Photo: REI
Are retailers and consumers misaligned on trust?
Businesses believe they are much more trusted than they actually are by both consumers and employees because executives are misreading what moves the needle on trust, according to PwC’s “2022 Consumer Intelligence Series Survey on Trust.
The study finds business leaders focused on social issues like ESG (environmental, social and governance), with 50 percent of executives strongly agreeing that their companies invest in and stand up for social and racial equity. By comparison, only 27 percent of consumers believe companies that invest in social and racial equity are more trustworthy.
Other areas where execs are misaligned with consumers and employees around trust:
- Forty-five percent of businesses believe new climate disclosures will help build trust with customers versus 23 percent of consumers agreeing. Forty-seven percent of businesses believe climate risk disclosures build trust with employees versus 33 percent of employees agreeing.
- Forty-five percent of executives are focusing on transparent communications to build trust with both stakeholder groups. Only 13 percent of consumers and 19 percent of employees rank this as a priority.
The study found “day-to-day realities” are demanding more attention in determining trust in corporations.
Asking consumers what builds corporate trust, the top three answers were: affordable products/services, 34 percent; treats employees well, 33 percent; and variety of high-quality products/services. Good corporate citizenship ranked sixth, at 20 percent.
Asking employees what builds corporate trust, the top three answers were: treats employees well, 47 percent; provides a variety of high-quality products/services, 22 percent; and leadership admits to mistakes quickly and honestly, 21 percent. Good corporate citizenship was fourth, at 20 percent.
Overall, 87 percent of business executives think consumers have a high level of trust in their businesses versus only 30 percent of consumers that say they do. Eight-four percent of business leaders say employee trust is high, compared to 69 percent of employees.
While several studies in recent years have found consumers favoring companies that are committed to sustainability and take public stances on social issues, an August 2021 YouGov study found a majority of global consumers (62 percent) prioritize the price of the product or service when considering a retailer purchase, with only 25 percent prioritizing the retailer’s values.
- Trust: the new currency for business – PwC
- How many consumers prioritize brand values when picking tech products? – YouGov
- /amo’s Annual Global Corporate Values Study Shows Increased Emphasis on Innovation, Stakeholders and the Environment – /amo/Business Wire
- 80 Percent Of Gen Z Adults Want Companies To Take a Stand – Mitechnews
- New Meyocks survey shows consumers want brands to mentor them – The Meyocks Group
Discussion Questions
DISCUSSION QUESTIONS: What do you think builds trust in companies among consumers and employees? Where does corporate social responsibility factor in building trust, and is it often overrated?
Poll
Loading …BrainTrust
Lucille DeHart
Principal, MKT Marketing Services/Columbus Consulting
Paula Rosenblum
Co-founder, RSR Research
I think executives should spend less time relying on studies and spend more time on the sales floor with shoppers and associates. If you want to know what your customers and employees really want observe them in action then ask them yourself.
Trust is multi-dimensional. Most retailers have basic trust in that consumers trust them to provide the products and services they promise with good levels of quality and reliability. However when it comes to more complex issues – like ESG or social justice – consumers are much more skeptical. This is not helped by the fact that what retailers and brands say often does not match what they do. The fact executives are so out of touch with the reality on trust shows they need to spend a lot more time at the “coal face” of retail.
There is a clear paradigm shift in retail, where price-conscious consumers are now evaluating and aligning with companies with similar core values and beliefs. We have witnessed the emergence of the connected consumer and now, even more importantly, the conscious consumer is becoming more of the norm.
Retailers and brands must establish a relationship of trust and transparency with consumers, who are now very interested in companies’ stances on social, political, sustainability, and ESG initiatives. The conscious consumer is now very mindful of their environmental footprint and carbon impact. So, companies must be fully transparent about their products’ sourcing, procurement, manufacturing, supply chain, and other operational aspects. Trust and transparency matter more than ever.
The next emerging generation of consumers, Gen Z, will seek brands that not only value the companies that are open and transparent but will also notice how the employees are treated. An outstanding customer experience requires an empowered, incentivized, and motivated workforce. How companies treat their employees provides a good indication of their core values.
Trust is part of authenticity. If companies operate from their brand core instead of from research insights, they will be respected and trusted. Consumers and employees construe the embracing of environmental and social issues as important, but not necessarily as more important than why businesses exist: to provide consistent, reliable products and services of value to their market.
I would be interested in chipping away a bit more on the consumer top requirements for trust – affordable products, treats employees well, quality products. The first and third seem to be contradictory to the overall perception of consumer demands for social responsibility, especially as it pertains to sustainability. But I suspect if you dug into those high-level concepts, you’d find that demands for sustainability are getting wrapped into definitions of “affordable” and “quality.”
And companies should pay close attention to that second one – treats employees well. Will the day come that your Glassdoor reviews are more important than product reviews? Probably not – but it might become a real consideration in where consumers send their dollars.
I’m surprised “good customer service” didn’t pop to the top. Why? Because it has gotten so bloody awful. I’m a technologist (or was) by trade, and I’m certainly a technology supporter. But the human touch is nowhere. When you learn that the only way to get a corporation’s attention is to Twitter-shame them, that’s when you find out just how bad things are. Here are some examples:
Maybe these companies don’t treat their employees well, but they sure aren’t treating their customers well, either. Heads in the sand, they continue their cost-cutting measures. This is not the road to success. Success is Chewy.com. Success is Walmart. Success is not having to Twitter-shame a company into doing what they should have been doing in the first place. Technology is a tool. It’s not the only answer.
None of this is subtle. It’s embarrassing, actually.
Corporate and social responsibility are great, but trust comes from how you treat employees/peers. Of course, you could write a book on that (many have) but I’ve found it’s honesty, fast action (promotions, dismissals, socializing issues, etc.) and an “open door” policy that goes a long way towards mutual respect. You have to be sincerely empathetic at all times, you just can’t fake that or any of the above. And oh, by the way, if you’re truly concerned about issues and take actions towards them, that’s just icing on the cake.
Consistent pricing, quality product, ethical sourcing, and a living wage are the metrics I look for, and I believe a majority of consumers and employees think in a similar way. But everyone also knows that the PR spin cycle never ends, and ESG is just another buzzword (or buzz-acronym) until employees and customers see actions and results. As for the gap in what corporate thinks employees and customers think and what they actually think, it’s called “illusory superiority.” Yes, I had to Google it. It’s why everyone thinks they’re above average.
It seems like more and more businesses and brands are putting themselves in a position of over promising on their brand promise. And therefore putting themselves in a position to disappoint. Which creates a trust gap. A simple brand promise focuses on attitude and aesthetic, quality and value. A more complicated brand promise treads into social and political issues. Social and political issues will pretty quickly start to alienate some people who would otherwise be supporters of the brand. Brands and businesses need to remember that there is an economic reason for their existence. That economic reason has to be delivered on first and foremost in order for the business to take on a role in any social or political arenas.
While companies have an obligation to society to address longer term issues like equality and sustainability, that won’t build trust today. Consumers today are worried about current events that directly impact their daily lives — affordable gas, potential war, looming recession, rising inflation. It’s only human to be most concerned about having basic needs met before concerns about larger societal needs. Corporations will earn trust by clearly demonstrating consistency and transparency in pricing and clarifying the value their products or services offer. Continuing to push forward on equality and sustainability is important for companies, but that should be a secondary message. Speaking to the everyday worries that keep customers awake night after night should come first.
Incredible! Asking consumers what builds corporate trust, the top three answers were: affordable products/services, 34 percent; treats employees well, 33 percent; and variety of high-quality products/services. Good corporate citizenship ranked sixth, at 20 percent.
This trust issue is simple to uncover and fix. Executives: get on the floor and ask questions of customers and listen very carefully to be greatly surprised. Secondly, work closer with associates. The floor is where the action is and where many of the real problems are discovered and profits are produced. Certainly your unique media presences are incredibly important as well. You have a tough job!
Will senior executives ever learn to be more in-touch with reality, to be more aligned to the needs and wants of their own employees, to the desires of their shoppers? Clearly, the studies show there still is a wide chasm between on-the-ground, in-store experiences and what senior executives think. This is troubling, but it can be rectified very quickly if executives were to visit stores on a weekly basis and get out into the markets where they operate. I think they’d be surprised how much they’d learn! Trust with shoppers and associates is earned and it starts with the basics.
We have seen too much “greenwashing” and other claims by retailers. Consumers must see absolute proof of a retailer’s efforts. Granted, the evidence is hard to show in these areas, but confidence in the retailer must come across in every aspect of their business.
When I teach strategy, I regularly use the following example: We are talking about building a company’s strategy for the future. I show the students a full-page ad from Exxon touting their efforts in sustainable energy. I tell the students Exxon’s R&D budget is over $1 billion. I ask the students how much do you think Exxon is investing in developing a future strength in green or renewables. The lowest guess is about $400 million. Many of the students guess 80 percent to 90 percent. The reality is that Exxon invests less than 10 percent in new energy. Should we trust what they say?
Consistency and actionable feedback are trust builders for brands.
Trust is consistency in EXPECTED service and having products in stock at a price that the target market sees as valuable (not cheap, but the exchange of dollar for the product is of high value). Today’s customers want to be heard and want to see action from feedback. Employees want to see companies DO what they say and DO the RIGHT THING. Here is the problem with trust, it takes a long time to build and no time to crumble.
Another set of data that exposes the gap between corporate strategies, field execution and customer perception. Executives would be well served to spend time with key cohorts – associates, customers, detractors, partners as well as competitors – to learn how the brand promise is being delivered.
The first step in building trust in a company is to create a trusting relationship between management and employees. If the employees don’t trust management, there is no way that companies will build trust with their customers.
The key to building trust with employees is management holding itself accountable, responsible, and doing what they say they will do when they will say they will do it.
Consumer trust is earned incrementally and it is an outcome of well-considered policies and consistency of experience.
CSR signaling may feel like virtue to corporate leaders (and some shareholders) but it can be perceived as hollow virtue signaling by consumers. Cynicism does not build trust. Disclosure does.
Taking a true stand on environmental or social equity issues is very different from “green-washing” or (this month’s favorite) “rainbow-washing.” It’s no wonder that consumers are skeptical.
Corporations with a sincere interest can choose to make a difference if they are willing to invest. It can be tricky.
Brands that take sides on divisive issues (even climate change) can risk alienating large market segments. The risk/reward calculus may be off-putting for CEOs who are also calculating their stock bonuses.
Americans deeply mistrust public institutions and leaders, so it is no surprise to see study data that suggests their wariness spills over onto corporations.
There are many factors that define trust between a consumer and a brand, and these don’t always translate to an entire industry or segment. Those factors are heavily influenced by the environment the consumer is living in day in and day out when prompted by the survey. You could see quite different results to such a survey if asking today versus having asked 6 months ago or 6 months from now.
And of course, the demographics of the consumers you’re asking about trust also matters. Different generations establish trust with a brand in diverse ways. Do all generations value ESG the same? Not likely. Younger generations attribute more value to this. The bottom line is that retail executives always need to worry about the fundamentals of the brand relationship if they want their customers to trust them. It starts with the product and continues with every visible interaction the customer has with them. That means how their frontline staff act towards customers’ matters – and that has quite a bit to do with how the brand treats their employees. Customers’ experiences after the sale also establish a layer of trust, and so on. Focusing on these customer-facing interactions will have the greatest impact on trust.
Where do things like ESG fit in? Perhaps execs should consider that getting ESG wrong can have a strong negative effect on trust. ESG alone will not establish strong levels of trust, but couple that with a great product and great customer experience, then you’ll establish a higher degree of trust.
Good brands define and commit to an overarching and clear purpose, with easy to understand core values, and then live it out in the products and services they offer. It’s that simple.
Expressing the brand personality in the order of WHY-HOW-WHAT provides the color, content and detail both customers and employees need to either join the movement, to act, or opt for something else. Brands who do this well build upward and maintain high levels of trust.
A challenge for brands delving into social responsibility and polarizing issues are the distractions from core product/service priorities and messaging if not put in context. Or it can force people to pick sides when mostly they just wanted to see your brand build a great product/service.
The statistics suggest that as customers, we are far behind when it comes to embracing societal benefits. This journey still holds a long haul. Undeniably, the top priority for customers is getting value for their money with high-quality product assortments. While the foremost concern of employees stands in experiencing a positive working environment.
Now, let’s frame the whole situation from a company’s perspective, the primary KPI here will be “revenue generation” and the primary relationship will be “transactional.” The majority of a company’s decisions will revolve around these two aspects, as for the stakeholders the value metrics will be “consistent profitability with consistent growth.” The main question here is, can we create a society where everyone feels equivalent, secure, and content? To me, it somewhat seems like a dream.