Trust is one of those intangible assets that we simply do not consider enough.
We can obsess over balance sheets or even how the stock market reflects confidence in a business through the share price.
But we rarely consider how important trust is to a company and how it will be vital for any brand’s success in the future.
Perhaps part of the reason we frequently don’t think about trust is that it’s often taken for granted. Nonetheless, trust, or perhaps, more importantly, the ability to gain and give trust, is so fundamental it offers us an evolutionary advantage. When mammals work together, whether a pack of wolves or a society of humans, trust is the unacknowledged currency that helps make everyone’s lives better.
When a species can work cooperatively without constantly having to look over its shoulder, it frees capacity that can be used to support and develop the whole group’s welfare.
In short, with trust, everyone benefits.
But what does trust have to do with business?
Classical economics has long been based on the idea that all the actors within an economy are rational and, therefore, predictable.
The slightly tongue-in-cheek figure was of homo economicus. This being would always make the economically sensible decision, acting on information like price and quality to maximize their benefit from any choice.
It has also long been recognized that homo economicus is fiction.
The rational actor makes for useful models but rarely explains actual human behavior out there “in the wild,” so to speak.
For starters, there is hardly anyone on earth who can have total information about a single decision, let alone a lifetime. But even with imperfect information, people behave in seemingly irrational ways. The whole field of behavioral economics has arisen to explain it.
One of the factors that frequently sits behind those irrational decisions is brand. People will happily pay a premium for certain brands, even when they know that other, cheaper brands may offer the same functionality or quality. Even telling themselves, sometimes contrary to the evidence, that their brand is superior to the alternative. The brand, in this case, is providing value other than price.
Brand + human characteristics
And brands are increasingly imbued, both by consumers and businesses, with human characteristics.
This reflects the evolution of the consumer.
Initially, decisions were based on practical issues: does this product have the function I need? Then they were increasingly a reflection of conspicuous consumption: what does this brand say about me or make me feel? We are now increasingly seeing brands as identities and actors within their communities. Like in any community, members ask themselves, ‘do I trust this brand?’
Charting the decline of trust
It might seem like trust is in short supply in the modern world. Western societies seem more divided than ever, with some conflict always feeling like it’s just over the horizon. The annual Edelman Trust Barometer highlights quite how powerful that division and lack of trust is.
An annual worldwide survey with over 26,000 respondents, the 2022 trust barometer found that 48% of people — nearly half — consider their government to be a divisive force in society. Fewer than half the respondents in the UK, US, Germany, and Spain said they trusted their democratic institutions. These are the bodies that most would expect to have moral authority and respect.
Business is stepping into the trust gap
But it seems that rather than being lost, trust is being transferred. Edelman’s survey found that, globally, the most trusted institutions are now businesses. Sixty-one percent of respondents said they trusted business, and 77% said they trusted their employer.
Consequently, those feelings of trust, whether consciously or unconsciously, play a part in the consumer decision-making process. Increasing evidence is finding that people actively choose, and even pay a premium, to use businesses that they believe aligns with their values.
The Edelman survey also highlights that this is not just a passive expectation.
People are not content simply assuming that their preferred businesses would also share their preferred views.
Instead, there is a demand for businesses and CEOs to take a stand on issues, even those that are not related to their business. Eighty percent of people want CEOs to be visibly speaking about public policy. Sixty percent of employees even want their CEO to speak out on controversial issues.
There is, of course, a gap between what people want and what they believe they see. Across a spectrum of societal issues, the survey usually found around half of the respondents feeling that businesses weren’t doing enough.
But there was an underlying hope too.
When it came to whether organizations were ethical, businesses had a net positive score of 14. By contrast, governments had a net negative score of -12.
Increasingly, businesses are responding to this.
While sometimes their steps might seem performative, such as redesigning logos for Pride, they sometimes come at a heavy cost. For example, the Russian invasion of Ukraine resulted in many businesses withdrawing from Russia and taking a significant hit to their bottom line in the process.
Other businesses are endeavoring to build trust into their business models.
Apple, for example, has been a high-profile proponent of privacy, even resisting requests from law enforcement to provide backdoors to their devices. Nike has responded to concerns about its manufacturing by introducing supply chain transparency.
While they may have attracted some criticism in both cases, the overall effect has increased customer loyalty. Both brands are highly trusted by their fans and can charge a premium for their products.
Greater awareness of social and ethical issues
The trend has been developing for a long time but is accelerating rapidly.
People are, more than ever, aware of the social and ethical issues that are important to them. Increasingly they feel that their public institutions cannot, or will not, reflect their beliefs. As a response, they are turning to the corporate world, expecting them to help champion those causes.
Consumers hope for their favorite businesses to be more than a supplier of products or services.
Whether through their supply chain, environmental change, or campaigning on social justice, they want to trust businesses are on the same side as them.
For those that take advantage of it, making that trust part of your brand is a major competitive advantage.
Gerard Tannam is the founder of Islandbridge brand consultancy, a writer and a keynote speaker. Alongside his team, he works with international clients to build brands that help great businesses reach their goals.