Trust: A Pathway to Customer Loyalty

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“In God we trust, all others pay cash” was a very popular sign in many stores in the pre-credit card days. Perhaps, this attitude toward customers was acceptable in the era when demand for most goods and services was greater than supply. However, today the shoe is on the other foot. Customers are in control and have an abundance of choices available in most markets. The chief cause of failure is not lack of inventory but lack of customers. Companies become extremely vulnerable when they lose trust. Customers are telling them, “In God we trust, and if you don’t earn our trust we are gone.”

In “It’s a Wonderful Life”, George Bailey clearly understood the importance of trust and used it to save the Savings and Loan. When depositors stormed in demanding all their money, he told them, “You’re thinking of this place all wrong. As if I had the money back in a safe. The money’s not here. Your money’s in Joe’s house…right next to yours. … Why, you’re lending them the money to build, and then, they’re going to pay it back to you as best they can. Now what are you going to do? Foreclose on them?… Now, we can get through this thing all right. We’ve got to stick together, though. We’ve got to have faith in each other.”

The importance of trust is also evident from the recent GfK Loyalty BenchmarkPlus survey of retail banking customers. Among customers who strongly agree that their bank is a bank that they trust, 73% have actually told others good things about their bank while only 5% told others about problems they have had. On the other hand, customers who strongly disagree that their bank is trustworthy did the opposite—only 4% provided positive word of mouth and 76% negative word of mouth. Benchmark surveys in other industries provide similar results.

How to earn trust

While trust is the cornerstone of strong, sustainable customer relationships, trust is an intangible and often elusive entity. Earning and keeping trust requires a lot of work and a deliberate customer-centric strategy. Such a strategy requires excellence in three areas:

  1. Delivering on promises
  2. Showing customers respect
  3. Providing memorable experiences

Deliver on Promises

The first rule of trust is “always keep your promises”. You must provide products and services that meet customers’ basic, must-have needs. This requires a disciplined knowledge of your customers’ requirements and the implicit promises they associate with your products. When customer expectations are met, customers are satisfied and when you fall short, customers feel betrayed and trust suffers.

No one is perfect, so product failures and service lapses are bound to happen. When these happen it is important to have customers forgive you. The best way to achieve forgiveness is to take responsibility for mistakes and let customers know that you have taken steps to prevent them from happening again. Doing this will not only earn forgiveness but also trust.

Respect Customers

Customers are not commodities but valuable assets necessary for the long term success of any business. As such, you need to make every effort to show your appreciation and make them feel valued.

Stew Leonard’s is famous for its customer service rules that are posted in each store: “Rule 1: The customer is always right. Rule #2: If the customer is wrong, re-read rule #1.” This is not giving away the store. Rather, it shows respect and empathy for customers’ personal situations and perspectives.

You also need to know customer’s history with your company and use this information to proactively offer solutions and rewards that matter. Connecting with customers by providing valuable information and special offers builds emotional connections and ultimately strong trust.

Provide Memorable Experiences

In addition to living up to your promises and treating customers with respect, it is necessary to delight customers with positive experiences that are extraordinary and unforgettable. Such experiences are needed to foster expectations that you are going to live up to your promises and provide value in the future. In the scene mentioned above, George Bailey had to jog memories, saying, “Here, Ed. You know, you remember last year when things weren’t going so well, and you couldn’t make your payments. You didn’t lose your house, did you? Do you think Potter would have let you keep it?”

Successful companies rely on memorable experiences to create long-term positive differentiation for their products and services. Such experiences will not only create positive word of mouth but also immunize your customers from competitive offerings. In essence they solidify customer trust.

* * *

The path to true customer loyalty requires the establishment and cultivation of trust. Trust is developed and nurtured by consistently meeting customer needs, demonstrating respect, and creating memorable experiences.

Click here to download a .pdf of this article.

Trust: A Pathway to Customer Loyalty

“In God we trust, all others pay cash” was a very popular sign in many stores in the pre-credit card days. Perhaps, this attitude toward customers was acceptable in the era when demand for most goods and services was greater than supply. However, today the shoe is on the other foot. Customers are in control and have an abundance of choices available in most markets. The chief cause of failure is not lack of inventory but lack of customers. Companies become extremely vulnerable when they lose trust. Customers are telling them, “In God we trust, and if you don’t earn our trust we are gone.”

In “It’s a Wonderful Life”, George Bailey clearly understood the importance of trust and used it to save the Savings and Loan. When depositors stormed in demanding all their money, he told them, “You’re thinking of this place all wrong. As if I had the money back in a safe. The money’s not here. Your money’s in Joe’s house…right next to yours. … Why, you’re lending them the money to build, and then, they’re going to pay it back to you as best they can. Now what are you going to do? Foreclose on them?… Now, we can get through this thing all right. We’ve got to stick together, though. We’ve got to have faith in each other.”

The importance of trust is also evident from the recent GfK Loyalty BenchmarkPlus survey of retail banking customers. Among customers who strongly agree that their bank is a bank that they trust, 73% have actually told others good things about their bank while only 5% told others about problems they have had. On the other hand, customers who strongly disagree that their bank is trustworthy did the opposite—only 4% provided positive word of mouth and 76% negative word of mouth. Benchmark surveys in other industries provide similar results.

How to earn trust

While trust is the cornerstone of strong, sustainable customer relationships, trust is an intangible and often elusive entity. Earning and keeping trust requires a lot of work and a deliberate customer-centric strategy. Such a strategy requires excellence in three areas:

  1. Delivering on promises
  2. Showing customers respect
  3. Providing memorable experiences

Deliver on Promises

The first rule of trust is “always keep your promises”. You must provide products and services that meet customers’ basic, must-have needs. This requires a disciplined knowledge of your customers’ requirements and the implicit promises they associate with your products. When customer expectations are met, customers are satisfied and when you fall short, customers feel betrayed and trust suffers.

No one is perfect, so product failures and service lapses are bound to happen. When these happen it is important to have customers forgive you. The best way to achieve forgiveness is to take responsibility for mistakes and let customers know that you have taken steps to prevent them from happening again. Doing this will not only earn forgiveness but also trust.

Respect Customers

Customers are not commodities but valuable assets necessary for the long term success of any business. As such, you need to make every effort to show your appreciation and make them feel valued.

Stew Leonard’s is famous for its customer service rules that are posted in each store: “Rule 1: The customer is always right. Rule #2: If the customer is wrong, re-read rule #1.” This is not giving away the store. Rather, it shows respect and empathy for customers’ personal situations and perspectives.

You also need to know customer’s history with your company and use this information to proactively offer solutions and rewards that matter. Connecting with customers by providing valuable information and special offers builds emotional connections and ultimately strong trust.

Provide Memorable Experiences

In addition to living up to your promises and treating customers with respect, it is necessary to delight customers with positive experiences that are extraordinary and unforgettable. Such experiences are needed to foster expectations that you are going to live up to your promises and provide value in the future. In the scene mentioned above, George Bailey had to jog memories, saying, “Here, Ed. You know, you remember last year when things weren’t going so well, and you couldn’t make your payments. You didn’t lose your house, did you? Do you think Potter would have let you keep it?”

Successful companies rely on memorable experiences to create long-term positive differentiation for their products and services. Such experiences will not only create positive word of mouth but also immunize your customers from competitive offerings. In essence they solidify customer trust.

* * *

The path to true customer loyalty requires the establishment and cultivation of trust. Trust is developed and nurtured by consistently meeting customer needs, demonstrating respect, and creating memorable experiences.

Click here to download a .pdf of this article.

Republished with author's permission from original post.

Ken Powaga
Ken Powaga is Senior Vice President, GfK Customer Loyalty, with more than 25 years experience in the research industry including client side experience. His sales and account management experience includes establishing long running customer satisfaction programs for Coca-Cola, Ford Trucks, HP, US Bank, and others. Ken also worked extensively with clients in the high-tech, retail, and financial service industries, and was involved in development, global harmonization, training and marketing of many of GfK's products including GfK LoyaltyPlus SM, GfK KDA+ SM, BPISM, BVT® and others.

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