Wednesday, November 11, 2009

A Word about Trust

Thee was an interesting article by David Kiley and Burt Helm in Business Week in the September 17th edition. The first point they make is that trust is the most perishable asset. They point to a survey conducted a phone survey from May 26th to July 3rd by the public relations firm Edelman. The key statistic from the survey is that 44% of Americans said they trusted business and that statistic is down from 58% in the fall of 2007. This decline in trust has caught the attention of some major companies, such as Ford Motor and American Express.

Trust is what drives profit margin and share price according to Larry light, CEO of Arcature, a brand consultancy in Stamford, Connecticut. The poll indicates the consumers are becoming more suspicious not just in products and services but the companies as a whole.

Companies are beginning to understand that brand names are important. As I mentioned in an earlier blog that hyper-loyalty is what companies strive to achieve with their customer base. Companies such as In-And-Out Burgers and Federal Express have achieved some form of hyper-loyalty (customers not only recommend the company but will actually encourage others to use the companies products and/or services.

Trust and company reputation have become ever-more intertwined with customer loyalty and marketing. It appears to have permeated the entire corporate structure to the point that trust and reputation are no longer limited to the PR department. The idea that products and services are separate from the brand and reputation of the company doesn't work well anymore. Consumers at all levels are doing more research than ever before with the advent of the internet. With their research they can read reviews of products and services and discover what their peers are saying.

The bottom line is that trust is becoming more important when considering customer loyalty and market share. One of the words that seems to be descriptive of this enlightened customer approach is "authentic." When you think of In-and-Out or Federal Express you see an authentic company. I use the word authentic in the strictest form of its dictionary definition; namely, the company is being what it is represented or claimed to be. A good synonym is genuine or real. Companies that can attain this image in the market may find they have hyper-loyalty with their customer base. The question to be considered in future blogs is what is how does a company become authentic.

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