‘If a brand isn’t trustworthy, when choice is available it’ll be rejected in favour of one that is’.
This statement comes from Sean Pillot de Chenecey’s 2018 book The Post-Truth Business and I think it highlights one of the biggest dangers to a business – when they are not seen as trustworthy – and the inevitable cost.
With the rise of fake news, sophisticated scams and recent royal commissions, we are increasingly coming from a default position of mistrust, or at a minimum, a very cautious perspective.
Edelman, a communications marketing firm, conducts an annual global study to determine levels of trust. Its 2018 research showed an overall decline in trust across four institutions: media, government, business and non-government organisations.
In July 2018, Deloitte released research into the Australian Financial Services Industry, where it surveyed over 2,000 Australian consumers.
The insights in this report established that trust in the Australian Financial Services Industry had ‘taken a dive’. The report stated that:
- 32% said their trust in the finance industry had deteriorated in the past 12 months.
- 25% did not trust the financial services industry, with banking and insurance the least trusted.
- 47% did not trust their own financial services provider.
Perhaps indicative of the extent of distrust in the financial services industry, 23% of those surveyed said they would consider financial services from an airline carrier such as Qantas or Virgin.
This insight, I believe, not only shows how far the finance industry has fallen in the eyes of its customers, but also how important trust is. Firstly, we have lost so much faith in the industry that we are considering having our financial service needs met by airline carriers. On the flipside, I trust Qantas with my life every time I fly with them. So, is it too much of a stretch to trust them with my superannuation or savings?
A loss of trust can mean a reduction in employee and customer loyalty. What’s more, the costs to rebuild trust can be significant. Looking again at the finance industry we see multiple examples as banks attempt to recover the consumer confidence destroyed through the findings emerging from the Banking Royal Commission.
Late last year when most of the larger banks raised their interest rates, NAB didn’t. The CEO at the time, Andrew Thorburn, stated the need to rebuild trust as the contributing factor. In a video to the market Thorburn said, “We need to rebuild the trust of our customers … by focusing more on our customers, we build trust and advocacy, and this creates a more sustainable business.” This cost the bank approximately A$29 million per month.
In some cases, the loss of trust is not so hidden and can result in immediate and severe cost penalties. When footage emerged on social media of United Airlines employees forcibly removing a passenger, there was an immediate backlash and stock plummeted by over US$1 billion.
Another example comes from the Australian Cricket ball-tampering incident. Cricket Australia lost its major sponsor at a reported cost of A$20 million. The players involved also lost millions in sponsorship.
While the consequences of losing trust are often immediate and visible, the hidden effects come from long-term brand damage. In an environment of distrust and growing competition, companies need to elevate the importance of trust, especially when it comes to employee engagement and customer loyalty. Failing to do so can be costly on many levels.