The difference between mere trustworthiness and true trustability

By Martha Rogers, Ph.D., Founder, Trustability Metrix and Co-Founder Emerita, Peppers & Rogers Group, with Don Peppers, of Peppers & Rogers Group

What is ‘TRUST’, anyway?

Everybody’s talking about ‘trust’ these days, and many use the term as a synonym for what we might call ‘reputation’, or ‘regard’, or ‘popularity’, or ‘familiarity’. Brand equity like this is valuable and worth pursuing, but it’s not the same as ‘trustability’, any more than fresh paint and a freshly mown lawn can reveal whether or not a house has a solid foundation.

For the most part, the business authors who’ve written about trust in the past have developed their own taxonomies to catalogue the various elements that make up trustworthiness, ranging from dependability and reliability to honesty and authenticity. These elements for ‘trust’ tend to boil down to a combination of good intentions and competence.

In other words, being trustworthy requires:

• doing the right thing; and
• doing things right.

Peter Drucker referred to doing things right as ‘management’. (That’s the competence, or ‘execution’ piece.) Doing the right thing? He called that ‘leadership’,¹ and that’s the piece that’s all about good faith, playing fair and best intentions.

The truth is, most real businesses don’t abuse customers’ and prospects’ email addresses or mobile phone numbers or break any laws. They don’t violate their customers’ trust like this for reasons that have little to do with the patchwork of regulatory restrictions enacted over the last two decades. In the transparent world we live in, this sort of behaviour would inevitably be exposed. So except for rapacious and disreputable fly-by-night marketers, companies refrain from doing these kinds of things at least partly because they would be found out. Even if there were no regulatory penalty at all, to be found abusing any person’s contact details would immediately tarnish a company’s reputation.

Most businesses today consider themselves to be trustworthy, and by yesterday’s standards they are. They post their prices accurately, they try to maintain the quality and reliability of their products, and they generally do what they say they’re going to do. But that’s as far as most businesses go, and by tomorrow’s standards it won’t be nearly good enough. Not even close.

The fact is that far too many businesses still generate substantial profits by fooling customers, or by taking advantage of customer mistakes or lack of knowledge, or simply by not telling customers what they need to know to make an informed decision. They don’t break any laws, and they don’t do anything overtly dishonest. But think for a minute about the standard, generally accepted way some industries have made money for the past several decades:

• To credit card companies, a borrower who can never resist spending, rolls his balance from month to month, and often incurs late fees is considered a most valuable customer. The common industry term for a credit card user who dutifully pays his bill in full every month is ‘deadbeat’.
• Mobile phone carriers profit from customers signing up for more expensive calling plans than their usage requires, and from roaming and data services accessed by accident.

A lot of traditional, widely accepted and perfectly legal business practices just can’t be trusted by customers, and will soon become extinct, driven to dust by rising levels of transparency, increasing consumer demand for fair treatment,² and competitive pressure.

Customers are pretty particular about what they expect, and companies can be pretty slow at picking up on it. In one infamous study reported by Bill Price and David Jaffe, 80 per cent of executives thought their companies provided superior customer service, but only 8 per cent of the customers of those companies thought they received superior customer service.³

So if old-fashioned trustworthiness is not enough, what can we do instead that will make a real difference in a super-interconnected, completely transparent world? The answer lies in doing things right and doing the right thing, and doing them proactively. We’ve coined the term ‘trustability’ to encapsulate this new form of extreme trust, and what we mean by trustability is very simple: ‘proactive trustworthiness’.

To be fully trustable, a company has to:

• do things right;
• do the right thing;
• be proactive.

So even though being trustworthy is certainly better than being untrustworthy, but soon even trustworthiness won’t be sufficient. Instead, companies will have to be trustable. What’s the difference?

Is your company careful to follow the rule of law? Do you train your people on your company’s ethics policy in order to ensure compliance?

That’s admirable, of course, and it’s exactly what any trustworthy company must do.

But a trustable company would go further: rather than merely following the rule of law, a trustable company will follow the golden rule towards customers and build its corporate culture around that principle.

Does your company try to do what’s best for the customer whenever possible, balanced against your company’s costs and financial requirements?

That’s great, but a trustable company designs its business model purposely so as to ensure that whatever’s best for the customer is financially better for the firm, overall.

A trustworthy company manages and coordinates all brand messaging to ensure a compelling and consistent story.

But a trustable company: recognises that what customers and other people say about the brand is far more important than anything the company says about itself.

A trustworthy company focuses on quarterly profits as the most important, comprehensive, and measurable KPI.⁴

But a trustable company: uses customer analytics to balance its quarterly profits against changes in its customers’ long-term value.

Rather than simply working to maintain honest prices and reasonable service, in the near future companies will have to go out of their way to protect each customer’s interest proactively, taking extra steps when necessary to ensure that a customer doesn’t make a mistake, or overlook some benefit or service, or fail to do or not do something that would have been better for the customer.

How businesses will practice proactivity

What would it really mean for a business to be proactively trustworthy, rather than merely ‘trustworthy’? Let’s just explore what trustability would mean for a mobile telephone carrier. The typical mobile carrier today is not very proactive about protecting the interests of its customers. Within an environment of smartphones and increasingly capable wireless services, the charges a mobile carrier assesses can be complex, and complexity presents a tempting opportunity to take advantage of customers. It might involve allowing customers to incur unintended data charges, or it might be failing to put a customer on the most beneficial or cost-efficient calling plan for their usage patterns. Or it could result from simple neglect (categorised as incompetence): if a customer is due to get a new phone at the end of his two-year contract, for instance, but doesn’t notice when a period of two years elapses, a trustable mobile phone company would proactively remind him and invite him to come in to choose a new one. However, most mobile operators do not, preferring to ‘let sleeping dogs lie’, and continue to collect on a fully paid-up contract while waiting for the customer to request an upgrade for some other reason.

Since genuine trustability requires being completely transparent, if a customer is about to subscribe from a home or business address prone to poor network coverage or slow broadband connectivity, a trustable telecom company would advise him or her in advance of this weakness in its offering, perhaps providing a discount or other benefit until such time as service in the customer’s home area is improved. The best strategy for a mobile carrier with a weakness in its offering is simply to communicate frankly about flaws and weaknesses in advance, as a way to inspire customers that they can have confidence in the company’s suggestions and recommendations.

So what’s the key question? How much more would a customer be willing to pay to do business with a mobile carrier he considers to be trustable?

Why your CFO will learn to love trustability

Our company, Peppers & Rogers Group, fielded a research survey to develop some top-line insights with respect to how customer trust affects certain kinds of businesses.⁵ We began by asking respondents how much they thought their mobile services provider could be trusted, based on the kinds of behaviours listed here.

Trusters were much more likely than distrusters to say that they would buy more things from their carriers without hesitation, including new data services, additional lines and upgraded phones. Trusters also said they would be more likely to remain as customers for a longer period, citing a strong sense of emotional loyalty to their mobile carriers. In addition, far more trusters than distrusters said they felt no need to search for alternatives and would recommend their carrier to others and defend it from criticism.

The most significant additional finding from the research was that participants said they would be willing to pay about US$11 more per month, on average, for a mobile carrier consistently demonstrating a higher level of trustability. More than one of the American mobile carriers can boast about 70 million customers. So let’s do the maths: if you run a telecom company and your customers would be willing to pay you an extra $11.00 per month, times 12 months a year, that is about US$1.3 billion for every ten million customers per year in incremental revenue, or nearly $9 billion for one of those big carriers. Only a fraction of this would be needed to accomplish most of the trustable actions described earlier. The rest would drop to the company’s bottom line, increasing customer satisfaction in the short term and loyalty in the long term.⁶

The overall conclusion of our extensive research is that although the financial benefits of earning the trust of customers may or may not show up in current-period results, there can be little doubt that trustworthiness and its higher standard, trustability, have the potential to return significant benefits over the long term.

Why are so many companies having a hard time moving from mere ‘trustworthiness’ to truly competitive ‘trustability’?

Companies cannot simply ignore the reputational damage if they resort to untrustworthy activities and customer experiences that don’t match their customer expectations. But unfortunately, while economics may not be everything, when it comes to operating a profit-making company with a payroll to meet and shareholders to satisfy, it’s almost everything. It’s extremely important to realise, therefore, that while acting in a customer’s interest may often require a company to incur a short-term cost, it will nearly always be economically beneficial for your company in the long run, and sometimes dramatically beneficial.

Ironically, at the heart of most companies’ untrustable behaviour is a nearly manic obsession with short-term financial results and almost total disregard for longer-term financial implications. Short-termism generates many dysfunctional and even self-destructive business practices, as profit-oriented companies dismiss the long-term consequences of their actions in order to generate current-period profits – profits that feed the bonus pool, pump the stock price and meet analysts’ expectations. Short--termism is usually connected to unadulterated self-interest and directly conflicts with trustability, but it is still easily the most pervasive and destructive business problem on the planet today.

The truth is, however, that short-termism only reigns supreme at most businesses because the financial metrics we apply to business are not economically true measures of success. They never have been, and they haven’t substantially changed since being introduced at the beginning of the industrial age. The way most businesses ‘do the numbers’ to document their financial performance focuses entirely on the past – that is, on the most recent financial period. Most companies’ financial reports to shareholders include absolutely no consideration of the way the most recent performance has or has not delivered on their customer experiences or promises, or delivered their customers’ expectations and therefore either helped or harmed your company prospects for generating future profits, leaving this detail to the stock market analysts and others to figure out.

Managers sometimes take comfort in the sophistication and precision of their short-term financial metrics, ignoring the long-term effects simply because they can’t be as precisely defined. But remember the simple fact about business metrics: if you aren’t measuring the right things to begin with, you’re not going to get better results by measuring them more accurately.

Customer experience and relationships: a link to long-term value

When it comes to understanding how trustability creates financial value for a business, there are basically two approaches to the issue: a simple, philosophical approach and a quantitative, analytical approach. Both start with customers, for one simple reason: by definition, all the revenue you will ever generate will come from the customers you have now and the ones you will have in the future. (Take note: brands, products, patents, logos, sales regions and marketing campaigns do not pay money to a firm; only customers do.) The simple approach is to state your company’s value proposition as a straightforward quid pro quo:

1. You want each customer to create the most possible value for your business.
2. On the whole, a customer is likely to create the most value for you at about the point he gets the most value from you.
3. The customer gets the most value from you when he can trust you to act in his own interest.

To maximise the value your customers create for your business, you need to earn and keep their trust – that is, to act in their interest and to be seen doing so.

It is your relationship with an individual customer, and the resulting experience you create for him, in other words, that provides the ‘missing link’ between your company’s short-term, current-period earnings and its long-term, ongoing value as a business enterprise. Apply this philosophy to enough customers and you’ll be able to overcome the temptation of short-termism.⁷

How trustable companies use customer insight to improve customer experience

Even though no company can ever be certain what’s in any particular customer’s mind, companies today do have much more capable technologies for analysing their customers’ needs and protecting their interests by providing positive customer experiences. Sometimes, all that’s required is for a company to use its own processes to help a customer avoid a costly and preventable mistake. Peapod, the online grocery service, for instance, has software that will check with you about a likely typo before you buy something highly unusual (‘Do you really want to buy 120 lemons?’).⁸

The best companies are also using their greatly improved IT capabilities to do a better job of remembering their customers’ individual needs and preferences. A trustable company will remember what it learns about each customer, becoming smarter and more insightful over time, and then using this insight to create a better customer experience. Sometimes, all that’s required is for a company to use its own database of past customer transactions for the customer’s benefit.

If you order a book from Amazon or a song from iTunes that you already bought from the company, you will be reminded before your order is processed.

These are examples of genuinely trustable behaviour. In each case, the company’s database gives it a memory that can sometimes be superior to the customer’s memory. It would not be cheating for Amazon or iTunes simply to accept your money, thank you very much. Rather than using their superior, computer-powered memory to take advantage of the customer, however, Amazon and iTunes use it to do the right thing.

Note that ‘the right thing’ to do, at least in this case, is mutually beneficial. Even as Amazon offers you the chance to opt out of a purchase you’ve already made, they also reduce the likelihood that you’ll receive the book, realise you already have it, and return it. When iTunes warns you you’re about to duplicate a song you already own, they are making it less likely they’ll have to execute a labour-intensive and costly refund process, or that you’ll think badly of them aloud on Twitter. This is exactly how ‘reciprocity’ is supposed to work – as a win–win.

Ironic isn’t it? That some banks use their customer databases and analytics tools to craft highly sophisticated pictures of their customers’ and prospects’ value, profitability and credit risk and then bombard them with two billion credit card solicitations every year. Why don’t more of them do what Royal Bank of Canada (RBC) has done? RBC has used its superior insight to extend automatic overdraft protection (with no fee!) to low-risk customers (that is, most customers). That way, the customer gets a break – and so does the bank: instead of having to pay a service rep to handle a call from a reliable customer who demands the fee be rescinded, the bank chooses instead to send a note explaining ‘this one’s on us’ and how to avoid this in the future, reducing their own costs in the process. Rather than incurring costs and resentment, and then netting no fee anyway, the bank saves the costs, builds goodwill and then nets no fee. During the first 10 years after instituting this approach, RBC increased per-customer profitability by 13 per cent.⁹

In conclusion: ask yourself these simple questions

How many of your customers could agree enthusiastically with the following statements:

• I can depend on this company to do the right thing for me.
• I know this company will make sure I get the right deal.
• This company does things right and makes it easy for me.
• I have a great experience when I do business with this company.
• I would be willing to tell people I know how much I trust this company.
• I would be willing to pay a little more to do business with this company.
• I trust this company more than I trust their competition.

As standards for trustability continue to rise, the companies, brands and organisations shown to lack trustability will be punished more and more severely. Very soon, for competitive reasons, all businesses, old and new, will begin to respond to the increase in demand for trustability by taking actions that are more worthy of trust from the beginning – that is, actions that create better customer experiences – actions that are more transparently honest, less self-interested, more competently executed, less controlling and more responsive to others’ inputs: more proactively trustworthy. Trustable.

(Adapted from Don Peppers and Martha Rogers, Ph.D., Extreme Trust: Turning Proactive Honesty and Flawless Execution into Long-Term Profits, ©2015, 2016. Used in this edition of this book with special permission of the author.)

Things to think about

Dr Rogers has made the case that the leading companies in terms of customer experience recognise that it is in a company’s own economic self-interest to be trustworthy, and in future those that do not choose to accept this will be forced to consider the implications of being seen as untrustworthy.

• How many companies would you trust in the future with your personal data and what would you allow them to do with that data?
• Would you trust your company to have access to and to use your personal data?

Remember the active opt-in to data sharing will become the norm and those companies that we trust with our personal data will have a major competitive advantage

• Consider for a moment who you would consider trustworthy enough to use your data and perhaps who could be considered as a gatekeeper for your data in the future.
• Would you trust your own company – what is the experience that you offer today that will inspire trust from your customers to the extent that they are prepared to give you access and permission to use your personal data?
• This issue is now being talked about in terms of good profits and bad profits, where the latter are driven out of cheating customers, charging exorbitant fees and generally damaging customer experiences. For example, how can a bank justify the fees charged for sending out letters; how can airlines justify the huge fees for an administrative change to a ticket; how can entertainment ticketing companies justify their booking fees?
• Consider your company. Does it have any practices that are clearly generating bad profits?

Measuring trust is an area that is still ‘under development’ but the business outcomes of trust are clear to see in terms of your stock performance through to your average spend per customer. One route for those looking to be in the vanguard of the trust agenda is provided by the team at Trustability Metrix where they are developing a more and more sophisticated tool to measure high-level trustability based on customer perception, employee perception, KPIs and business practices, and reviews both what the company says it will do and the internal capability to deliver on that promise.

Trustability matters throughout our efforts to build better customer relationships and experiences but there is an immediate issue that demands attention.

The leading companies in terms of customer experience recognise that it is in a company’s own economic self-interest to be trustworthy – in future those that do not choose to accept this will be forced to consider the implications of being seen as untrustworthy.