By Paul Korzeniowski
CRM Magazine - June 2013
Dictionary.com defines trust as the "reliance on the integrity, strength, ability, surety, of a person or thing." While the definition might seem a bit nebulous, corporations understand the value of building up a sense of trust in their customers. "It's quite simple: Consumers buy more products from companies that they trust," says Jake Freivald, vice president of corporate marketing at Information Builders Inc. (IBI). So the challenge for enterprises becomes finding ways to measure trust and then putting mechanisms in place to increase it.
For years, corporations have conducted surveys to determine how much trust consumers have in the business, its leaders, and its products and services. But this process can be time-consuming and limited because it only provides firms with a picture of customers' feelings at a specific moment. In today's volatile, rapidly changing, viral, social media-driven world, companies desire ongoing, up-to-date measurements.
But finding such measurements can be difficult, because firms often broaden their definition and therefore the corresponding measurements of trust. "Trust can be equated with customer loyalty. The components of a Loyalty Index are good metrics—the willingness to recommend a product/service, likelihood to repurchase, and overall satisfaction," notes Ivar Kroghurd, co-founder and lead strategist at QuestBack, an enterprise feedback management and social CRM solution supplier. "These metrics provide a proxy for trust because [the more loyal they are, the more likely] consumers are to be lifetime customers."
Counting Facebook Likes
Companies now have more ways to garner such measurements. The Internet and social media especially have provided enterprises with more ways to engage with customers and more items to measure. Businesses often start with simple items, such as Facebook likes; however, the science of interpreting social media interactions is just beginning to take shape. "The volume of data available and its heterogeneous nature make analysis challenging," Kroghurd states.
Corporations are in various stages of trying to sift through all this information. At the very least, businesses have woken up and are trying to do something with social media interactions. "Few companies still ignore social media," notes Ben Boyd, global chair of corporate practice and lead trust spokesperson at Edelman, the world's largest public relations firm. "Most understand that they need to use it to engage with customers." Many businesses start by tracking what is said about them on social media sites, then trying to funnel that data into the contact center as well as the rest of the corporation, and ultimately turning it into actionable information.
Businesses need to be proactive in this area because trust has fallen on hard times. The 13th annual Edelman Trust Barometer, which surveyed more than 31,000 respondents in 26 markets worldwide, found that about one out of every two consumers has little to no trust in corporations. And the more industrialized the country, the lower the trust measurements (see sidebar).
The Changing Corporate Icon
One recent change is how corporations exemplify trust. In the past, businesses trotted out top executives, such as Lee Iacocca from Chrysler Group and Dave Thomas from Wendy's International, who acted as the face of their firms. Today, that would backfire. Edelman found that the public's trust in managers has fallen far below that of the institutions themselves. Globally, trust in business to do what is right hovers at the 50 percent mark, while trust in business leaders to tell the truth is at 18 percent, a 32-point gap. That disconnect is wider than the gap between government and government officials, which is at 28 points. The trust gap between business and business leaders is among the largest (35 points) in the United States and China, the world's top two economic powers.
So, why do executives have such a tarnished reputation? "People feel that influence is tied up in a small group of people who do not play by the rules and do not do what is right," says J. Walker Smith, executive chairman of The Futures Company, a global research consultancy. Not only do consumers lack trust, but many are also mad as hell at corporations: "About twenty-eight percent of consumers are enraged about how they are being treated," Smith says. "Their lack of trust has been colored by a...sense of betrayal."
A long list of high-profile top management scandals that have occurred in the past few years seems to have scarred consumers. For instance, repercussions from the banking scandal of 2008 still linger. Banks and financial services are the least trusted industry sector: In fact, trust in banks globally is 11 points lower than it was in 2008, according to Edelman.
Scandals Taint Financial Institutions
A couple of factors are fueling the negative numbers. The Edelman Barometer found that the lack of trust is driven by the perception of unethical behavior, and, unfortunately, scandals continue to emerge. In 2012, investigators in Europe, the U.S., Canada, and Asia found that bankers knowingly submitted false data for the calculation of the London Interbank Offered Rate, an interest rate benchmark that influences the value of hundreds of trillions of dollars in financial contracts around the world, including floating-rate mortgages, corporate loans and interest rate swaps. The ruses were committed to hide their institutions' financial problems or to boost their traders' profits. The Edelman survey found that more than one in two people globally (56 percent) were aware of the financial services scandals (78 percent in the United Kingdom, where Barclays paid a $450 million fine), with 59 percent saying the cause of those scandals was behavior, specifically corruption, poor corporate culture, or poor leadership.
The banking industry is not alone. There have been a bevy of scandals involving top CEOs in other markets as well. For instance, Rajat Gupta, former global managing director at McKinsey & Co., was involved in insider trading. Cyclist Lance Armstrong, former chairman of the Livestrong Foundation, went on Oprah and confessed to using performance-enhancing drugs for the bulk of his illustrious but now tainted career. "We're clearly experiencing a crisis in leadership," said Richard Edelman, president and CEO of Edelman, in a public statement.
Low rankings in other industries stemmed from other high-profile calamities. Trust in the media in the U.K. dropped a dramatic 14 points after the release of the Leveson Inquiry—an investigation into the role of the press in a major phone-hacking scandal—making the press the nation's least trusted institution. In the U.S., after the poor handling of the fiscal cliff issue, trust in government dropped eight points among the general public, making it the nation's least trusted institution.
The Power of Social Media
Businesses do not operate in a vacuum and are negatively affected by such events, regardless of their industry. However, corporations are not completely powerless and can take steps to enhance the level of trust their customers have. "Social media makes it easier for businesses to monitor trust issues and trends as long as they're paying attention," states Laura Cochran, regional director of business development for TransPerfect Translations International, which provides translation services in 170 languages.
The first change in the boardroom is taking a bottom-up rather than a top-down approach when trying to connect with customers. "Because of the growing use of social media, the value of peer-to-peer communications is rising," Edelman's Boyd states.
Indeed, consumers are much more likely to pay attention to and develop strong feelings (either positive or negative) from social networking interactions than from corporate directives. "The Internet and social media have allowed everyone to have a voice, and consumers around the world are embracing the opportunity to praise and condemn the companies with which they do business," Cochran says.
What Would You Recommend?
People trust someone like themselves, so things like product recommendations from peers carry a lot of weight. "As customers, we don't trust enterprises [to the extent we used to], but we still trust our peers," QuestBack's Kroghurd says. "That used to be friends, colleagues, neighbors, and family. Nowadays, in the so-called Age of the Customer, our peer group has grown astronomically. Social media has enabled us to find 'someone like me' within seconds. We use this peer group all the time for booking hotels, researching, or buying products."
Rather than try to stymie conversation, companies must encourage it by actively trying to engage with their customers. Businesses and their leaders must change their management approach and become more inclusive: They must seek the input of employees, consumers, activists, and various experts. They then need to find ways to incorporate such feedback into their firm&'s business processes.
This step takes many forms. In some cases, businesses create online communities and forums for Internet-savvy customers who want to take an active role in product development and even customer support. On these forums, customers post questions and answers, search for information in a self-service FAQ (frequently asked questions) section, share stories, and vent. To a degree, such forums enable companies to offload simple customer service functions. However, full-time employees are needed to monitor and respond to issues raised there as well as on other social networking sites.
The Value of Transparency
In addition, businesses must operate in a transparent manner. In essence, consumers want to know everything that the company is allowed to tell them. The more information corporations share—detailed information for each customer about themselves and aggregated information about customers as a group—the better off both the customers and the company become. This new type of engagement is playing out in a couple of ways.
Companies now deliver more customer information than ever before. "The use of dashboards is rising, so firms can provide customers with simple access to complex data sets," IBI's Freivald reports. In personal finance, firms provide customers with various charts and graphs that illustrate how their portfolios performed versus various industry metrics. Wellness companies are creating more complex electronic health records, and, in some cases, providing personal health dashboards for viewing lab results, assessing risk factors, and tracking biometric trends. Utility companies have started to deliver consumer analytics applications that take smart meter and smart grid data and outline ways consumers can reduce their energy consumption—and their bills.
Another step is using social media to talk about company problems and outline possible solutions. Corporations are leveraging Twitter to update customers about steps they are taking to solve customer problems. Utilities provide updates on power outages; cloud service providers outline when their service will come back online; consumer electronics suppliers discuss return policies for problem products. The online communications channel is faster, more proactive, and viewed more favorably than previous options, like snail mail or a call to the contact center.
Changing the Relationship for the Better
The goal is transforming the customer/company relationship from an adversarial one into a true partnership. "Trust is the feeling a customer gets when [he knows] that a person or a company can follow through on promises and is dedicated to doing so," TransPerfect's Cochran says.
To do this, Kroghurd recommends that businesses clarify their goals internally in the following ways:
- Have a clear brand promise for your customers.
- Measure your ability to live up to that promise across all relevant channels.
- Act on things that are not working.
Essentially live up to the implicit contract your brand and company has with its customers.
Customers want to feel safe and secure. "Companies need to take the risk out of doing business with them for the consumer," The Futures Company's Smith says. "They need to guarantee that every transaction with them will end up being successful."
Going the Extra Mile
Simply responding to a problem in the traditional manner is no longer good enough; companies must be proactive and take the extra step. For instance, Specialized Bicycle Components, a designer and maker of bicycles and related equipment and apparel, received an alert from its social media monitoring software that a customer had posted a complaint because his local bike shop was going to take three weeks to fix his Specialized bike. Specialized stepped in, contacted the irate avid cyclist, phoned the repair shop, and was able to return the bike to the rider the next day. As a result, the customer pledged his loyalty to Specialized.
On Amazon.com, the system automatically notifies consumers whenever they order a book for the second time. Virgin Mobile gives customers the option of opting out of their cell phone contract if they lose their job. "The customer wants to feel that the company is truly on their side," Smith says.
This emphasis extends to the contact centers. Customers have the ability to communicate 24 hours a day, seven days a week, via multiple channels: email, phone, chat, and social media platforms. "New platforms offer businesses an opportunity to build trust, but they also are places where they can breach customer trust either by being nonresponsive, unavailable to respond on the customer's preferred channel, or unable to communicate in their native language," Cochran says. "Ultimately, superior client service is what truly allows you to gain trust, and therefore retain clients."