In last week’s episode of Forrester’s What It Means podcast, Senior Analyst Tom Champion explains why rebuilding trust with customers is not about brand hygiene but about growth, as more and more consumers show cynicism and skepticism towards brands and convert those feelings to actions.

Podcast transcript


Victor Milligan:
Hi, I’m Victor Milligan.

Jennifer Isabella: And I’m Jennifer Isabella.

Victor Milligan: Your cohosts for Forrester’s podcast, What It Means, where we’ll explore the major changes in the market influencing executive priorities. And on the line with us today from Sydney, Australia is Tom Champion, Senior Analyst at Forrester, to discuss the nature of trust in the market today. Welcome, Tom.

Tom Champion: Hi. Happy to be here.

Victor Milligan: So, Tom, let’s start with one of the ironies in the marketplace. Trust is on decline as a dynamic in the market at a time when trust is one of the most important factors in consumer decisioning. Why is that true?

Tom Champion: When we look at so many studies out there, trust is a topic which so many different organizations are researching, so many different leaders are talking about. So when we look at all these studies, one of those common themes that you do find is that trust is on the decline. One key data point out there is on the perception of trust for CEOs, and they’ve been saying that CEOs have never felt more worried about trust. The post-GFC around 69% of CEOs have described that trust is one of the biggest issues, compared to pre-GFC, where it was around 12%. So a really big gap there. And I think one part of that is how much we’ve been able to see the link to financial performance and poor customer trust. So studies have shown that our perception of data, for example, misusing data, and poor trust coming from that, can decrease retention by about 18% within a year, can make customers spend less, at around 15% in one year, and also makes customers more likely to dissuade others using that organization.

Victor Milligan: At this time, there’s less trust in institutions than ever before. And that could be a comment about governments, NGOs, brands. There could be all sorts of meaning to that word. And we are in a kind of a turbulent, political world where there is a lack of trust in the nature of governments. Let’s just use that as the example. How much is that playing out in markets where there’s a natural cynicism, or a natural distrust of things that are institutions, like brands, and that’s just sort of an overhang that all brands have to inherit, or have to consider as part of the consumer thought process?

Tom Champion: So we definitely see that across all industry, across all geography, there is this decline taking place. I think a huge part of that is the age of the customer. Customers who have never been more informed, who no longer need to look at brand messaging and market promises at face value– they have their mobile devices. They can very quickly check for themselves if what this organization is promising is true. They can look at review sites, who are very sophisticated now at aggregating reviews, providing numbers, providing more qualitative comments, helping customers engage with each other about a service. Customers just have a lot higher expectation about honesty, which is affecting their consumer decisions and behavior as well.

Victor Milligan: So one of the discussions we’ve had before was that there’s sort of a watchdog role that’s being played by the customer right now, to your point, which is customers are sufficiently cynical when someone makes a comment about, let’s say, their social compact they make with different charities, what have you, or they make promises about their product, what’s in their product, or what their product does. There’s an inherent skepticism, and so you have this watchdog effect where people check on it, and to your point, if there’s any chinks in the armor, they will both themselves act on it, and then amplify that same level of disappointment in the social channels. There’s a network effect that comes out of that. Is that part of what’s playing out here?

Tom Champion: Yeah. Absolutely, which is why we talk more about how important it is for trust to appear at different points in the customer journey at different interactions. Because what we see is that, for example, if you’re trying to demonstrate your integrity of the brand, it’s not enough anymore just to have a really passive association with a foundation, with a charity. That doesn’t have the power it once had. So now it is important for the customer to feel that when they’re interacting, where that trust can build, can be sustained at several points throughout the journey, and not just expecting customers to interpret how trustworthy the brand is themselves.

Jennifer Isabella: Yeah, and playing off a little bit of that, Tom, I mean, what does trust really mean today for organizations and their relationships with their customers?

Tom Champion: Well, I think it’s really critical. We see that when you think of how important loyalty is with any kind of relationship. I’m not talking about business, I’m talking about mankind, humankind. And that obviously translates to the world of business as well. But in such a competitive time when there’s lower barriers to switch and so much choice out there, why trust becomes much less of a nice thing to promise, and much more of something, where if you’re getting it right, if you actually think about those drivers of trust and acting on them, the real way to now be distinctive.

Victor Milligan: It’s kind of funny, with discussions we’ve had with different guests, we talked about loyalty programs and the fact that they are probably more transactional, seeking the next purchase, versus building up affinity. Or even going one step further beyond affinity, but actually building trust. And in a world where you have hyperadoption but it’s evil step-brother hyperabandonment, trust begins to be the necessary currency to sort of keep the customers believing in a brand or believing in a product, as they transact through the journeys or they transact through the multiple purchases. But you’re opening comment is that, “Natural trust is eroding,” meaning the natural loyalties that companies currently count on, is in decline.

Tom Champion: That’s right. So that’s why at least our research has shown how important the drive and the trust are. Our body of research on trust points out that the drive is about transparency, integrity, competence. When you’re able to break down the levers of trust in a nuanced way, it helps you diagnose where you’re weakest. So you can actually do something about it and get a bit more serious about how trust appears across the customer journey as opposed to just being something that you put in your annual reports and say to the media at any time a crisis happens.

Jennifer Isabella: Yeah, and I think it’d be helpful maybe, Tom, if you could just go through those drivers one by one.

Tom Champion: So our body of research is showing that the three drivers of trust are transparency, integrity, and competence. If there’s a problem there, in that, leaders can really misunderstand the true nature of these, what lies beneath these, and really be led astray by some of the conventional understanding of this topic. For example, transparency. We see that all the time, that organizations, when there’s been some kind of crisis when organizations have been caught acting in a duplicitous way. That’s kind of their default response. Let’s be more transparent. But they often times forget what this means in terms of a customer experience. Or so often you’ll see digital experiences. You’ll see websites will reform, and their interpretation of transparency is to overload it with disclaimers, overload it with texts. It’s this idea that by putting all possible information available in the customers face at every time is being transparent.

Victor Milligan: Yeah. It’s almost like transparency equals the small text that sits behind the contract, just so they can actually argue that it was there and there’s natural compliance to it. Or it manifests itself as an apology tour, which is “We weren’t transparent, but now we’ll divulge what we should have divulged before.” So transparency, even though it’s a key lever of trust, the way it plays itself out, is on a rather defensive measure.

Tom Champion: Exactly. It’s all about protection really. It’s not a customer facing approach, the transparency. I mean, we looked at one of few banks and their journey to buy certain financial products, credit cards. One of the websites, there was around 15% content and around 85% disclaimers. And you can see where they are coming from when they’re trying to be transparent and upfront when it came to inflation. But ultimately, it just has an ironic effect because no one’s going to read those disclaimers, so they’ll be even less protected than before. And it really points out to how important usability is when it comes to trust which is something people overlook.

Victor Milligan: You mean the idea that that information will never be read in the format you described it. It has to consumed for trust to be built out. It just can’t exist. There has to be a consumption, an internalization, some sort of an explicit agreement between the company and the customer that is done because someone has been transparent?

Tom Champion: Yeah. That’s exactly it. And so you can see why this has occurred. And a lot of it comes down to siloed ways of working. So I can imagine in that case, you have the legal team, and you have the UX team, and probably not working together. They weren’t thinking about, “Where do we put the right level of information at the right time throughout the whole journey?” It was more, “Let’s put all information there at all times,” for a very diluted experience. That doesn’t really help trust at all.

Jennifer Isabella: What about a good example of transparency?

Tom Champion: One example is from a healthcare provider, HBS, in Australia. And their forms, it’s more of a conversation. So they don’t try to hide jargon with really roundabout ways of describing what they mean or having little hint texts which overload the customer with explanations. They are honest about the terms they use and also educate the customer about these terms in a very simple way. So they’ve incorporated a content strategy to raise the literacy of customers as they’re going through something as transactional as a form. So really conscious that customers have a low understanding of something like health insurance jargon in the health insurance industry and doing their part throughout the journey.

Jennifer Isabella: So how are you advising organizations to balance that sort of transparency with the regulatory obligations that they have?

Tom Champion: Well, when you think about regulations, if you take a really cynical view, then they just sound like the devil. But if you take a more positive view, then they do serve a purpose, and they can help reassure customers. So at their heart, it’s all about protection, and customers want to feel protected. They want to feel safe, especially when they’re going through high stakes interactions when it comes to their money and lending, banking, that kind of thing. But how we advise organizations is to think more about that journey and think more about the emotional state of the customer as they’re entering this interaction. They probably have a low level of trust in their bank and they want to feel reassured. So we see organizations, for example, when you’re about to make that critical step, you’re about to do the approval, they won’t hide the disclaimers, they won’t tuck them away in accordions and right at the bottom. Instead, they’ll give it the same level of design treatment, the same content strategy, the same tone of voice, so it’s at the core part of the experience and the customers can actually feel safe, feel protected, feel informed by the end of the experience. Something like the disclaimer document, the terms and conditions documents. Typically they get hidden away in some PDF that looks like it’s created in 1995, but more and more I think organizations give that a polished design treatment, customer friendly language, showing and explaining things with diagram. So just showing you’ve got nothing to hide because customers can really appreciate–feel that protection, and feeling informed. And be very different as well, different experience, when you’re getting that right where your competitors are still treating it as bolt-on tucked away thing.

Victor Milligan: Let’s just deal in banking for a second, Tom. So in our CX index, what we found was the relationship equity between the bank and the customer has declined over the years. I mean part of the business model of bank was, “Once I catch you as a customer in your early days of checking your savings account, you’ll stay with me through the life stages.” And I think what we’re finding at the market place, that that’s not true. We’re finding in the CX index that there’s a true gap between the emotional connection between the customer and the bank. One way to look at this from the context of trust is that trust was perceived to be durable, meaning once it was formed early in that banking experience, it stayed with them in some cases for a lifetime, because it’s a local bank. As we look at more the prove-it world that we are with customers, where customers are asking companies to prove it experience-by-experience. Is trust becoming transactional?

Tom Champion: I would say that it is definitely a whole world, and that idea of the time when trust was built and been kept that way, I don’t think that’s the case anymore. It’s constantly being built or lost, even with the customer interacting with the organization. Any interaction is a chance to build trust, to sustain it, or delude it, which happens a lot, which is why we’re seeing organization instead of ways to build trust in different ways throughout the journey. So if we look at something like integrity, which is another driver of trust, so often organizations just try to form partnerships with foundations or charities and then tell the customer about it. They just do it through just campaigns and things like that. Instead of having it as something the customer can actually feel when they’re interacting with an organization. So one example, in Australia, is from a bank called Bendigo Bank, which is also one of the CX index leaders in Australia. And they do something called value based credit cards. And what this is, is you can attach your card to a cause, for example, animal welfare, animal rights. And so you’ll get a personalized card, sort of a card with either a dog or a cat on it, but then also when you use that card to make a transaction, it will make a small donation to a certain cause. It’s really changing the point of sale. And the customer is also feeling the difference. When they’re using this card, they can feel that integrity as opposed to just being told about it every now and then.

Jennifer Isabella: And that’s really connecting the– we’ve talked about this in other episodes, right — but that brand promise with the customer experience so that they’re sort of, maybe literally, putting their money where their mouth is, and committing, and baking it into their operations, “You can support this cause. We support this cause.” And connecting with their customers that way.

Tom Champion: Yeah, absolutely. And I think that too is key to think about the operations. It’s key to really making systemic changes because that third driver of trust, one of the other key drivers of trust, competence. That really connects to how important consistency is to build trust. You kind of have to think about, you only need to have one bad interaction with an organization for that to be stuck on your mind for a long time, which can really impair trust. So and to have that more consistent experience is so important to look into those operations, look at their root causes, so that the experience the customers feel, no matter the channel, there’s unity there. And also you’re able to give more realistic expectations as well, as simple as something like a time frame. So one organization we spoke to found that they just couldn’t tell customers, the call center could not tell customers realistic time frame on when their application would be processed because there was just no connectivity between the call center and all these other different teams necessary to the process, the application. But they really needed to fix things like policy, fix things like training, fix things like internal communication channels so that this consistency of timing, consistency of messaging could be brought through to the customer. So it’s so true that you need to look a lot deeper into the operation as opposed to just telling customers, “Trust me,” which is what a lot of organizations do.

Victor Milligan: I’m going to play off your comment about competence for a second. Some brands, in terms of describing their competence, will describe it as based upon the durability of the firm, “We were established in 19-something-or-other. We’ve been in business for this long,” as if being there for a period of time is the basis of trust. And that argument is a way to counter the digital disruptors who have been in the market, obviously, for a much shorter period of time, so therefore, they should be trusted less. But actually what we found was that’s not true, was that because trust is becoming transactional, some of the digital disruptors that can deliver from a constant standpoint against those experiences are gaining as much trust as some that have been established for 50 or even 100 years. How do we explain that? How do we understand brands that are levering on that durability?

Tom Champion: Oh, absolutely, and I think you see that so much when organizations want to establish that they’re trusted, they go straight to number of years in operation. They go straight to the year that they were founded, as if that’s meant to be enough proof for organizations to act. Because as you point out, you look at Uber, you look at Airbnb, these organizations are dependent on customer trust to survive, and they’re obviously doing well, and they’re 10 years old, less than 10 years old. So that’s something we see so often, and it all connects to how trust cannot be passive.

Victor Milligan: Yeah. And I guess the other cautionary tale is that, in some cases, when you think about trust and just sort of being an energetic thing, people might think of it as a way to describe or a way to focus their advertising. But what we’ve learned is the advertising channel is the least trusted channel, and so where a marketer spends the vast majority of their money is an area where there’s least natural trust that has formed. So as part of the advice as we animate trust is don’t place it in the advertising, “I promise you these things.” And we’re back to what Jenn said, is to actually go through the walk-the-walk game of delivering it through the experiences.

Tom Champion: Absolutely. I think that advertising can definitely play a role, but you need to live up to that at every point throughout the journey. I think we see a lot of really interesting approaches to establishing trust through advertising. The one organization that is doing this is a life insurance organization here in Australia. And they’re really tapping into how mistrusted insurance can be in the country and how much customers don’t believe a lot of the common messaging around insurance that you see, which is to get peace of mind and protect your loved ones. But that’s very saturated. Their approach is saying that you won’t love us, you won’t hate us. So they’re just being very honest and truly trying to set expectations to match the customer’s perception. There’s also a payment plan here called BPAY, and their campaign now is around, “fall in like with your bills”. You don’t fall in love with your bills, fall in like with your bills. They’re just being very conscience that you’ll probably never love paying bills, but you could like it. But they’re really trying to match what their perception is from the customer. But then, the onus comes on them to live up to that throughout the interaction. So whenever you are doing it on whatever channel, it still needs to be reflected on that initial advertising. It’s not just advertising, but advertising certainly helps.

Jennifer Isabella: Yeah. And I think one of the things that you just hit on in that BPAY example is, understanding your customer is so core to building that trust, right? I mean, it seems simple enough that nobody likes to pay bills, but sometimes organizations forget that the human nature of, whether marketing or speaking or writing to humans, that it’s key in knowing your customer and understanding what their needs, likes, wants are to build that relationship, to build that trust.

Tom Champion: Yes. Customers enter interaction fully charged. They’ve got perceptions that maybe have been influenced by the media. Maybe they’ve been influenced by their past interactions. They’ve been influenced by what their family thinks of this whole industry. There are so many things that go into that. So organizations really need to understand what is that context of the emotion that customers have as they’re going through interaction.

Victor Milligan: One would think that trust is naturally a human to human connection and people would be naturally more distrustful of digital connections. What we’re finding is that may not be true using wealth management as an example with robo advisors. Is it true that people trust robo advisors as much as they trust their advisor?

Tom Champion: So people trust people. And so there’s all kinds of studies that show that something like health care is not a very trusting industry, but nurses, doctors, pharmacists are some of the most trusted professions. We certainly see that separation there. And also, how much perception matters with all of this. If your robo advisor is coming across as human and can connect to them and can relate to them, then I think then that is just as trustworthy as a real life human being.

Victor Milligan: I think part of what you’ve been saying, Tom, is that trust really is an operational competency. It’s not a brand message. It’s not collateral. It’s what I do every single day in terms of transparency, integrity, competence. It is my business. And it’s not just because it’s part of an emotional connection. It is a significant lever to financial performance. So as you think of companies positioning towards trust, what does it mean to a company to use trust as a competitive weapon?

Tom Champion: I think trust is too high-stakes now to leave it to conventional wisdom. And we know too much about the drivers of trust. So that the competitors who weld this, who use it as a competitive weapon, they’ll be able to get ahead because we’re at the point where you can diagnosis where you’re weak on trust, define to what extent trust matters to you, and then you can use that across the journey and make the systemic changes to match. So the companies that do that will really prosper.

Jennifer Isabella: Thanks for joining us today, Tom. We appreciate it.

Victor Milligan: I trust you had a good time, Tom.

Tom Champion: Thank you.

Jennifer Isabella: If you like what you heard today, please subscribe to Forester’s What It Means Podcast on iTunes, Google Play, SoundCloud, Stitcher, or TuneIn. And don’t forget to leave us a review. To continue the conversation, follow Forester on Twitter and LinkedIn. Thanks for listening.