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Standing Up and Standing Out

Trustability: Marketing Imperative

Martha Rogers, Ph.D.SMICS

July 11, 2012

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Toyama no Kusuri-uri

House-to-house medical supplies

Consumers only charged for usage

Detailed records kept in a database, called the “Daifuku cho”

Circa 1750


In 1996, Barnes & Noble offered to buy amazon.com,

--to protect them from B&N’s online launch




Today:•Barnes & Noble has a market cap of $719 million




Today:•Barnes & Noble has a market cap of $719 million•Amazon.com has a market cap of $102 billion


We all recognize this, right?

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And everyone knows what this is?


Well, how about this?

Philip Stewart's 'Chemical Galaxy II' periodic table


Taking a different point of view

Orica’s business involves collecting detailed blast parameters from customers all over the world

Now the company sells service contracts for crushed rock, taking on the risk of managing each blast itself

What business are you in?

Customers just want their rock crushed to ideal granularity

Strategy. Execution. Results.

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The company that does not use the information it has about customers has no

advantage over the company that does not have information

about customers


Can this work for smaller businesses?

Zane’s Cycles faces both Wal-Mart and a sports superstore

Chris Zane applies 1to1 marketing at the retail-detail level

Lifetime bicycle warranties

CRM-based customer profiles

Doubled his business in two years to $3.5 million

Now has 65% of the bike market in his area


Twin benefits of relationships…

More satisfied customer

More convenient product

More appropriate offer

Personalized service

Lower costs

Less “wasted effort”

Lower inventory costs

Better asset utilization

Relationships and good experiences require trust



Customer centricity’s objective

Product CentricityProduct CentricityMarket share

Customer Needs

Satisfied

Customers Reached

Share of customer

Cus

tom

er C

entr

icity

Maximizing the value created by each product

Maximizing the value created by each customer


Customer centricity is building the value of the company by building the value of the customer base

Customer centricity is building the value of the company by building the value of the customer base


Welcome to the Age of Transparency83% of consumers trust the recommendations of

their friends

More than half trust the online opinions of complete strangers

But just 14% of consumers trust advertising!

Forrester Research

“Transparency is a disinfectant for business. It will purify things and help start the healing, but it’s going to sting like

hell.”


Moore’s Law

Every 20 years, computers get a thousand times faster and cheaper


Zuckerberg’s Law

Every 20 years, we share a thousand times as much information with others


Now suppose you were a food source for bees…

But a bee will only do his dance to tell the other bees about you if he was satisfied with the nectar

Moral: In the absence of communication among your customers, advertising rules

Once your customers communicate with each other, it’s the customer experience that counts

Bright colors and a sweet fragrance can get any exploring bee to take a look



It’s basic:Customers create the most

value for you when you create the most value for them.



Going forward: 3 Requirements

For Extreme Trust

Intention Do the right thing

Competence Do things right

Proactively


Customers assert their new social power easily

• HSBC forced to reverse course• Over the summer it had dropped its policy

of free overdrafts for university students• By using Facebook, students connected

with others to organize a protest of this new policy

• Soon HSBC reinstated the free overdraft policy



The components of 20th century “trust”

Competence – doing things right

Good intentions – doing the right thing

Now

Doing things right, and

Doing the right thing,

Proactively


Honeybees dance about everything!


Screw up, and the “news” will be immediate, ubiquitous, and permanent

You can’t un-Google yourself.- Linda Kaplan Thaler, CEO, Kaplan Thaler Group

“You can't take something bad off the Internet. That's like trying to take pee out of a swimming pool.”

- Grant Robertson, blog post, May 1, 2007


Trust Is Becoming More Important Because…

1. Trust makes interactions efficient

2. We screen information for its

trustworthiness

3. Interaction generates transparency


Extreme Trust

•No longer sufficient simply to refrain from cheating or deceiving customers

Proactive trustworthiness



Earning trust sometimes requires a deliberate balance of

short-term gain and long-term

equity





equity

Acting in the customer’s interest





equity

If that seems impossible, ask what

happens when customers choose between you and a

company that can be trusted in the long

run


Lots of people are asking:

How can I use new social media to sell more to my customers?




Wrong question!




Wrong question!

The question to ask now is:

How can I use any tool to understand my customer better

and build a more trustable relationship?


One bank routed calls from its most valuable customers to product and sales specialists, to try to sell something, before letting them do the routine transactions they wanted

Ordinary customers were able to get right to the IVR and handle their transactions

Why did those valuable customers leave?

Very special (mis)handling?

Source: The Best Service is No Service, Price and Jaffe, 2008


A B

Things aren’t always what they

seem


How good is your customer experience?

80% of corporate executives say their company delivers a superior customer experience

Just 8% of consumers report they received one

Source: Bain and Company,

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makean

impact!Trustworthy is not good enough. Your company must be trustable

Take this test…



Carefully follows the rule of law, and trains people on its ethics policy to ensure

compliance

A trustworthy company:

Follows the Golden Rule toward customers, and builds a corporate culture around that principle

A trustable company:



Does what’s best for the customer whenever possible, balanced against the company’s

needs

Designs its business to ensure what’s best for the customer is financially better for the firm, overall





Fulfills all its promises to customers, and does what it says it will do, efficiently

Follows through on the spirit of what it promises, by proactively looking out for customer interests





Manages and coordinates all brand messaging, to ensure a compelling and consistent story

Recognizes that what people say about the brand is far more important than what the company says





Uses a loyalty program, churn reduction, and/or win-back initiative to retain customers longer

Seeks to ensure that customers want to remain loyal because they trust the firm to act in their interest





Focuses on quarterly profits as the most important, comprehensive and measurable KPI

Uses customer analytics to balance current profits against changes in actual shareholder value




Doing Business in the Age of TransparencySocial networks evolve in a path-dependent way, and social sentiment cascades in an inherently unpredictable manner

As a result, dealing effectively with rising levels of unpredictability is a vital skill-set for today’s managers

Six strategies for dealing with unpredictability


Doing Business in the Age of Transparency

The social domain and the commercial domain operate on entirely different customs and mores

Four ways to influence the influencers without using cash or commercial incentives


Doing Business in the Age of TransparencyThe e-social world facilitates convenient, cost-free sharing and collaboration among strangers: “social production”

“Free revealing…is at the very heart of social production—the free and unencumbered sharing of innovative ideas to generate some

collective good.”



The world is not perfect, so brands that maintain they are perfect are simply not trustable

“Admitting one’s own vulnerability is the first step in earning someone else’s trust.”

“…the numbers show that a negative customer review actually converts to a sale more effectively than a positive customer review.”



Dealing with a supernova of data will require skill with numbers, but human biases often triumph over objective analysis

In the 1970s a man won the Spanish lottery with a ticket he’d specifically chosen for its ending number of 48. Very proud of his

“strategy” for winning, he explained: “I dreamed of the number 7 for seven straight nights, and 7 times 7 is 48.”

“…90 percent of CMOs believe that customers trust their own company’s brand as much as or more than they trust competitors’

brands!”


Customer’s view of trustability

Based on experience with other trustable firms

Your view of trustability

Based on changes you made to your own prior policies

Things aren’t always what they seem


Rising Customer Expectations

•Previously acceptable business practices are now “untrustable”

X Profiting from consumer error

X Failing to notify

X All “caveat emptor” policies!



Earning trust all the time helps on a bad

day

Remember what happened to

http://www.jetblue.com/


Imagining the Future…

•How would a trustable gift card work?

•What about a trustable mobile phone company?

•…a trustable health insurer?

•…a trustable automotive manufacturer?


What social networks require of you:

Build and maintain a reputation for trustability


Trust is everything

Prediction: Trustability will become the

single most enduring measurement of a

company’s ability to create and sustain value.


Trust sells

84% of marketers agree that building customer trust will become marketing's primary objective

Source: 1to1 Media survey


The three things they respond to: Figure out what’s best for each of

them, and do it – well. And proactively.

Customers can be tough:


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If customers trust you…

…they believe you will understand their point of viewWhat’s it like to be your customer?What should it be like?

Three elements of trustability: Goodwill CompetenceProactivity

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Customer trust is based on reciprocity…

“Treat the customer the way you would want to be treated if you

were the customer.”

“Customer advocacy is…the best indicator of…cross-sell success”

“Firms that score highest…are considered the most for future

purchases”



…and there’s no such thing as “one-way reciprocity”

First Persian Gulf War (1991) USAA sent unsolicited refunds for time spent abroad by members

Empathy works both ways

2500+ members mailed their

refunds back!


How would you compete against a company that

customers trust so much they send back the refunds and stay

for three generations and counting?



…can “trustproof” a business, protecting it from random swings of social sentiment

Trustability


A culture of customer trust drives many leading firms


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Creating a culture of customer trust

These companies are not just selling something.

They are building the value of the customer base.



Rising levels of transparency will raise the standard for trustworthiness:

No longer sufficient simply to refrain from cheating or deceiving customers• What happened to the wealth client

Proactive trustworthiness:

Trustability

Instead, a trustable company will work to protect customers’ interests proactively


Simple truth

Do things right

Do the right

thing

Do things right

Proactively


A little inspiration from Harley Davidson?


Peppers & Rogers Group

Management consultants in customer strategy issues

Magazines, newsletters,research white papers

Offices and clients around the world

www.extremetrustbook.comTwitter @martha_rogers

http://www.extremetrustbook.com/



QQ AA&&