The Trust Recovery: Implications for Irish Businesses
Good morning everyone, and thank you for your invitation to share with you some thoughts on what I have called The Trust Recovery.
But first, let me share with you a prediction.
I predict that in the next five years at least one major business – turning over more than a billion euro – will go bust as a result of a catastrophic loss of trust by its customers.
How do I know this? Well it’s because that’s what consumers tell me in the surveys and focus groups that we run every day at Amárach on behalf of our clients. Trust isn’t one of those fluffy, nice-to-have features of your brand or marketing positioning: trust is a fundamental requirement for customers doing business with you in the first place… and in the last.
But I came here to talk about the Trust Recovery – not the Trust Apocalypse!
Okay, but ‘what recovery?’ you might ask – as indeed many asked during the recent General Election. Take, for example, the Edelman Trust Barometer. In the latest report for 2016, 43% of Irish adults say they trust business a lot, up from 36% in 2015. That’s a higher level of trust than in the media or government. In some respects, Irish businesses have done a better job of retaining – or a least regaining – trust than have NGOs, politicians or media owners. Though that’s not an excuse for presuming trust is completely restored. Far from it.
Nevertheless, in a survey we did last year among more than 2,700 consumers – ranking the best providers of customer experience in Ireland – one of the key drivers was Integrity. In other words, the extent to which customers of different brands felt that the business they transacted with was trustworthy and engendered trust.
Among the top 10 (out of more than 150 companies), integrity or trust is a hugely important driver of customer loyalty, Net Promoter Score, and lifetime value. Especially for organisations like the Credit Unions, An Post and even Hailo! Though lets not forget the bottom 10: the absence of trust or integrity is critical factor in their poor performance, especially for the company that came last out of more than 150: Irish Water. Come to think of it, there’s a company whose demise – should it come about – might well be connected to a catastrophic loss of trust. Though that isn’t a prediction!
But back to the Trust Recovery. Why is it happening and what does it mean for businesses actively addressing their Corporate Social Responsibility agenda? I think one reason we are witnessing a recovery in trust in businesses is that the recession put loyalty at value and the heart of customer relationships and so businesses learned – sometimes the hard way – that keeping the customers you’ve got is more important than beating the competition come what may.
Of course, recessions always force businesses in general and marketers in particular to go back to basics. But this time is different.
At Amárach, we work with a wide range of clients on developing, measuring and analysing the impact of their loyalty schemes and strategies. What is very clear is that the businesses who win and keep the loyalty of their customers are significantly less vulnerable to price competition and are genuinely seen to be making a real difference to the lives of their customers. Hence the higher levels of trust that they enjoy.
Just one example: we recently analysed the Net Promoter Score for customers of a number of different organisations, contrasting the NPS for customers who are in the organisation’s loyalty programme the NPS for customers who are not in the programme (but still shop with the brand). Take Boots: the NPS for their customers who are in the Boots Advantage programme is +18; the NPS for Boots customers not in the programme -11. Topaz also gets a big ‘loyalty boost’ to their NPS: from -33 for customers not in their programme ‘rising’ to -6 for customers who are members.
But what have loyalty programmes got to do with CSR? As it happens, quite a lot – and I suspect a lot more in the future. What is happening is that consumers are now increasingly aware of the value and importance of the data they share with brands and businesses. In parallel, loyalty programmes are becoming an essential part of the Customer Relationship Management agenda in many organisations that I work with, and the smarter ones are beginning to see the connection between CRM and CSR (my apologies for all the TLAs!)
So why is the Trust Recovery happening now? I think we are witnessing an extraordinary confluence of factors such as a greater focus on customer loyalty and the growing importance of customer data in driving business performance and a third factor that I haven’t talked about yet: the waning influence of traditional media. If you ask anyone under 30 what their main source of news is (as I’ve done recently in focus groups for one of our media clients) the answer you will get is: Facebook. Some will mention a news app or twitter. Sure, radio and newspapers are in the mix (TV not so much), but the reality is that for Millennials (and even for their parents), the old media influences are fast disappearing.
Why does this matter? Because businesses may well end up the ‘last ones standing’ in terms of institutional influences on what people think, want and do: whether you want it or not, businesses are going to be even more responsible for the type of society we live in in future. Not so much Corporate Social Responsibility as Corporate Societal Responsibility.
Now some might this prospect frightening (including, I suspect, a few corporate CEOs!), but I don’t. Those businesses that are taking their CSR agenda seriously are the ones who will benefit from the Trust Recovery, because they will have made the necessary investments in customer trust, loyalty and transparency in an age of media dis-intermediation.
Let me leave you with a final thought. Seth Godin – one of the most perceptive commentators on the interface between technology, marketing and societal change – makes the case for why businesses need to become tribal. He observes that:
A tribe is a group of people connected to one another, connected to a leader, and connected to an idea. For millions of years, human beings have been part of one tribe or another. A group needs only two things to be a tribe: a shared interest and a way to communicate.If responsible businesses think of themselves less as hierarchies and more as tribes then they will unlock the extraordinary power of trust, co-operation and purpose that drives shared human endeavour. Loyalty programmes, CRM and all that are mere stepping stones on the way to a responsible future.
The Trust Recovery will open up unprecedented opportunities for business leaders to play a critical role in the shaping of our society, our culture and our economy for the better.
I hope you are up to the task because I’m not sure who else will do it in the turbulent times ahead.