This is the first issue of our enewsletter – Hooked. Our goal is to serve up provocative insights, research and practical strategies for dealing with today's customers.

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Trust in business has plummeted. This creates new challenges for customer relationships. Suspicion and distrust are now pervasive. Every business gets tarred by the same brush, no one can just sit back.

While most business leaders tacitly believe trust underlies customer relationships, they don’t have a deliberate strategy to build the right kind of trust. By design or by default, the majority of businesses build only “satisficing” trust, sufficient trust to buy a product or service. “Satisficing” trust works in a transactional, commodity based business, but does little or nothing for customer relationships and loyalty—in fact, it can be counterproductive.

Customer trust is a precondition for prosperity. Yet, most businesses …

• Think customer trust develops because the business believes it is honest.

• Build only a shallow trust that does not lead to profitable relationships and loyalty.

• Have no strategy to build trust where customers increasingly value the relationship.

Now is an excellent time to aggressively and systematically work at building customer trust. Virtually all businesses have been tainted by the general rise in societal distrust of companies.

• A recent Datamonitor study of consumers in the USA and Europe found that 86% are less trusting of companies than they were ve years ago.
• 80% of people stop buying products or services from companies when their trustworthiness comes into question (Edelman 2005 Trust Barometer)
• People spread distrust to friends and associates, the people they trust most.
• Over 33% of those who lose trust in a company, openly campaign against that company on the Internet.

 Competitive Differentiation

According to a Yankelovich study, more than two-thirds of people don’t believe advertising and marketing. They see it as self-serving distortions. Customers want to do business with companies they trust but don’t know who to trust. Therefore, companies that proactively demonstrate trustworthiness stand to gain a tremendous source of competitive advantage.

What is trust and why is it important to customer relationships? Webster gives two
denitions of trust that help separate the wheat from the chaff.

• rm belief or condence in the honesty, integrity, reliability, justice of another person or thing.
• condent expectation, anticipation, or hope; as in trust in the future.

Most companies believe they are trustworthy but only measure up to the rst denition. They want to be known as a company that is honest, reliable and fair. They expect their products to live up to expectations and when they don’t they think they treat customers equitably.

Do you think your company measures up?

If you say yes, ask yourself what you do proactively to build this trust. Many companies have no deliberate strategy. If you have a deliberate strategy, now might be a good time to question how well it is working. As mentioned above, Yankelovich’s research shows that most customers don’t believe your marketing and advertising. In addition, the Edelman Trust Barometer concluded that when looking for a credible source of information on a company or product, CEO’s, employees, public relations people and celebrities rank in the bottom half.

Measuring up to the first definition of trust is essential to sustainable and protable customer relationships. However, even if customers believe your company is honest, reliable and fair, this is no guarantee they will be loyal and protable. To garner commitment, profitability and high lifetime value, a company must measure up to Webster’s second definition as well.
In today's complex and fast-changing world, customers want trusting relationships that will help them deal with this situation. Satisficing trust relates to the product. Real commitment comes when customers trust the relationship. Here's a short story that illustrated the point.

In the haydays of the first dot.com era Billy Blue, a men's clothier in San Francisco, was doing great. When the crash hit the business started to flounder. The owner, Billy Bargman, wrote his customers a letter and told them, "Guys, if you don't start buying some clothes, I am going to have to close Billy Blue." Business immediately picked up. One guy mailed in a check for $2,500 and said, "You know what I like, pick me out some clothes." Why did they do this? There are plenty of other places to buy men's clothes in San Francisco. The customers did so because they valued the relationship, a relationship that helped them address the intangible needs of buying clothes that fulfilled practically and emotionally. __________________________________________________________________________

Hooked: The Psychology of Customer Experiences, a webcast by John I. Todor, Ph.D. is available for on-demand listening at www.Cincom.com/hooked.
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In our next issue: Why Engaged Customers Equals Competitive Advantage
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For additional information on the new book by John I. Todor, Ph.D. Addicted Customers: How to Get Them Hooked on Your Company, go to www.AddictedCustomers.com.

This newsletter is brought to you by The Whetstone Edge, LLC (www.TheWhetstoneEdge.com).

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