BrainTrust Query: Are we seeing a diminishing need for trust in retailing?
Kenneth
A. Grady, President and Attorney, K.A. Grady PC
(www.kagradypc.com)
A recent survey of online retailers showed that they are improving when it comes to earning the respect of their customers, but that they haven’t done as well when it comes to building trust.
The report by the Customer Respect Group showed that in the Third Quarter of 2006, respect among customers for online retailers had increased to an overall score of 6.2 on a 10-point scale. Five companies — Sears, Payless ShoeSource, L.L. Bean, CVS and Wal-Mart — received an excellent rating. Of the 51 companies surveyed, about half received an exceptional score in communication which, according to Customer Respect Group, typically is the lowest scoring area for most industries. However, online retailers are not doing quite as well when it comes to trust. For example, the survey showed:
- Online retailers ask a lot of questions. About 20 percent of the companies surveyed asked their customers to complete 10 or more fields of information. Many online retailers required customers to login before completing the shopping experience.
- While sharing may be good in school, sharing of customer information without the customer’s permission is not as good. About 43 percent of the companies share their customers’ personal data with other companies, even though the customer did not give permission for the sharing.
- For many years, trust was a key concept in retailing. Yet today, many things retailers do arguably take away from a trusting relationship. Concerns about organized crime and other shrink drivers have lead retailers to use tougher security measures. Security tags, closed circuit TVs, tighter return policies, and more secure product packaging all help to reduce shrink. But many customers interpret these measures as saying, “We don’t trust you.”
Interactions between customers and store employees are fleeting and casual. Customers know that the clerk waiting on them probably won’t be working at the store in a few months (or even weeks). Customers don’t invest themselves in building a relationship with the retailer through its employees, which detracts from building a trust relationship with the retailer.
In discount stores, customers have fewer interactions with the employees decreasing the opportunities to build trust. While luxury retailers are more oriented towards building long-term trust relationships, even that model has changed as Costco and other retailers, whose model includes fewer employee-customer interactions, move into the luxury goods segment.
On a larger scale, customers have diminishing trust in companies as they see headline after headline announcing the latest scandal. Currently, option backdating has placed some retailers at the forefront of trust-eroding news. As the industry consolidates, frequent changes in corporate ownership and the change from “local stores” to national brands (e.g., Federated moving stores under the Macy’s brand) also influence the trust relationship.
Discussion Questions: With the development of multi-channel
relationships with customers, is the trust component of the relationship changing
character…and does that mean that the need for trust is diminishing? Is there
an opportunity for some retailers to differentiate themselves by focusing on
trust building in one or more channels?
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8 Comments on "BrainTrust Query: Are we seeing a diminishing need for trust in retailing?"
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Trust between retailers and customers may be diminishing but the sustaining value of a trusting relationship has not. If so, why aren’t there more sincere efforts being made to build lasting trusting relationships among customers and retailers?
Trust is a plant of slow growth while retailing today has become a hungry plant of fast and forced acceleration. Many consumers have become cynical. Personal interface has given ground to impersonal technology; acknowledgements and human relations take time and are considered costly, particularly when Wall Street is breathing down your neck.
These are some of the by-products of the ever-increasing demand for material results from the marketplace. Perhaps that’s why I occasionally enjoy visiting customer-oriented CHEERS “where everybody knows your name” … but I’m just one customer and I’m not in a hurry.
Thank you Race for helping to clarify the questions. Yes…we’re asking about the nature of trust and how online experiences have changed that.
As an example: It’s common today for consumers to use a product comparison website, like Froogle, and click through to an offering based solely on its low price ranking. Although the online vendor may be completely unknown to them, there’s a presumption of trust based on the superficial design of the website and the impression that the retailer is following best practices for gathering account information and conducting the online transaction.
From another perspective, what level of trust is needed when ordering apparel when all you can see is an online representation? Are online retailers learning that they must be more exacting and detailed in their product descriptions to gain the kind of trust one would find in stores, or is it assumed by consumers that there’s a wider margin of error when ordering online?
Building on Bill’s point, I think retail chains often do things that erode customer confidence and trust, in the name of efficiency. I’ve seen a number of the slips that Bill talks about lately – they must be a way to minimize the number of returns, reduce costs, etc.
The multitude of abandoned shopping carts online and to a lesser extent offline is emblematic of the fact that consumers find it easier to abandon one shopping experience and go to another entirely than it is to find what they want, ask a question, or get some help.
Part of the problem in physical stores is the wide disconnect between store personnel and the executive suite. How many “clerks” have had real customer service training, are rewarded based on their interactions with customers, and have any regular contact with HQ management?
Amen to Bill and Race’s comments!
This issue will only increase in it’s importance as technology further enables retailers to use or abuse it in relation to customer strategies. As RFID and other consumer technologies emerge, it makes my blood run cold to think about them being abused to track consumers and data mine without responsible permission strategies. Yet, look at our history…the more people share that they like controlling their messages and data, the louder we yell and the sneakier we get!
Let’s hope we don’t repeat lessons learned and do right by people as the tools to connect with them become more powerful. We frankly can’t afford not to.