Editorial Articles

A recent discussion paper by ESCP Europe examines the role of trust in consumer relationships across the mobile, banking and insurance sectors. Kieran Kilmartin, Marketing Director, EMEA at ESCP's partners Pitney Bowes Business Insight talks to Figaro about the report, and explains why the most important long-term investment for any service-led business is the customer

Trust, like that other elusive notion 'engagement', is one of the most discussed issues in digital marketing and nowhere is its significance greater than in service-led sectors such as banking, insurance and mobile provision where customer sentiment is key to developing long-term relationships. But what, in this context, are the attributes of a trusting relationship, and how do brands nurture it?

These are among the questions considered in 'The Role of Trust In Consumer Relationships', a discussion paper by Professor Chris Halliburton and Adina Poenaru of ESCP Europe Business School, produced in partnership with Pitney Bowes Business Insight.

In a time of rapid technological acceleration, explains Kieran Kilmartin, Marketing Director, EMEA at PBBI, the team wanted to examine changes in customer-centricity. "We wanted to understand more about the attributes of the customer relationship," he says, "and trust is at the core of that."

The significance of the research is demonstrated by the generally low level of trust currently exhibited by consumers. According to the Reader's Digest 'European Trusted Brands 2010' study quoted by the report, only 32 per cent of consumers trust international companies, and only 13 per cent trust advertising. The scepticism is understandable; overall trust in global institutions is just one of the assets stripped by the current economic crisis. Yet trust, the report found, can still drive up to 44 per cent of customer loyalty in brands. For organisations prepared to invest in trust, the rewards are evidently there.

Rational numbers

But what exactly does trust in these sectors entail? According to the ESCP's report, it arises through a combination of rational and emotional bonds between user and organisation. The rational dimension is based on knowledge, competence, ability, reliability, predictability, credibility and dependability. Over in the emotional corner we have empathy, security, goodwill, altruism and accumulated personal experience. And though, as consumers, we like to imagine our decisions are based on carefully calculated rational criteria, it's frequently feeling that directs consumer action.

"Imagine you walk into a showroom and see the latest Mercedes 500SL," says Kilmartin. "You don't care about the price, the fuel consumption, the servicing costs. You just fall in love with it. It's an emotional decision." Banks, insurance companies and mobile phone providers may not arouse quite the same level of blinding lust, but emotion is just as important – if not more so – in generating brand loyalty.

Both aspects of trust, the report explains, are closely entwined: customers rationally assess an organisation's competency and reliability, but it's through an emotional process that we evaluate qualities such as concern, care and a preparedness to look beyond pure profit. "Customer trust," write Halliburton and Peonaru, "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."

Invest in relations

Armed with that insight, how did the report find different service sectors fare in the trust stakes, and what factors contribute to customer confidence?

Mobile phone providers, the report reveals, do comparatively poorly. Partly, says Kilmartin, that's because this is a young, dynamic industry in which the landscape's evolving, and the focus still tends to be on short-term gain rather than customer retention and loyalty. Insurance does better in the trust stakes: here 48 per cent of ESCP's respondents agreed that 'generally speaking I trust my service provider', compared with 45 per cent in the mobile sector. But it's banks and banking that retain the greatest fund of trust. What does that teach us about attitudes to service-led sectors?

"Interestingly," says Kilmartin, "despite what's happened in the banking industry in the last few years, people still trust their bank. In part that's because banking is such a long-established industry, and people tend to place a degree of trust in that." The point's echoed by one Marketing Manager working in banking, quoted within the report. "There may be something of a Stockholm Paradox here. People may distrust bankers, or the insurance industry, but they often do trust their own provider. It is perhaps significant that people talk about my bank, but rarely, if ever, my supermarket."

Business benefits

For Kilmartin and the report's authors, the great benefit trust brings to business is loyalty, which in turn leads to longevity, higher spend and stronger advocacy. The great test in any business relationship, however, comes when things go wrong and it's at this point that service-led organisations are able to demonstrate just how – and how much – they really care.

"One of the things that's interesting about trust," says Kilmartin, "is when organisations make mistakes, it can actually lead to an increase in trust." That's because nothing demonstrates accountability more effectively than holding your hands up, declaring it a fair cop and then getting the situation fixed.

"Transparency is a key word in the relationship between brand and customer," says Kilmartin, "and social media is a key tool in helping organisations be more transparent."
ESCP's report also indicates that indirect experience (reputation, advocacy and word of mouth) are vital in shaping trust. "The provision of a seamless and consistent customer experience," write Halliburton and Poenaru, "will engender trust, which in turn will reinforce the relationship and propel it towards higher levels of opportunity and return."

What customers want

From an organisation's perspective, says Kilmartin, admitting customer governance and having a holistic approach are important in generating and maintaining trust. But what do customers themselves want and what can service-led organisations do to make sure they get it?

"First of all," says Kilmartin, "it's about improving marketing communications. Making it timely, making it relevant. Treat me like you know me, treat me like you understand me and treat me like you value me. Those, I think, are the three principles of customer-centricity."

Second is customer care and instilling in consumers the sense that they are being looked after. This may involve an increasingly personalised service or demonstrating to users that profit isn't the only motive. In the case of banking, says Kilmartin, letting customers know when they're about to run out of credit or slip over their overdraft limit may not be in the immediate interest of the bank, which risks diminishing its own revenue, but it is in the interest of the customer relationship, with all the long-term value that implies.

Finally in the list of trust-focused customer demands is a general sense of competency, consistency and high personal conduct, from the staff on the shopfloor up to the boardroom and then on into the virtual realm, uniting the emotional and rational aspects of trust in an overall positive attitude which Kilmartin describes as "the sum of all interactions".

Consumer trust, it's clear, is a long-term investment and it relies on many of those issues which social media marketers across all sectors are keen to leverage: openness, transparency, engagement. In the service-led sector it also relies on organisations operating efficiently while remembering that at the end of every account is an actual human being with the power to recommend or rubbish your service to their own network. Organisations need to invest in their customers because, in the long-term, it's customers who'll be deciding whether your business grows.

Article by Jon Fortgang