Trust #1 Competitive Advantage in 2019
January 17, 2019
As we look back on 2018, one word used increasingly by executives was Trust.
Salesforce co-CEO Keith Block used the word “trust multiple times in a recent 45-minute interview with Fortune Magazine. “In our business model, everything starts with trust...our core values start with trust...everybody needs to be worried about trust.”
KPMG says, "Winning with customers increasingly depends on the quality and personalization of the relationships we are able to build with them, and success is ultimately built on the trust that is developed day-in and day-out, through the realities of personal experiences.” Accenture reports, "Companies need to very intentionally create a culture of building, maintaining and preserving trust, and bake it into their DNA, strategy and day-to-day operations."
The question every customer asks, whether it is a manufacturing, financial services, professional services or retail is, “who can I trust?”
We are in an era of the empowered customer.
Customers are more skeptical and more critical than ever before. They are demanding more transparency and integrity. No longer is it good enough to have the best product or the best service. To grow and succeed companies must have the trust of their customers and stakeholders.
Almost every organization talks about how important trust is to their organizations, yet most of them do not have a proactive plan to build it and protect it. Customer trust is rarely measured as a key performance indicator. Those that do that do have a competitive advantage. Many leaders find it difficult to quantify its value to the success of their organizations… until there’s a crisis.
When there is a breach of trust most companies take a reactive stance because they don’t have a have a strategy to build and protect customer trust. Many use it as a talking point to tell stakeholders there’s been a “breach of trust” or that “we need to focus on rebuilding trust.” Trust can takes years to build and moments to breach.
No business is immune.
This rings true when looking at recent examples of compromised trust that have played out in the media– think Tim Hortons, United Airlines, BP and Facebook. These declines in trust can be tied to corporate behaviour (real or perceived).
The number one thing organizations can do to build and protect trust is to act in the best interests of their customers, stakeholders and the public. This sounds easy but it never is. They put the short-term sale, the quick fix and profits first.
If data and privacy breaches, “fake news,” a shifting world order and a global focus on transparency are not compelling enough reasons for trust to be top of mind for every company, some of these statistics make it fundamentally clear:
- 69% of people worldwide believe the number one job for CEOs is to build trust, ahead of delivering high-quality products and services. Edelman Trust Barometer
- 54% of US companies that experienced a drop in trust, according to Accenture, have revenues at stake equate to US $180B.
- On average, and over the long-term, the “Top 10" most trustworthy public companies have outperformed the S&P 500 by over 25% since 2010. Trust Across America 2018.
- 68 % of people worldwide recommend a product or company they trust to a friend or colleague. Edelman Trust Barometer
- 92 % of Canadians tend to buy from companies they trust more, even when quality and price of a product or service are similar. Ipsossurvey for Readers Digest Canada
- 81% Canadians pay a little more money to support a product or a service from a company they trust. Ipsos survey for Readers Digest Canada
There is a statistically significant relationship between levels of trust and challenges businesses regularly face, including declines in sales, customer retention, increases in regulatory scrutiny, employee turnover and customer complaints.
The bottom line for companies is that trust drives business performance.
Trust is both measurable and manageable. Building and protecting trust equity requires a purposeful, intentional long-term commitment.
Trust is no longer a concept that businesses and their leaders should consider as difficult to quantify. Last year’s events as well as the research and evidence make it clear: customer trust is the single greatest competitive advantage a company has.
Trust cannot be left to chance. Building it and protecting it must be managed. Failure to understand this can have existential consequences. The question always is, do your customers trust you?