Thomas Cook – one of the big brand name UK based travel companies – has seen it share price drop by 85% to 10p and have now bounced back up to 30p. Why? The shares dived when investors lost confidence in Thomas Cook’s ability to survive. The shares recovered when Thomas Cook was given a lifeline of £100m. Competitor – Thomson – has made the most of this opportunity with its latest advertising: “You can smile with Thomson because you’re in safe hands. Another holiday company may be experiencing turbulence, but we’re in really great shape.” Clearly Thomson is seeking to undermine customer trust in Thomas Cook whilst building up confidence in itself. This got me thinking about the critical role that trust plays in the commercial relationships – in winning new customers (expanding market share) and retaining existing customers (customer loyalty) – especially in services businesses like travel, insurance, banking, telecommunications etc.
What do we know about trust and why it matters?
We, human beings, do not like to be faced with uncertainty, vulnerability or risk – these three factors take an emotional toll on us. We prefer to work on ‘autopilot, which is simply another way of saying that we prefer to trust and developed societies work on the foundations of trust. Just think if you were not able to trust anyone for anything: what would life be like? Here is what the literature says on trust:
Trust rests on three complimentary pillars: competence, integrity and benevolence
I am likely to trust you if you occur to me as being credible, honest and benevolent. Said differently: “Customer trust is based on the expectations that the service provider can be relied on to deliver its promises, to care for customer needs and demonstrate competence”.
Everything (all touchpoints) contribute to trust
The organisation (corporate reputation), the front line employees, marketing communications and self-service technologies all play a part in trust. Trust in the overall organisation (like Thomas Cook) is based on what customers hear and read about the organisation – that includes management polices and practices. Trust is also a function of the customer’s interactions with representatives of the organisation.
Trust has two dimensions: rational and emotional
Think of trust as a two sided coin, one side of trust is based on a rational process and the other side on an emotional process. Using the rational process the customer determines the service providers competence and reliability – its ability to keep the promises it makes to customers. Through the emotional process the customers comes to a conclusion about how much (or little) the company cares about customers and their needs. Customers look for indicators like responsiveness, flexibility, willingness to compromise and act beyond the profit motive. This is where being known as a company that values both social good and profit matters – it helps customers form that emotional bond quicker.
Here is my take on this: whilst both rational and emotional matter the emotional bonds matter more. Why? I don’t care how competent you are if I suspect that you do not care about me – that you are simply in it for the money. Given the choice I will look for someone who shows me that they care about me and are competent in their chosen profession.
Building trust takes time
Trust builds up through the accumulation of previous experiences (interactions) with the services provider. Experience is a lived phenomenon and customers can accumulate these experience by directly interacting with the service provider and by exposed to / tapping into word of mouth and corporate reputation. For the first time in history, I, the customer can determine how much to trust you simply by tapping into social media where your customers are already talking about you which is why sites like TripAdvisor are incredibly popular and influential. Last week I drove 60 minutes to see an optometrist when there is one within ten minutes of my home. Why? Because this chap came recommended through my personal network. I was not disappointed and I’d happily drive 60 minutes to see him again.
Trust takes the risk out – it acts as a safety net
Why did I turn to my personal network for a recommendation and then drive 60 minutes to see the recommended optometrist? Because my son’s wellbeing was at stake and I did not want to take any chances. This is what the literature says: “In situations of perceived risk or vulnerability, trust has the role of a safety net, helping the customer to make a decision by minimising uncertainty and risk. The insecurity about the long term horizon of delivery, as well as the inability to test the service before actual consumption makes trust a valuable decision factor for customers of service organisations.
I will set out what you can do to cultivate trust in Part II (coming soon).