by Ashley Reichheld and Amelia Dunlop #BusinessHarvardReview
Customers who give a brand high trust scores are three times more likely to stick with it through a mistake. Eighty-eight percent say they’re more likely to buy from that brand again, and 62% will buy almost exclusively from the brand. The authors have developed a simple, four-question survey that any brand can use to measure — and improve — their levels of consumer trust. Here, they explain how it works and offer an example of how The Wall Street Journal used it in practice.
Every business leader knows that trust is critical to a company’s success and that lost trust often has financial consequences. An Economist magazine analysis of Volkswagen, Wells Fargo, and six other corporations calculated that a company loses 30% of its value when it loses trust, at least in the short term.
Conversely, an increase in trust can have financial rewards. The most trustworthy companies have outperformed the S&P 500, and high-trust companies are more than 2.5 times more likely to be high-performing revenue organizations. Our own research shows that trusted companies outperform their peers by up to 400% in terms of total market value, that customers who trust a brand are 88% more likely to buy again, and that 79% of employees who trust their employer are more motivated to work and less likely to leave.
And yet, according to Gallup, trust in business and institutions has plummeted to its lowest point in decades. How can companies understand and enhance trust to drive growth?
We have spent the past two years developing a platform we call HX TrustID that companies can use to predict, measure, and increase trust between a firm and its employees, customers, partners; benchmark trust across industries; and better understand stakeholder behavior. The “HX” stands for human experience and derives from our belief that you can’t elevate anyone’s experience if they don’t trust you. In this article, we introduce the centerpiece of the broader platform, a simple, robust, four-question survey that any organization can use for free.
Here we’ll focus on just one key application — using the survey to boost customer loyalty. Our focus on loyalty has its roots in Ashley’s inspiration for creating the TrustID platform — to develop a measurement system that would be complementary to the gold-standard loyalty measure Net Promotor Score (NPS) introduced by her uncle, Fred Reichheld, in HBR nearly 20 years ago. The connection between trust and loyalty is intuitive, and our research confirms a strong linear correlation between TrustID and NPS scores. In plain English: The more customers trust your brand, the more loyalty they’ll have. This means that organizations can measure and improve customer loyalty — and therefore business performance — through specific interventions that enhance trust.
The TrustID Survey
Let’s first define trust. (You’d be surprised at how people’s definitions vary.) We define it as the promise of a meaningful, mutually beneficial relationship between an organization and its stakeholders. At its core, trust is built when an organization makes good promises and then delivers on them. We call these, respectively, stating a positive intent and demonstrating competence.
Through thousands of hours of research, exhaustive literature reviews, and countless regression analyses we broke intent and competence down into their foundational elements, what we call the four factors of trust: humanity and transparency, which together communicate intent; and capability and reliability, which together demonstrate competence. We then developed a survey to measure customers’ and employees’ perceptions of companies’ performance on each of the four factors and validated it by collecting 200,000 scores from thousands of respondents across 500 brands and more than 10 industries.
In its simplest form, the TrustID survey asks respondents to indicate on a seven-point scale the extent to which they agree or disagree with the following statements, each of which gauges a company or brand’s performances on one of the four factors.
Humanity: The company/brand demonstrates empathy and kindness toward me and treats everyone fairly.
Transparency: The company/brand openly shares information, motives, and choices in straightforward and plain language.
Capability: The company/brand creates quality products, services, and/or experiences.
Reliability: The company/brand consistently and dependably delivers on its promises.
Survey results are highly predictive of actual behavior. Customers who give a brand high trust scores are three times more likely to stick with it through a mistake. Eighty-eight percent say they’re more likely to buy from that brand again, and 62% will buy almost exclusively from the brand.
When we look more closely at how each of the four factors in isolation predicts customer behaviors we see the same strong correlation. When an organization can move a customer’s humanity score from neutral to high, the customer will be twice as likely to promote it on social media and defend it against criticism, and nearly three time more likely to choose it over the competition. Customers who rate a brand’s transparency highly are more than twice as likely to promote it on social media. When customers give a brand a high capability score, they’re three times more likely to choose it over the competition. And when they score a brand highly on reliability, they are three times more likely to spend more on the brand compared to a similar product or service.
By statistically linking trust scores with specific behaviors in a small sample of customers, a firm can confidently predict trust scores across entire segments based on their behavior. This reduces the need for repeated large-scale surveys that fatigue customers and eat into budgets, and it permits rapid, highly targeted A/B testing of marketing messages as well as actions such as product enhancements designed to build trust.
The Loyalty Connection
Loyalty is built on a foundation of trust. While an NPS score in isolation can tell you how loyal a customer or group of customers is (as gauged by their willingness to recommend the brand or company), it doesn’t tell you why they’re loyal. TrustID allows you to get at this “why,” predict what actions will create trust and loyalty, and test them.
Consider two airline passengers, Camila and David. Both give the airline the same NPS scores, showing they’re equally likely to recommend. But the TrustID survey reveals that while Camila sees the airline as highly capable and reliable, she gives it poor marks on humanity. David, meanwhile, gives the airline a high score for humanity but a low score on reliability. Further digging reveals that Camila feels the airline was not responsive to her request to seat her family together, hence the low humanity score. David was unhappy about sitting on the tarmac for two hours on a recent flight, hence the low reliability score.
While Camila and David share the same NPS score, the actions needed to build trust with each of them are quite different. Marketing communications targeting Camila should probably emphasize the airline’s commitment to families, while David probably needs a heartfelt apology and reassurance that on-time flights are a top priority. In addition, the airline needs to back its words with actions, making a special effort to assure that Camila’s family is seated together on their next flight and perhaps giving David a voucher to compensate him for the inconvenience and his lost time.
Piloting the Tool at The Wall Street Journal
Let’s look at a real-world example of the TrustID tool in action. Over its 133-year history, The Wall Street Journal has established a reputation for trustworthiness. But its leaders recognize that trust needs to be continuously earned. Though WSJ had been measuring subscribers’ trust for years, it didn’t have a way to understand the why behind customer trust levels, and therefore it was hard to know what actions to take to reinforce and enhance trust.
We conducted the TrustID survey with 16,000 current, former, and prospective customers. We then combined the scores on the four factors (humanity, transparency, capability, and reliability) with behavioral data, for example, how often customers visited the website. Evaluating thousands of potential variables, we created a dynamic measure of trust, adapting our algorithms to predict a customer’s trust score and measure its movement over time. Thus in WSJ’s case, we could predict the trust scores of millions of current and potential customers by surveying a tiny subset.
With actual and predicted trust scores in hand, we then worked with WSJ to launch a series of pilots to test which actions would increase scores among customer segments that shared similar score profiles. We followed these segments after intervention to see how scores changed relative to a non-intervention control group and then scaled the interventions that worked in the pilot for all customers with similar predicted trust scores.
For example, to increase transparency, WSJ created targeted digital campaigns to remind readers about the breadth of services included with their subscription and the ability to share content for free. To increase humanity, WSJ focused on making sure target readers felt included by providing them with free content tailored to their personal interests. For example, some readers would be shown a recent report on the environment; others might see a column by a technology columnist.
As a result of these interventions, customer trust grew by 33%. We saw a 14% increase in website traffic compared to a control group and a 5% decrease in predicted subscriber churn. The pilot allowed us to determine what types of interventions would likely be effective for different segments, test them, and measure their real-time impact.
While we’ve focused this article on the use of TrustID to increase customer trust and loyalty, we are passionate about building trust more broadly to elevate the human experience because this creates the types of organizations we want to belong to, and the type of world we want to live in. By improving employees’ trust in their firm, partners’ trust in a business, and public trust in institutions we believe the TrustID platform can ultimately help leaders restore — and increase — trust across society at large.