Trust: You Can’t Fatten a Pig on Market Day

In the previous article (‘What to do when a “breach of trust” unleashes an unruly mob’), it was argued that unless there has been malfeasance, the CEO should not apologize for a breach of trust.  When it comes to a public apology, the CEO is personally worse off often facing permanent reputational damage and the organization fares no better than had no apology been made.

In the event of a crisis, two response models were proposed.  Should the brand weather the storm or instead, in boxing parlance, “come out swinging.”  You should consider the more assertive approach only if you believe the mob can be swayed. 

Most organizations wait for the mob to lose steam and only then does brand rebuilding commence.  In instances where there has been an absence of malfeasance, you should expect that the restoration of trust through forgiveness and forgetfulness, to take upwards of 18 months.  Where that has been proven malfeasance expect the recovery to be expressed in years and not months.

In this article we begin the process of dissecting the applied application of trust as an element of brand and we separate the steady state from a passing concern, a troubling development, and a full-blown crisis.

Trust and empirical reasoning

Trust is related to all forms of organizational citizenship such as altruism, civic virtue, inclusiveness, conscientiousness, environmental, social, and governance matters and courtesy.  However, are these the elements that drive purchase behavior?

Commentators often claim that poor corporate behavior undermines people’s trust.  That might be so however, any consequences to business outcomes depends on whether the poor behavior impacts on a driver of consumer trust and, if that driver is related to purchase behavior.

Without the data science, decision makers are mostly guessing that building trust will have a positive effect on business outcomes.

When an organization’s risk committee talks about trust and reputational damage you can be reasonably certain that they do not have before them an empirical model of trust drivers.  Intuitively, they might feel that trust matters however, they have little idea about what attribute of trust is driving acquisition or retention and the extent that it matters.

Trust is situation dependent

Trust is an abstract noun but moreover, it is an abstract concept.  Brands frequently make trust an organizational goal however, they have little or no empirical evidence of how to build trust. 

The drivers of trust are entirely dependent on who is defining it and the circumstances at the time.  Trade-unions, regulators, law makers, colleagues, prospective colleagues, customers, or prospective customers may all have different definitions and expectations.

The circumstances for trust vary from the steady state to a full-blown crisis (Exhibit One).  In the following article we will pull apart the different levels or organizational response ranging from a steady state to a passing concern, a troubling development, and a full-blown crisis.

Exhibit One – Different situations require different responses

 

During times of crisis, as the organization’s trust performance falls, Forethought has frequently witnessed the relative importance of trust as a component of brand in the form of future purchase behavior, markedly rise. 

Furthermore, factors that drive trust during the steady state are not necessarily what drives a rebound in trust in the midst or aftermath of a crisis.  In the case of one client suffering a significant data breach, five new significant category drivers entered the predictive purchase model.

These new drivers are not drivers of trust.  They are recovery drivers.  For example, ‘protects customers’ data’ which is not a reputation driver but rather a performance driver.  For the organization to reenter the consideration set it must address these new drivers.

The only time to build trust is during the steady state therefore, identifying the drivers of trust during this period should be mandatory for brand management. 

Exhibit Two illustrates for an energy retailer during a steady state, what lies beneath the abstract concept of trust.  Having deconstructed trust, the organization is now ready to set about to build a store of trust.  Again, trust can only be built during a steady state.

Exhibit Two – Relative importance of drivers of trust– Energy Retailer, steady

 

Panic! We have a trust crisis

Airlines are exemplars for preparing for a crisis.  I witnessed a full unannounced drill of a major airline.  The level of preparedness was astounding right down to the four draw filing cabinets in the corner of the dedicated situation room that had hard copy plans in case the two backup generators had not cut in. 

Members of the Risk Committee observed the response including the mock press conference with real, attack journalist.  Part of risk committee’s responsibilities should include an understanding of how to build trust but also, how to respond at the time of a crisis.

If you currently do not have a trust issue then the advice is, prepare now for having one by quantifying the drivers of trust and incorporate them into organizational behavior and marketing communications.  Organizational trustworthiness equals stored value in the form of forgiveness. 

Forgiveness is the market’s preparedness to regard wayward behavior as an aberration.  For those categories where trust is important to consumer choice, be aware that you “cannot fatten a pig on market day.” Trust is part of brand and like goodwill, must be stored. And finally, beware the organizational executive who free rides on past trust by maximizing revenue today at the expense of trust tomorrow.

All in all

To build trust, organizations must first quantitatively deconstruct trust into its constituent pillars and explanatory variables, model the importance of the hypothesized variables, select trust drivers and then, set about to build trust.  This requires establishing the drivers that relate specifically to who they want to trust them and for what purpose.

Lastly, communications need to be tested for plausibility and coherence. Organizations are often alarmed to discover that due to a loss of trust, cynicism towards all communications is so high that it may be an utter waste of time – including apologies.

References

1 This article has benefited from a previously published Forethought Whitepaper, ‘Trust; Before Reconstruction
Comes Deconstruction,’ Ken Roberts, Mario Garrido, Sawsan Howard, Mark Van Der Meer
2 Malfeasance is commonly used in matters of a breach of trust. According to the Oxford Dictionary it means
‘An unlawful and wrongful act (a crime or a tort).’
3 The more technically inclined will understand that I am taking about the output from factor analysis.
4 Incidentally, this major airline is considered the safest airline in the world having never lost a plane nor a
single passenger. This kind of planning points to why that has been the case.