Trust in banks and business is at an all time low with 62%* of Americans stating that they don’t trust business to do what is right. Dan Collins author of Trust Unwrapped and a successful entrepreneur in his own right argues that this presents an opportunity for recovery.
I’m not sure I’ve ever really trusted banks, not since the £1200 cheque I wrote to pay for the first consignment of stock in my fledgling business was bounced, back in 1992.
This certainly upset my supplier who had trusted me with a line of credit despite having no trading history. It didn’t seem to bother Midland bank though, who had caused the problem by depositing the funds that should have funded this cheque not into my business account but into my personal account.
In truth it was just a clerical error where the cashier who must have recognised me thought she was being helpful by altering the paying in slip to what she believed was my correct account number and branch. Banking was so different then, most of us held accounts opened when we were young in the same institution that our parents had trusted with their hard earned funds.
Then our banks discovered that marketing could give them a new face. Black Horses and Griffins slowly receded while Cahoots and Smiles became the shop windows of our financial institutions. This worked well, until a generation of emerging leaders started to pay more attention to hype and spin than to the cautious accountants whose warnings advised a more prudent approach. Someone ran a calculation that suggested a call centre would be cheaper to run than employing cashiers in the branches – probably correct in the short term. Then someone else suggested online accounts where the customer would never meet a bank employee. The relationship changed and as with any relationship the less time spent in one another’s company the less loyalty and trust can grow.
It would seem that some of our bankers forgot that they still had a duty to the customer. Recent events have made this plain for all to see. I doubt that our financial institutions will ever recover the trust their customers once put in them.
Customers are going to be far more cautious in future, they will look for ATOL protection before they book a holiday. In light of Rover its not just performance and styling that will influence their choice of car and when it comes to food, Jamie Oliver’s voice will be ringing in their ears when their hand reaches into the chiller cabinet to select either budget or free range chicken breasts.
Purchase decisions are no longer just informed by the sellers marketing materials. With a mouse click consumers can access comparison web sites, press reviews and user groups. In a matter of minutes they can establish the best available price without any level of relationship.
The rules have changed and whereas at one time the more established businesses had an advantage over new entrants, the reverse is now true. Start ups with their low overheads and up to date processes will out perform any operation that’s more than 3 years old.
Unless, the older business can win on relationship.
After all that has happened since the run on Northern Rock eighteen months ago consumers are craving business relationships where they feel valued. Dave Gooderidge sums this up well;
“When I trust someone, I confer value on them.”
Businesses like Virgin, innocent and John Lewis that place trust in their employees, customers and even suppliers, consistently outperform their competitors over the long term.
The example that first triggered this thought in my mind was a little restaurant in North London that was always full, predominantly with repeat customers. Despite being quite a trek from the centre of town it was renowned around the world. The reason being, there were no prices on the menu because there was never a bill at the end of the evening. Vasos Michael the 4’10” diminutive proprietor didn’t ever give his customers bills for their meal, he simply presented a list of what had been served, including drinks and asked that the customers paid what they felt the meal was worth. On the whole people rewarded his trusting nature by paying more than a comparable meal would have cost elsewhere and if someone abused the relationship by paying too little Vasos wouldn’t hesitate to ask why, gaining either valuable feedback or the satisfaction of publicly embarrassing a miser.
At the other end of the spectrum in 1999, Warren Buffett, thought to be the world’s richest man bought the North American furniture retailer Jordan’s from Barry and Eliot Tatleman for a rumoured $250 million – on a handshake. There was no contract that the brothers would stay with the business although that is Buffett preference when acquiring companies. Particularly important in the case of Jordans because Barry and Eliot always fronted the firms TV commercials.
When Barry Tatleman was asked by a reporter why the billionaire had taken them at their word he replied ‘it’s a new concept in business, it’s called trust’.
Any business leader worth their salt knows that this recession presents an opportunity to grow market share. That growth will come primarily from new business but new customers will only place their business with those they trust.