and much of the literature suggests that they believe that there is something wrong with customers who are not loyal and do not advocate for their brands.   But from the perspective of customers and prospects, it is the brand’s own reliability that is the issue.   The high level of interest in earning loyalty/advocacy is testament to the high level of problems with reliability – companies that routinely deliver on their promises have no such issues, and have a substantial number of repeat buyers and advocates.

All or Nothing

The three foundations of trust are all critical, and it’s insufficient to satisfy only one or two of them.   Consider this …

·      Competent and reliable, but not beneficent – Is the firm that delivers a product that provides no value to the customer.   This wins admiration from non-customers, who admire the brand but feel no need to buy the product.
·      Beneficent and reliable, but not competent – Is the firm that genuinely means to do well and will be responsive when called upon, but simply cannot seem to deliver on their promises for lack of technical skills.   This wins sympathy, but not repeat business.
·      Beneficent and competent, but not reliable – Is a firm that is willing and able to deliver value, but doesn’t take an interest in actually doing so.   This wins a lot of one-time customers who never come back and discourage others from engaging with the firm.

Simply stated, trust is all-or-nothing.   While people will express that they “kind of trust” a brand or “trust it a little bit” that is not sufficient to secure their patronage.   They may reluctantly engage, half expecting to be disappointed, and give a firm the chance to earn their trust based on their beliefs – but it is their experience that will get them to close the deal, come back again, and refer others.

Conclusion

Again, trust is a difficult and nebulous issue, so I will concede that this may not be comprehensive – but after much thought I do feel confident in the belief that any firm that convinces the customer that it is beneficent, competent, and reliable will win their business, and a firm that demonstrates these qualities in action will win a loyal and vocal following.

To put this information to practical use, I suggest considering the verbatim remarks of customers who have switched providers or who have chosen not to engage in the first place.   There will be complaints that the price is too high, that the product doesn’t have certain features they want, or that it’s inconvenient to shop – and these should certainly be considered.  But pay specific attention to the remarks that indicate problems of trust.   These are more subtle, and far more insidious, than the more common and obvious problems that non-customers or ex-customers will identify.

Ultimately, price, quality and ease are less important.  Again, people can routinely be seen to give their business to providers who are lacking in all three of those areas.

Having attempted to remedy them for so many years I have come to the sense that the complaints will never go away – no matter what you do, people will always want cheaper, better, and easier.      But if you get trust right, people will do business with you and advocate for your brand in spite of deficiencies in these areas.

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