Why ‘Trust Equity’ Is Becoming A Business’s Most Important Asset
HALIFAX-The business world is rapidly changing, with informed customers making more complex decisions before they buy a product. The days when people would simply make a purchase based on the price tag are gone. Whether your consumers, employees, and investors trust your company is becoming an increasingly important question.
Natalie Doyle Oldfield, a Halifax entrepreneur and author, has spent her career researching the ways companies gain and lose trust, and how more and more people are taking a company’s “trust equity” into consideration before opening their wallets.
“Companies are facing more scrutiny than ever before from informed and critical customers,” Oldfield explains in an interview with Huddle. “Stakeholders are demanding more transparency and they have access to more information.”
“Customers from all over the world are prioritizing their business decisions from companies that display trustworthy behaviours.”
Oldfield created the company Success Through Trust, and she teaches her business clients how to build up their trust equity. Oldfield’s research has shown that it comes down to three key principles.
“It’s about how they communicate, how they behave, and how they serve customers,” she says.
The pandemic world has put this issue of trust to the test, especially with labour and supply chain shortages.
It has been common the past two years to hear about people buying a pre-built home only to lose trust in the builder due to constant delays. Or for a couple to buy new furniture from a major supplier and never be told it could take several months for their shipment to arrive.
Oldfield says every company will face critical moments where they face an issue of trust. That’s why it’s important to build up trust equity ahead of time.
“When you have high trust equity, if you can’t finish a project on time, customers are more forgiving,” she says. “You can learn it; you can cultivate it and you can develop it.”
But it isn’t just about trust that you will be honest and upfront with a customer’s expectations, or do your best to deliver a product on time. Now, more than ever, there is an expectation that companies big and small will be moral social citizens.
“Organizations need to work harder in the future to earn their customers’ trust,” Oldfield says. “The tolerance for unethical behaviour is continuing to decrease. People want to buy from companies that have a social conscience.”
This type of trust is more important than ever, especially if a company plans on cultivating support from the younger generations. According to Oldfield, studies have shown that 72 percent of Generation Z (people born no earlier than 1996) are more willing to support a company that contributes to a social cause.
If companies are worried about the cost and the resources needed to build a high level of trust, there is a positive economic reward. Oldfield said a majority of people around the world, including in Canada, are willing to pay more for products and services they trust.
A key example is coffee. There is no shortage of places you can go to buy a cheap cup of joe in the morning. Yet many, especially younger coffee drinkers, are willing to go to a local barista and spend $5 or more on coffee they trust is fair trade and ethical.
But if you feel your company has done something to lose trust, it doesn’t mean it’s gone forever. Oldfield pointed to a historic example of a company that lost trust across the board but are still making big money today.
One of the biggest unsolved crimes is also a historic lesson in regaining trust
Chicago, 1982. Seven deaths would change the pharmaceutical industry as we know it forever. All seven people were killed by cyanide poisoning and they all had one thing in common: in the hours before their deaths, they took Tylenol capsules.
After the death of one victim, two grieving family members complained of headaches. Tragically, they took Tylenol from the same bottle as their deceased relative and died soon after.
Investigations have shown that the still-unknown murderer took Tylenol packages off store shelves and inserted cyanide into the capsules. The packages were resealed and put back on the shelves.
The motive for such random attacks on strangers remains unknown.
Johnson & Johnson, the makers of Tylenol, faced a huge crisis. Their over-the-counter pain medicine made up nearly 20 percent of their business in 1982. How would they regain the trust of the millions of Americans who took their product?
The company decided not to take any risks. It recalled 31 million Tylenol packages from across the US, even though the crimes were localized to Chicago. They lost millions of dollars because of the recall and the American public’s understandable reluctance to take any Tylenol.
Less than a year later, thanks to great PR and marketing through the media, Johnson and Johnson bounced back completely and Tylenol remains a big seller to this day.
The incident is also the reason the over-the-counter drug industry had to change to regain trust. Gone were capsules–from 1982 onwards light medication came in the form of tablets, which is much harder to lace.
“They had a trust crisis,” summarized Oldfield. “They are a classic case of a company that did all the right things to regain the trust of their customers.”
Derek Montague is a Huddle reporter in Halifax. Send him your feedback and story ideas: [email protected].