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The past three years have been eye-opening for business owners, to say the least. Some businesses had to close, some survived and some thrived. Even more, the business environment has changed so quickly that businesses that were thriving during one period may be struggling not even a few months later.
One thing is for sure — every business was impacted by the pandemic, supply chain issues, staffing shortages, ongoing threat of a recession, and more. The business community is resilient, and as long as leaders are keen to adapt and learn, they can benefit from applying the lessons learned in the pandemic era to emerge as an even stronger business for the remainder of the decade.
We discuss four of the lessons in a four-post series. This post covers the second post of trust.
Lesson 2 – Don’t Take Trust for Granted:
One post-pandemic lesson to take heed of is how quickly trust can be eroded and the significant costs of losing this trust. We’ve seen this trend take hold across society in many detrimental ways. From a government perspective, this has made it difficult to communicate policy effectively. From a business perspective, organizations that have experienced a loss in trust have had a very difficult time recovering no matter what changes they make. In short, once trust is lost, it’s very difficult to regain.
A strong example of lost trust is still underway in the social media industry. Many prominent companies (most notably Facebook) have pursued profits first for the better part of the last five years, all while ignoring the effects their platforms have on individual and societal wellbeing. The end result is that this has put user safety, wellbeing, and overall customer experience on the backburner in favor of extracting as much ad revenue as possible regardless of the costs. While the profitable years were very profitable, selling out your own customers was a long-term recipe for disaster, and the costs are mounting. Due to the erosion of trust, there has been increased governmental regulation, reduced ad revenue, falling active user counts, and increased competition from other players in the industry that feel they can do better.
This story is not unique, for almost every mature business, there is an incentive to maximize profits. But what is not often discussed is that profit maximization often comes at the cost of maintaining long-term safety and trust from loyal customers. You often get short term incentives (profit maximization) that are in direct opposition to long term incentives (maintain a loyal base of repeat customers). The rise of Japanese auto makers in the 1980s and 1990s is a great example of how trust can be gained and used as a means to increase market share over firms that abandoned valuing user quality and safety in order to maximize short term profits.
How To Build Trust Over the Long Term:
- Be transparent, even during the bad times: Many organizations preach transparency, yet only follow through on this when there is nothing bad to discuss. The difficult part about being transparent is that you can actually erode trust even more when you talk the talk, but fail to follow through when addressing mistakes and failed ventures. While it’s preferable to avoid being put into embarrassing situations in the first place, it’s really important to stay consistent with one’s values and avoid trying to cover up mistakes. In general, people are far more forgiving than most realize for poor decisions and mistakes. But when there is an intent to deceive or be dishonest, there will be very little that can be done to ever win back broken trust.
- Treat your customers and employees as partners, not objects to extract value from: When looking at generational tendencies, one common thread for younger generations is that they value being treated as individuals, not as a “number.” This lesson is important to consider when it comes to building trust since the act of customizing something shows a much deeper commitment to a relationship than a simple commoditized transaction. This builds trust and encourages loyalty. Overall, emphasizing little details that show you care and value others can generate big returns in customer trust and loyalty.
Similarly, treating your customers and employees as numbers to extract value from will quickly cause resentment. Hidden fees, poor service, and generally extractive practices will quickly incentivize your most loyal customers to switch to a competitor who treats them better.
- Improve how you set expectations, bad and good: While it’s important to have lofty goals and to dream big, there should be some lessons learned from failures of organizations who over-promised in an attempt to win customers only to under-deliver after reality sets in. This can be a delicate balance since making big predictions and announcements can be effective in getting people excited about a new product, service, or venture. But those promises need to be grounded in reality since a failure to follow through causes trust to break down significantly.
- Learning to set expectations can also be extremely beneficial when it comes to dampening anything negative that may be coming that customers may not expect. Remember that people are forgiving and understanding, but not when they feel there is dishonesty involved. If there is potential bad news coming down the line, consider communicating this to get out in advance of the news so it doesn’t catch your customers and employees by surprise. Just remember that the cover-up is often worse than the crime, so instead of trying to hide bad news, it’s often best to be open and honest about mistakes and problems that occur.
- Be consistent, avoid shocking changes: People have been experiencing whiplash effects in society for the better part of three years now. While some of these whiplash effects (notably due to the pandemic and subsequent economic fallout) were unavoidable, it’s important to recognize that people are tired of extreme shifts and changes. Change by its very nature causes stress, which most people try to avoid at all costs. While it’s not always the most exciting thing to be steady and predictable, it certainly helps to build lasting trust and loyalty. Overall, this isn’t to say that organizations shouldn’t take risks and try new ideas. But keep customers and employees in mind before making wholesale changes. Consider keeping legacy policies and products that have a lot of loyalty while simultaneously testing new offerings side by side.
Trust Takeaways & Next Lesson
Overall, losing the trust of loyal customers, clients, and employees has been a common theme of failed organizations both large and small going back as long as anyone can remember. Customer and employee trust is often exploited to maximize short-term returns, but this causes long-term damage since trust can be lost far quicker than it can be gained. Cultivating an environment of trust can be a huge long-term advantage for business owners, especially if competition has ignored how important this component is to their success.