Dictionary.com defines trust as the "reliance on the integrity, strength, ability, surety, of a person or thing." While the definition might seem a bit nebulous, corporations understand the value of building up a sense of trust in their customers. "It's quite simple: Consumers buy more products from companies that they trust," says Jake Freivald, vice president of corporate marketing at Information Builders Inc. (IBI). So the challenge for enterprises becomes finding ways to measure trust and then putting mechanisms in place to increase it.
For years, corporations have conducted surveys to determine how much trust consumers have in the business, its leaders, and its products and services. But this process can be time-consuming and limited because it only provides firms with a picture of customers' feelings at a specific moment. In today's volatile, rapidly changing, viral, social media-driven world, companies desire ongoing, up-to-date measurements.
But finding such measurements can be difficult, because firms often broaden their definition and therefore the corresponding measurements of trust. "Trust can be equated with customer loyalty. The components of a Loyalty Index are good metrics—the willingness to recommend a product/service, likelihood to repurchase, and overall satisfaction," notes Ivar Kroghurd, co-founder and lead strategist at QuestBack, an enterprise feedback management and social CRM solution supplier. "These metrics provide a proxy for trust because [the more loyal they are, the more likely] consumers are to be lifetime customers."
Counting Facebook Likes
Companies now have more ways to garner such measurements. The Internet and social media especially have provided enterprises with more ways to engage with customers and more items to measure. Businesses often start with simple items, such as Facebook likes; however, the science of interpreting social media interactions is just beginning to take shape. ";The volume of data available and its heterogeneous nature make analysis challenging," Kroghurd states.
Corporations are in various stages of trying to sift through all this information. At the very least, businesses have woken up and are trying to do something with social media interactions. "Few companies still ignore social media," notes Ben Boyd, global chair of corporate practice and lead trust spokesperson at Edelman, the world's largest public relations firm. "Most understand that they need to use it to engage with customers." Many businesses start by tracking what is said about them on social media sites, then trying to funnel that data into the contact center as well as the rest of the corporation, and ultimately turning it into actionable information.
Businesses need to be proactive in this area because trust has fallen on hard times. The 13th annual Edelman Trust Barometer, which surveyed more than 31,000 respondents in 26 markets worldwide, found that about one out of every two consumers has little to no trust in corporations. And the more industrialized the country, the lower the trust measurements (see sidebar).
The Changing Corporate Icon
One recent change is how corporations exemplify trust. In the past, businesses trotted out top executives, such as Lee Iacocca from Chrysler Group and Dave Thomas from Wendy's International, who acted as the face of their firms. Today, that would backfire. Edelman found that the public's trust in managers has fallen far below that of the institutions themselves. Globally, trust in business to do what is right hovers at the 50 percent mark, while trust in business leaders to tell the truth is at 18 percent, a 32-point gap. That disconnect is wider than the gap between government and government officials, which is at 28 points. The trust gap between business and business leaders is among the largest (35 points) in the United States and China, the world's top two economic powers.
So, why do executives have such a tarnished reputation? "People feel that influence is tied up in a small group of people who do not play by the rules and do not do what is right," says J. Walker Smith, executive chairman of The Futures Company, a global research consultancy. Not only do consumers lack trust, but many are also mad as hell at corporations: "About twenty-eight percent of consumers are enraged about how they are being treated," Smith says. "Their lack of trust has been colored by a...sense of betrayal."
A long list of high-profile top management scandals that have occurred in the past few years seems to have scarred consumers. For instance, repercussions from the banking scandal of 2008 still linger. Banks and financial services are the least trusted industry sector: In fact, trust in banks globally is 11 points lower than it was in 2008, according to Edelman.
Scandals Taint Financial Institutions
A couple of factors are fueling the negative numbers. The Edelman Barometer found that the lack of trust is driven by the perception of unethical behavior, and, unfortunately, scandals continue to emerge. In 2012, investigators in Europe, the U.S., Canada, and Asia found that bankers knowingly submitted false data for the calculation of the London Interbank Offered Rate, an interest rate benchmark that influences the value of hundreds of trillions of dollars in financial contracts around the world, including floating-rate mortgages, corporate loans and interest rate swaps. The ruses were committed to hide their institutions' financial problems or to boost their traders' profits. The Edelman survey found that more than one in two people globally (56 percent) were aware of the financial services scandals (78 percent in the United Kingdom, where Barclays paid a $450 million fine), with 59 percent saying the cause of those scandals was behavior, specifically corruption, poor corporate culture, or poor leadership.
The banking industry is not alone. There have been a bevy of scandals involving top CEOs in other markets as well. For instance, Rajat Gupta, former global managing director at McKinsey & Co., was involved in insider trading. Cyclist Lance Armstrong, former chairman of the Livestrong Foundation, went on Oprah and confessed to using performance-enhancing drugs for the bulk of his illustrious but now tainted career. "We're clearly experiencing a crisis in leadership," said Richard Edelman, president and CEO of Edelman, in a public statement.
Low rankings in other industries stemmed from other high-profile calamities. Trust in the media in the U.K. dropped a dramatic 14 points after the release of the Leveson Inquiry—an investigation into the role of the press in a major phone-hacking scandal—making the press the nation's least trusted institution. In the U.S., after the poor handling of the fiscal cliff issue, trust in government dropped eight points among the general public, making it the nation's least trusted institution.