Friday, October 12, 2007

Building Trust (and loyalty) with Customers

The logic that is being built in this series of blogs is that building market share can be created through loyalty and customer loyalty is built upon trust. This blog will take the next step and discuss some specific ways that trust can be built. It will include ways that can easily be taught to employees so that customer interactions will be positive and will increase the level of trust with your organization.

Ethical Treatment and the Golden Rule

The basis for building trust with customers is ethical treatment. In a book entitled Business Ethics in a Changing Culture by Richard Chewning, the author notes:

“…Ethics, as an expression of reality, is predicated upon the assumption that there are right and wrong motives, attitudes, traits of character, and actions that are exhibited in interpersonal relationships. Respectful social interaction is considered a norm by almost everyone.”

He goes on to say “the overwhelming majority of people perceive others to be ethical when they observe what is considered to be their genuine kindness, consideration, politeness, empathy, and fairness in their interpersonal relationships. When these are absent, and unkindness, inconsideration, rudeness, hardness, and injustice are present, the people exhibiting such conduct are considered unethical. A genuine consideration of others is essential to an ethical life.”

Perhaps the simplest expression of ethical treatment is the Golden Rule. While there may be some business situations where the Golden rule may not be tenable, the general application is a worthy ingredient in any customer interaction. This may become very difficult in a sales situation when the salesperson feels enormous pressure to make the sale, sometimes to the extent of not finding the “best” solution for the customer but rather the “best” solution for the salesperson or the company.

In an article by Anna Muoio entitled The Experienced Customer which was published in Net Company magazine (Fall, 1999), she notes that a company should “let the customers reveal themselves at their own pace – so they can learn to trust you and so that you can serve them one at a time. Don’t force them to follow a one-size-fits-all, information-gathering approach.”

Some eCommerce Examples

There are some excellent examples of how companies on the web have developed techniques for letting customers reveal themselves at their own pace. The following list represents just a few ideas of how to “let customers reveal themselves”

1. Lands’End website ( allows customers to order swatches of fabric at no cost so they can see and feel the fabric before they make a purchase.
2. ( has a customer bill of rights that is honest and fair and conveys the essence of the Golden Rule.
3. The website for the Gap ( allows a customer to put an outfit together online. The website builds the outfit and keeps track of the costs so that the customer can visually see the outfit on the computer screen and know the price at every stage of the purchase.
4. ( has offered an unmatched guarantee. It will reimburse a customer 110% of the purchase price within one year if the customer is not satisfied with the purchase.

In each of these examples, the company is providing the customer with some form of reassurance that they will get ethical treatment. The customer that comes to your website is really in a self-service environment. That fact is often overlooked and often the website design may be pretty but it may also be confusing. The website should offer the same friendliness as a personal contact. It should be easy to use, intuitive to understand and allow the customer to get information that will help make a purchase decision.

The Big Blue Example

For those or us who can remember the computer industry in the 1960’s and 70’s will remember the impact of “Big Blue” (IBM for those of the younger crowd). IBM had a very high market share of the large computer users. If fact, it dominated the market to the extent that some competitors said at the time, “we worry each day that Big Blue will do something that will put us out of business.” During this period of time IBM was not the industry leader in technology nor was it the low cost alternative.

How could a company with technology that lagged the industry simultaneously charge some of the highest prices in the computer industry and stay in business? The answer was commitment to the customer that was total and complete. When a customer purchased a computer system from IBM there was complete trust that the system would be installed properly and all aspects of the system would meet the customer’s requirements. Although this wasn’t always the case, the perception continued.

When competitors would compete with IBM, the phrase that most of them heard when they lost the bid was that the company could depend on IBM to make sure that everything would work. The person at the company would say something to the effect “I can’t be fired if I select IBM.” What that person was also saying was that he trusted IBM and so did his management. If he selected another vendor and the system did not work as specified, he ran the risk of being fired. But if he selected IBM and it did not work, he was still safe because he had selected “the best” alternative (rightly or wrongly).

Even when the personal computer was first introduced in the early 80’s IBM was the vendor of choice and held the largest market share. It was the same criteria for PCs that was used for the mainframe computer systems; namely, if I select IBM I can’t be fired for selecting the best (even if it costs more). I know this is true because at the time, I owned a small computer repair company that built PCs. Our price was less than ½ the cost of the IBM. We were completely unsuccessful in selling to large corporations and the answer we got when our bid was turned down was the one noted above “I can’t be fired for buying IBM but I can if I buy your computer and we have problems.”

The lesson: IBM had such a huge reputation of total customer commitment that companies blindly trusted IBM to do what was right, and even if it cost more, the security of buying from a trustworthy company was worth it.

Some Other Examples

IBM used a strategy of total customer commitment to build loyalty. There are some other strategies that have also worked.

Nordstrom has taken the strategy of delighting their customers. In general, Nordstrom trains their employees to pursue excellence in customer service. They empower their employees go out of their way to exceed customer expectations – another way of saying delight the customer by giving more than expected. They are taught to use good business judgment in making decisions regarding refunds-on-the-spot with no questions asked. With this strategy, Nordstrom has been one of the fastest growing retailers in the US and has had higher than industry average profit margins (even with refunds-on-the-spot). They have built loyalty on a base of giving a little more than the customer expected rather than just enough or just a little less.

Another very different strategy for building trust and loyalty has been taken by Southwest Airlines. They have chosen to dignify the customer during a period in airline travel when other airlines are treating their customers with less and less dignity. (Some people say that they feel more like herded cattle than people when dealing with their airline. Southwest has taken the course of making the relationship with its customers as pleasant as possible and still minimize its costs. The executive vice president, Ms. Colleen Barrett has said, “we will never jump on employees for leaning too far toward the customer, but we come down on them hard for not using common sense.”

The Bottom Line

There are a number of strategies that can be used to build customer trust as noted by the examples above: such as commitment to customers, delighting customers and dignifying customers. They all have several ingredients that are common. The following list appears to capture some of these common elements.
1. The corporate mission is clear and it is frequently and unambiguously voiced by upper management.
2. Employees are given responsibility to take action and make decisions on the spot.
3. These organizations work hard at reducing internal bureaucracy and internal politicking.
4. They are frequently asking the customer what is important and how are they doing.
5. They focus their products and services to be what the customer wants.
6. They encourage teamwork.
7. They work at being a partner with their customers – they try to build the partnership at every interaction whether sales, service or accounts receivable.
8. They exemplify trust in all their interactions with their customers. They do this by treating customers in ways that convince them that the company will never take advantage of a customer even when the customer is most vulnerable.

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