As we see a shift towards greater digital relationships between customers and organisations, the risks associated with customer relationships are changing and no risk is more front-of-mind at the current time than data security.  Sony recently lost the personal data of some 77million accounts from their PlayStation Network including names, email addresses, birth dates, log in details, passwords and possibly credit card details.  The organisation behind the breach is yet to be confirmed but what is beyond doubt is that Sony have a long road ahead of them when it comes to rebuilding consumer trust (perhaps shown by the significant loss they reported this week).

I’m not the only one who recognises the challenge they face – the President of Sony Computer Entertainment, Kazuo Hirai, himself publicly stated, “I see my work as first making sure Sony can regain the trust from our users” (as quoted in the Guardian on 1st May).  Since announcing the breach, Sony’s PR machine has kicked into full effect with Hirai and his executives issuing a formal apology alongside a compensation plan including initiatives such as complementary downloads, 30 days of free service and enrolment into identity protection programmes. 

So whilst Sony continue to re-build their damaged reputation and other firms the world over let out a collective sigh of relief that it didn’t happen to them, I’d like to take a few minutes to consider a definition of customer trust; reflect on how customer trust is impacted by the digital environment and provide some tips on how organisations can proactively build customer trust.

What is customer trust?

Like many theoretical concepts, finding a single definition of customer trust can be difficult but the paper, ‘The Impact of Satisfaction, Trust, and Relationship Value on Commitment:  Theoretical Considerations and Empirical Results’, provides a good overview:  ‘Common to all different definitions used to conceptualize trust there is the notion that trust constitutes the belief, attitude or expectation of a party that the relationship partner’s behavior or its outcomes will be for the trusting party’s own benefit’.

Why is customer trust important, especially in the digital world?

In the paper mentioned above, the three academics proved some important points about customer trust generally; that the more the customer trusts a supplier, the higher the customer’s commitment to the relationship with this supplier will be; and the more the customer trusts a supplier, the higher he or she values the business relationship with this supplier.

In simple terms, the more trust the customer has in an organisation, the more likely they are to engage in repeat business and the less likely they are to walk away in favour of a competitor.  Unfortunately for organisations today, a separate study has proven that there’s been a ‘long-term, global decline in the level of trust organisations enjoy from their customers’ and I suggest the growth of digital media has played a significant role in this:

  • The internet, social media and mobile services have all improved consumer access to information and services from a wide variety of competing organisations.  Faced with more choice than ever, customers move between firms more rapidly and don’t allow trusting relationships to develop
  • With the introduction of more digital channels, face-to-face contact with customers is less common (and for some firms, completely unavailable) which can make trust harder to build (e.g. in conveying authenticity)
  • As digital channels have empowered the consumer and amplified their voice, one person can digitally share an indiscretion or negative experience and impact trust levels for thousands of existing and potential customers.

How organisations can build trusting customer relationships

Considering how the growth of digital can undermine customer trust, what can organisations do to counter this? Beyond acting with integrity, honesty and transparency in all dealings with customers and third parties, what other steps can help establish a high level of consumer trust?

  • Know yourself – If you’re not clear on what your own offering is, how it compares to your competitors or why customers should choose you, how will anyone else be?  Organisations need a clear vision about their identity, their products, their aims and USP to be able to position themselves as an organisation worth trusting. 
  • Know your customers – Creating meaningful, trusting relationships without customer insight is an impossible challenge.  Having a relevant segmentation model with clearly defined customer journeys  will give organisations the insight they need to make the right decisions – be they on products, communications, promotions or prices.  Ultimately this will lead to better financial outcomes as firms convey to their customers that they are acting for their benefit
  • Know the influencers – Peer-to-peer influence is growing and those organisations that harness this can stop the decline of customer trust.  Firms should look to create advocates and consider using existing communities to build trust on their behalf.  Likely to be cheaper than the official ad campaign and arguably more effective (due to the higher degree of personalisation), winning round key influencers is becoming increasingly important.  ‘The F-Factor’ and ‘Influencer Marketing – Who gets to open your wallet’ provide more detail on this topic.

My conclusion is that customer trust is important for firms, increasingly complex to establish with a growing digital environment but not impossible to achieve.  Learning the lessons from Sony and employing the philosophy of ‘there for the grace of God…’ I’d recommend looking at your current levels of customer trust today, so you don’t regret it tomorrow.