Trust in Customer Relationships

by John I. Todor, Ph.D., Author of Addicted Customers (www.AddictedCustomers.com)

“Our study found that if respondents lose trust in a company, they are highly likely (70% to 80%) not to purchase its products or services. Worse, people do not simply internalize their doubts; they talk to others and spread distrust—with up to 33% now using the web to post their views.” 2006 Edelman Trust Barometer (www.edelman.com/news).

Trust is not just a good product at a good price. Trust is an indication of the strength of the relationship between the two parties—the customer and the company. It is an indication of the extent to which both parties see the relationship as win-win. Now here is the thing that should really catch the attention of many companies. Companies that focus on making the sale by offering discounts and incentives are encouraging customers to take an adversarial position, a win-lose stance that is inherently distrustful. Trust doesn’t have a chance to develop.

Losing trust in a company doesn’t require the company to be overtly distrustful. All that needs to happen is that the customer perceives they are playing a zero sum game, at their expense.

Many business leaders bemoan the lack of loyalty in customers. Well, if you want loyalty you need to build trust, and you can’t accomplish this if the focus is on the product. Trust develops through the customer experience and that includes the experience in buying and using the product.

Now consider the implication of a second Edelman finding.

“In the US, for example, the ‘person like yourself or your peers’ was only trusted by 22% of respondents as recently as 2003, while in this year’s study, 68% of respondents said they trusted a peer. Contrast that to the CEO, who ranks in the bottom half of credible sources in all countries, at 28% trust in the US.”

Here’s my take on this. Most CEOs are not viewed as trustworthy because customers suspect a one-sided agenda. Enron and other companies have not helped change this perception. Peers, on the hand, are peers or friends because there is in fact a demonstrated relationship. One reason they are perceived to be trustworthy is the earned trust reflected in the relationship. A second reason is that peers base recommendations or endorsements on their customer experiences with the products and companies in question. Their customer experiences have more validity. They represent the context within which the prospective customers will be making their judgments.

Check out my new book Addicted Customers (www.addictedcustomers.com) for a comprehensive treatment of the evolution of trust in customer relationships.