Considered in classic psychological terms, trust is viewed as somewhat more a ‘feeder’, or building block, of emotion. We typically see emotions (as defined by experts like Paul LeDoux, Sylvan Tompkins, Paul Ekman, and Robert Plutchnik) as including surprise, interest, joy, rage, fear, disgust, shame, and anguish, and also happiness and sadness, or acceptance and anticipation. As regards both b2b and b2c relationships between customers and suppliers, lack of confidence is driven by insecurity and egotism, and ability to be confident is based on feelings of safety and acceptance. The name of the emotion-based game, with confidence as a ground rule, is ‘trustworthiness’.
Customer behavior research studies consistently show that elements of vendor trust, represented by image, reputation, and expressions of positive values such as sincerity and honesty, are significant drivers of loyalty and disloyalty, advocacy and alienation, and bonding and rejection. Trust is an essential building block of the Maslow values hierarchy. And, consumer financial service industries, such as banking, investments, and insurance, are sectors where trust and confidence play a particularly important role in key elements of the strategic customer life cycle: selection, loyalty, risk, and defection.
Retail banking, in particular, has seen both success and failure because of customer trust. Big and large regional banks are particularly vulnerable. Since the financial meltdown of 2008, many have been singled out for charging excessive fees (often, as well, a surrogate for service-related deficiency issues). And, in an industry that had relied on customer stability (or at least inertia), large retail banks have experienced churn rates of 10%, or more (per J.D. Power annual studies). Since the U.S. financial meltdown of 2008, the rate of big multi-regional and large regional bank defection has been increasing while, at the same time, less exposed small banks and credit unions have seen rates of customer acquisition go up and defection rates decline.
In banking, customers identify elements of confidence and reputation as important in their choice process and also in their continuing relationship:
1. feeling like they belong,
2. having the bank ‘go the extra mile’ for them,
3. providing consistent and reliable service,
4. being strong and stable, and
5. exhibiting personalization
If banks cannot learn to get the basics of emotional trust right, or reinvent themselves to do so, they will experience the pain of ever-increasing defection rates.
It should be noted that these findings on the impact of image and reputation and their relationship to customer behavior are not at all unique to the financial services industry. In truth, virtually every company in every b2b and b2c sector is vulnerable to reputation attack and resulting business impact. As noted by Dr. Leslie Gaines-Ross, Chief Reputation Strategist for international public relations firm Weber Shandwick:
“There is an increasingly critical connection between brand and service promise, corporate and brand reputation trustworthiness, the transactional experience (as delivered by people, processes, communications and culture), and downstream customer behavior. Any small ripple in reputation change (such as through a product-related issue, online rumor or executive miscue), brand performance or customer service can have a tsunami-like effect on business outcomes which may last indefinitely. This is especially true now because of the permanency provided by social media.”
So, in the interest of optimizing relationships and delivering positive results to marketing, operational, and communication efforts, the financial services industry would be well-served to treat ‘trust’, ‘trustability’, and ‘trustworthiness’ as a critical core emotional driver of downstream customer behavior, and to assure that confidence, represented by a positive image and reputation, is a major focus.