Claire Labrum of Strictly Financial takes a look at how the models of trust that are so important to the image of big brands are breaking down, and at how they need to rise to the challenge this represents.
Trust is fundamental to human interactions – we want to trust the people with whom we are dealing to deliver on the promise. Consumers are unlikely to buy a product or service from a company that they do not trust.
Over time the model of trust has changed as our society has changed. Originally local, the trust construct shifted to an institutional model during the 20th century, as the world industrialised and close-knit communities became rarer. Instead of trusting our family or neighbours, we became willing to trust that big companies would create rules and enforce compliance, so that we would be safe, and the products and services we were buying from them would be reliable. Institutional trust is characterised by a system that is large, centralised and standardised, and where trust is top down. During this time, interpersonal trust was still limited to a relatively small circle of immediate family and friends.
However, two things are happening. Institutional trust is breaking down in the wake of some very high profile scandals – the financial services crisis, the Panama papers, Volkswagen, FIFA and members of Parliament, to name just a few. Public confidence in major institutions has slumped.
At the same time, the digital world is enabling greater personal connectivity, freed from the constraints of time and distance and backed with ‘digital trust tools’ (for example, performance ratings on sites such as eBay, trip adviser, Airbnb) which are beginning to be powered by blockchain technology.
In effect a decentralised database, blockchain stores transaction history within a network, eventually creating a registry of different types of ‘assets’ (real world objects, reputational assets, etc.), and helps lower uncertainty about the people that we may want to do business with. In brief, it does this by creating a record of human transactions – physical, digital and personal. It directly addresses trust issues through:
- Allowing us to know who we are dealing with: Combining information about an individual from all sources (eBay, Facebook, LinkedIn, etc.) to create a single, 360 degree profile of an individual, and importantly one which it is almost impossible to tamper with
- Giving us transparency of transactions: All parties in a supply chain (buyer, seller, manufacturer, distributor, etc.) are able to monitor the whole chain and to track objects throughout the process (even when that part of the process is outside their direct responsibility).
- Ensuring recourse if things go wrong: Code is written within the blockchain that creates binding contracts between individuals and seeks to guarantee that those contracts will be met without the need for third party intervention
Blockchain technology is highly complex and in its infancy (the links at the bottom of the next page explain and explore it in much greater detail than we can in this article), but it potentially represents a real shift in the way in which we do things because it directly challenges the role of institutions. There is no longer any need for the more formal trust systems represented by governments/banks and corporations to be in place. Instead we have the ‘trust’ tools in place to allow us to collaborate at the individual level.
This new model of trust starts at the bottom rather than the top – individuals are in effect building their own brands and trust track records through their social media and internet activity – others can view, review and make a judgement as to how trustworthy that person is. ‘Stranger danger’ becomes much less of a risk in this environment.
Whilst the technology still has a long way to go, things are already moving quickly – we are already seeing a shift in trust from relatively low stake transactions (for example the sale of a second-hand jumper or camera) to higher stake items – staying in a stranger’s home or car sharing.
What are the implications for brands?
Traditionally brands have created trust through conveying their values and attributes to customers, and through them the promise of current and future reliability. But the growth in this new type of digital trust is potentially game changing for brands – presenting both challenges and opportunities. How trust is built, lost and repaired is being turned upside down, and brands need to manage their customers’ trust (and their brand equity) in a new way. People no longer need the reassurance of dealing with a big organisation – rather they are increasingly prepared to trust strangers, and their opinions on a brand, product or experience, based on their digital credibility.
How do brands need to behave in this new environment?
Fundamentally brands need to open themselves to more scrutiny and adopt a more transparent approach – as can already be seen in how some companies are starting to react to poor social media reports. These are very public – both the original complaint and the brand’s response to it – and can have a considerable impact on brand perception.
Brands also need to be much more public about their successes (and failures) – and this too is starting to happen. For example, many sector regulators are beginning to publish the enforcement action they are taking and the fines imposed. This includes the FCA, but also the Fraud Office, ICO, Ofcom etc. How brands with a damaged image (e.g. banks in general, or more recently Samsung in particular) are seen to be dealing with mistakes – including how prepared they are to ‘own up’ to them – can have a long term influence on how trusted those brands are in future. And the new environment gives them very little time to prepare their response and get it right.
There is also an opportunity here to ‘join the revolution’ – for example in the US Amazon has launched a trial of Flex, which is a crowdsourced delivery service that relies on ordinary people to bring packages to you. These people are not employed by the company, and a trust web has been created between Amazon, customer and deliverer.
Digital trust is a developing landscape, and we will learn as we go along – but it is one which we need to be aware of and consider when we are developing and researching brand strategies for this new world.
For the full article and list of sources, visit www.strictlyfinancial.com