Service Providers: why trust matters and what you can do to cultivate it (Part I)

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).

2011: time to merge marketing and customer services?

Many years ago I worked for International Distillers & Vintners (IDV), a company that sold premium branded alcoholic drinks to the supermarkets, restaurants, clubs, cafes etc.  One of the challenges that the salesmen encountered was that almost always they were on the back foot.  As soon as they started the sales discussions (for new orders) the customer invariably brought up the issues he was experiencing with the company: not getting the products on time, receiving the wrong products, receiving the wrong quantities, pricing, discounts, billings….  This made it really difficult for the salesmen to sell.  The salesmen had to apologise and sort out the problems first and then talk about sales.  Or they had to promise to sort out the issues and offer even bigger discounts to get the customer to place the order.

It seems to me that we have arrived at the same situation in the B2C.  Anyone with access to the internet can share their views and their experiences with, and on, any organisation.  And everyone with access to the internet can read those views and experiences.  This puts the B2C marketer in the same position as the IDV salesmen.  If the marketer is going to succeed then he/she either has to sort out the customer issues or give a big discount to tempt people to buy.

Surely the sensible option is to sort out, even prevent, the issue that are resulting in poor customer experiences and a negative word of mouth.  Who has the access to this information?  Who knows what customers are ringing up about?  Who knows why they are ringing?  Who knows what business policies, practices and operations are failing the customer?  The Customer Services function.

If that is not reason enough to merge these functions and put them under one department, I can think of several more:

  • Marketing actions impact the customer and where they impact the customer negatively it is the people in customer services who get to know about it first;
  • Marketing spends considerable sums of money with market research agencies to better a better picture of customers yet the customer services function is interacting with many thousands of customers on a daily basis and can provide customer insight as well as conduct research;
  • The performance of the Customer Services function has a direct impact on the word of mouth that is taking place online and offline and WOM is marketing;
  • The new role of the Marketing function is the design and orchestration of a superior customer experience and in that role the Customer Services function plays a key role;
  • By fusing with the functions together it may encourage marketers to actually speak with real customers rather than reading about customers as abstractions in market research reports;
  • The fusion will allow the Customer Services function to escape the relentless focus on cost-cutting and making its treasure (customer insight) available to a function that has more clout; and
  • From a customer perspective it makes a difference if the left arm (Customer Services) knows what the right arm (Marketing) is up to.

In the new world, where we trust TripAdvisor more than any hotel, Marketing and Customer Services are two sides of the same coin.  When one side of the coin is ugly it really does not matter how beautiful the other side is – the coin, as a whole, is not attractive as one in which both sides are beautiful.  I am convinced that the potential for synergy – where 1+1 > 2 – is there.

What do you think?  What have I missed – apart from the fact that it is unlikely to happen any time soon?