Monday, November 16, 2015

Trust - The Value Accelerator

I was reviewing the successful and unsuccessful business ventures I have been involved with over the last few years. One of the things that struck me was the element of trust that was a necessary ingredient for successful business.  Where trust was present up and down the value chain, the business was successful for all parties.  Whenever trust was missing or broke down, at any point, the business dropped off or never materialized.

Let me give you a few examples.   One of my newer clients came about because a friend from many years, who is in a C-level position at a large organization, recognized a need in his organization and called me.  Within a few weeks I was onsite providing assistance with a pressing problem and the solution has had an immediate positive impact in their operation.  In another case, a long standing client had an immediate need due to personnel changes.  A few phone calls and my work with that client increased significantly.  The good news for the customer was that there was no interruption in their ability to offer their products and services. Trust created successful business relations in both cases.

By the same token, I recently lost an account when a new person came on board at the client.  I did not have a relationship with the new individual.  After several misunderstood emails and a bad teleconference, I lost the client.  (The fault was primarily on my part – I assumed a relationship existed because of my previous work when it didn’t.)  Another example was a start-up client that I have worked with for years.  The company is still trying to land their first big account.  One of the difficulties is that the product/service they have developed integrates aspects of sales, operations, marketing, and finance into a single system.  Although they are often able to find an advocate in one of those departments within a possible customer, they haven’t been able to find an advocate in all the departments.  The typical organizational silos create a barrier between departments.  The result is they have not been able to gain the trust from all departments and one of the departments will veto the project.  (Interestingly, it has been different departments in different companies.) Lack of trust destroyed business opportunities.

The point to be noted is that where trust exists, business transactions were accelerated and value was created for both the customer and seller.  Where there is lack of trust, transactions are stalled.

Trust Enablers

So how do we build trust in our business relationships?  How do we especially build trust in relationships with customers?  There are three trust enablers.  When these three are strong, trust will grow.  When one is missing, there will be an element of mistrust on the part of the customer that often slows the transactions.  When two are missing, you can forget about doing business with that customer.

  • The first enabler is the efficacy of the product or service.  Does it work?  Does it work consistently? Does it work in the manner that the customer expected it to work?  This is often referred to as the product value.  Customers seek out products or services because of this value.  However, this type of value is seldom a competitive advantage.  There are other potential sellers who can offer a similar product or service.  The absence of efficacy will destroy trust.  If the product does not work the way the customer thinks it should work, the customer will likely feel cheated.  So to enable trust and create value, the product/service must work.

  • The second enabler is the reputation of the company, often referred to as brand value.  In the mind of the customer, some brands are desirable, others are to be avoided.  And in many cases, they have no opinion about the brand, until they check references.  A company’s reputation can open customer’s doors or close customer’s doors.  This is so serious that there are entities like Better Business Bureaus who exist to report on the reputation of companies.  My most recent two clients found me, rather than me finding them.  They contacted me because of my products/services and reputation.  Those two items were trust enablers.  They demonstrated value to the customer.  But to actually close the deal, we needed the third enabler.

  • The third enabler is relationship.  As much as we might wish that businesses make decisions strictly upon the cost versus benefit of a product/service or the historical experience with a supplier, the reality is that relationships matter.  It is still people who are making the decisions.  That is why you do business with your brother-in-law or college roommate; even though they might not have the best product on the market.  Most customers want to look a potential seller in the eye or speak with them over the phone.  People like to feel special.  They appreciate it when a supplier greets them by name or shares a common interest.  It creates a special bond that builds trust.  Relationships are often initially based upon first impressions.  Everyone carries around in their head stereotypes or caricatures of people.  These could be based upon age, gender, race, religion, origin or any of a hundred other factors.  These will immediately create bonds of trust or barriers of mistrust with individual they just met.  If an individual fits a positive stereotype, a relationship bond can often be quickly established.  Negative stereotypes can be overcome, but that will take time to develop a personal relationship.

The Trust Chain

So let’s recap.  We create value for our customers and companies when a transaction occurs.  A transaction is much more likely to occur if the customer trusts the seller.  In order to establish trust, a seller needs a product/service that works, a positive business reputation, and a relationship bond with individuals within the customer’s organization.  If you are a seller wanting to accelerate your business and create value for customers and your company, you must focus on the three trust enablers.         


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