What is the dollar value of trust?
Through a special arrangement, presented here for discussion is a summary of a current article from the blog of LoyaltyOne. The article first appeared on Forbes.com.
New research by Accenture Strategy assigns a dollar value to trust among organizations and finds companies that experience a material decline in trust could miss six percent in potential sales, on average.
The findings, based on an analysis of more than 7,000 companies across 20 industries, back up what many retailers should already know: That transactions are largely driven by brand confidence. The proper use of consumer data, it appears, plays a big role in instilling that trust and confidence.
A look at retailers that rank high on the 2018 Temkin Trust Ratings supports the theory, connecting trust with performance. Amazon and Kroger, the two top rated publicly traded retailers included, were tied at 22 among 318 entries. The top-rated retailers overall are two privately-owned supermarket chains: Wegmans Food Markets, second, and H-E-B, third.
Retailers that lost trust — and market share — encouraged less-frequent visits. Among those that fell at least 15 points below industry average on the 2018 Temkin Trust Ratings list is 289th-ranked Sears Holdings and Toys “R” Us, 273. Accenture’s “Competitive Agility Index” reveals 54 percent of companies have experienced a decline in trust.
Pretty much all retailers gather data, through a loyalty program, credit card data and/or digital transactions. Transforming that information into a shelter of trust, however, takes expertise. Here are some guidelines.
Be collaborative. When given a choice to choose what and how much information they share, shoppers are more likely to feel valued and believe in the brand.
Be clear. All communications, from explaining how the retailer uses its data to the special offers available through that data, should be interpreted in a few words.
Be as relevant as budget permits. Ideally, a retailer could break down its data into hundreds of unique messages, so each customer sees she is getting an offer special to her (and she actually wants).
Don’t take advantage. If the brand experience is incongruous or indifferent to the customer’s needs, they’ll lose trust, and that could be worse than never having been trusted at all.
If the Accenture theory is sound, then even blockbuster brands have the ability to improve performance through emotional connections and, specifically, the insights that enable them.
Discussion Questions
DISCUSSION QUESTIONS: What advice would you have for retailers seeking to use data to establish a “shelter of trust” with consumers? Can you provide examples of actions taken by specific retailers that create this type of trust on the part of consumers?
Poll
BrainTrust
Cynthia Holcomb
Founder | CEO, Female Brain Ai & Prefeye - Preference Science Technologies Inc.
Ryan Mathews
Founder, CEO, Black Monk Consulting
I agree that trust with consumers is a major factor in sales and retention. However, this “study” is ridiculously flawed. Of course, Toys “R” Us and Sears lost sales. But it had very little to do with a loss of trust or consumer data. It had to do with going out of business via heavy debt load.
One of the reasons that the average consumer products e-commerce site has conversions below 3 percent is specific to trust. Consumers are afraid to provide their credit card information to a retailer that they have no relationship with. That is why Amazon is so important for many brands to expand their sales. Consumers trust Amazon and trust that if there is a problem the A to Z Guarantee will take care of solving the issue. It has taken years for Amazon to cultivate its trust bubble with consumers and they reinforce it with Prime and their guarantees.
Trust is not an initiative that goes on the next quarter goals. Gaining and keeping consumer trust is part of a company’s culture. It is embedded in the business strategy and guides decision making. You measure trust by company and brand retention, not by surveys.
Data is excellent and the more we can learn about our customers, provided it’s valid, the better we can gear our business to their needs. However, it’s the “real” experiences that customers remember and those are the ones that make them loyal. Building a relationship with the store manager or associate you see when you frequently visit the location. How they make you feel appreciated and valued. Those are things that count. How about when you’ve purchased something and when you need to return it, not only do they make that hassle-free, they help you find something more suited to your needs.
The products also are important because they must be high quality and make the customer feel their investment was worth it. When shopping online, chat and customer service needs must be easy and painless almost as if you’re speaking directly with someone. So finding more ways of accumulating and using data is fine but, most importantly, look for ways to improve and increase the “real” experience, most often with human interaction as well as easy-to-use systems that provide the service all customers deserve.
I think it boils down to how data drives behavior. Customers see and feel behavior. Honest product and pricing. How many price tags in the mall are believed/trusted as the real price? How many brands use data to regionalize and localize assortments? Retailers are drowning in data, but many seem unable to filter and edit and change behavior.
Trust is more of a “show-me” than an “ask me.” A uniquely personal, relevant offer speaks volumes over plying a consumer with “transparent” language on how their data is used and shared. All under the guise of demonstrating trust? A policy of depending on the consumer to read, process and determine if they should trust a retailer is completely counterintuitive to “show-me” why I should trust you, my retailer. Retailers have so many initiatives in play at once, it can be overwhelming to the consumer. Thinking holistically from the consumer viewpoint is rare, evidenced by current retailer trust strategies. A unique emotional connection with a consumer requires a new way of thinking.
This is a great example of retailers needing to stay on top of their brand image constantly. They must respond to negative publicity in a decisive, genuine manner to regain and build new trust. I think we can all name a few strong examples of brands that demonstrate this ability.
In this case I think trust is being conflated with wider issues of brand connection. I trust both Kroger and Wegmans to provide edible, reasonable quality food, just as I trust them to be responsible corporate citizens. However, I have a real connection to Wegmans because its whole proposition aligns with what I want from a grocery experience.
Garbage in, garbage out (a common tech saying).
CMOs are only as good as the Excel sheet in front of them. The back-office tech folks that serve up data must be tied to their business counterparts.
EDW (enterprise data warehousing) is a daunting task to tackle. Without proper data definitions, stewardship and continuity (front/back office) we will never speak the same language and a customer’s true worth (LTV) will not be achieved.
Here’s a scenario:
A CMO asks for a report on the SE of his physical footprint, showing repeat transactions from the same customer. The data dude receives the requests and joins the wrong two tables in the database and sends of the spreadsheet. The CMO’s staff looks at the report not knowing they are looking at Bill Jones and others who live in the NORTHEAST and not the SOUTHEAST. They give a summary to the CMO and the CMO takes action — YAWN.
EDW is a supreme offering offering retail should consider in their near-term strategy.
P.S.: I am a simple shopper who loves three to five brands and retailers. Smile when I walk in and tell me where the Tide is — Shouldn’t you already know I am coming in every eight days for this item?
Good points. And I’ll add that CMOs are only as good as their lack of bias and predisposed points of view. Lots of uncharted territory out there these days. Learning and changing behavior don’t cohabitate with bias very well. You certainly didn’t suggest that — just sayin’ …
It took me several readings to get what I think is the intent of this research. At first I agreed with the implication from a couple of colleagues here, that this article may not actually be dealing with “trust.” It’s more about reliability, honesty, predictability, consistency, satisfaction and those kinds of values; all good of course. “Trust” is in a league of its own and I don’t think it’s revealed in a “Competitive Agility Index.”
Interesting phrases are used like “a shelter of trust” which I find most peculiar. Almost an oxymoron. Trust is a spiritual issue and these folks are trying to make it into a strategic one. Work with me here.
Trust is truly and fully relevant only in the context of risk. Trapeze without a net takes trust. Sitting in a rocking chair not so much. The purpose of a “shelter” is to reduce risk. Does it take “trust” to go into a store where you always have an experience you like and expect? That may be a good thing, but I suggest it has little to do with trust. My question is this: Which retailers are taking risks these days?
Great point Ian. Trust is most clearly manifested during periods of conscious risk. But trust is also a risk-mitigation vehicle. So, for example, when a lower income shopper goes to Walmart, they “trust” they will receive good products at reasonable prices. In this example, Walmart’s performance over time mitigates the risk of a poorer shopper minimizing the value of the small number of disposable dollars they have available to them. The risk of not being able to make the money go far enough is certainly always there, but again it is mitigated by experience as opposed to something more dramatic, say, you walking off a 30 story building because you trust me when I say you will be safe. And this is exactly why “trust” isn’t something branders can — or at least should — promise. You are spot on. It is a spiritual experience that lives in the hearts and minds of the consumer who chooses to bestow it — or not to bestow it — on a brander.
I have to question the premise here. Trust isn’t something a retailer “creates,” it is something customers bestow on retailers as a result of their experience with them. A retailer cannot promise, “trust,” — their trustworthiness is either validated or refuted in real time by their customers. And exactly how much should a customer “trust” a retailer who strives to “be as relevant as budget permits”? Why is trust linked to economic performance? Does this means that in tough years branders can feel free to misuse data? And data security is only one aspect of how customers measure trust, not the only criterion. So if my data is secure, but my customer service experience is horrendous and/or a brander misrepresents the products they manufacturer or sell — am I suppose to still trust them? I agree with Phil Masiello. He calls the methodology “ridiculously flawed” — and he’s right. It’s either that or hopelessly naive.
Best comment of the day, my brother!
If you don’t know them, you can’t delight them. If you misstep, it doesn’t take long for them to find someone else who will provide a better CX. This is not the day and age to guess and assume. Better get it right. It starts with seeing the shopper, then making intelligent decisions on what you know, and acting on that intelligence in a timely, relevant and appropriate way. Miss one component of that process and you will see the loss in trust.
I reckon the value of consumer trust is 100%. If you want to calculate its dollar value to your organization, just look at your bottom line.
Trust is a requisite for loyalty, but they are not the same thing.
Trust is earned over time, by the consistent, competent and transparent actions of the institution. Delivering on your promises is of paramount importance. Stating them clearly is a core discipline.
Compared with that, collaboration on data collection seems like a pretty soft action. If analytics enable personalization, then of course the execution must be flawless, lest the customers receive the message that you are not truly attending to their wants and needs.
Defining trust as a “shelter” makes it seem like a cold-blooded, possibly deceptive tactic. A brand or retailer that acts in predatory fashion toward its customers doesn’t deserve to survive.