Columbia University economics professor Joseph Stiglitz once said, “It is trust, more than money, that makes the world go around.”
While this has, perhaps, always been true, it will truer than ever in the coming decade.
Whether in our personal relationships or our interactions with big brands and institutions, trust is the foundation of loyalty, engagement and affinity – and this foundation has taken a pounding in recent years, especially during the COVID-19 pandemic.
In this environment, building trust is more difficult than ever – but it’s also more important. According to the recent Trends in Customer Trust report released by Salesforce Research, 95% of customers are more likely to be loyal to a company they trust while 92% are more likely to purchase additional products and services from trusted businesses.
However, consumers want to be able to trust not only in the company’s operational integrity, but also in its values, ethics and principles. A compelling article in the Financial Times a few years back described a modern challenge facing every organization and leader: “Whether they like it or not, brands and those that lead them are already being dragged into society’s thorniest debates by consumers and employees who find it easier to influence brands than elected officials… With many governments in disrepute, leaders of finance and business have — improbably — been handed an opportunity to lead on some of society’s most pressing issues. Will they take it?”
The market is looking for social, moral and ethical leadership from the brands they engage with. They aren’t looking for brands and leaders that merely comply with the rules but brands and leaders that will step up, speak out and stand firm on the issues that count.
Commercial Benefits of Building Trust
Despite the intrinsic value of being a trustworthy, integrous and ‘good’ individual or organization, there are compelling commercial reasons for doing so too. Consider that:
- According to the Harvard Business Review, over forty academic studies have found a positive correlation between operating with strong social values and financial performance.
- Brands that have a clear sense of meaning and social responsibility have outperformed stock market benchmarks by 120% over the last 15 years.
- Assets in US funds that aim to produce social or environmental benefits alongside financial returns grew fourfold to $12T over the past decade.
The importance of cause-driven commerce is especially true with younger generation consumers. According to Forbes, 76% of Gen Zs said they have purchased or would consider purchasing from a brand because they identified with the issues and causes that the brand supported.
Understanding Your Customer
Many brands favoured by young consumers such as Warby Parker (glasses), Casper (mattresses) and Joybird (furniture) have built enormously successful retail businesses by understanding what makes Millennials and Gen Z tick. They have actively worked to earn the next generation’s affinity with strong return policies, authentic reviews and social media validation. Better yet, they have demonstrated a commitment to the social values young consumers hold so dear – Warby Parker’s ‘buy a pair, give a pair’ campaign which donates glasses to people in the developing world is a great case-in-point.
More established traditional brands are working hard to do much the same thing. Iconic jeweller Chopard, for example, made a commitment in 2019 to ensure all gold in its watches and jewellery would be 100% ethically sourced. Chopard’s co-president and creative director acknowledges that steps such as these are vital if the 160-year-old brand is to connect with and win the trust of young consumers.
It Must Be More Than Tokenism
It is important that support for causes is more than tokenism or ‘virtue signalling.’ Any sense that a brand’s actions are a PR exercise will backfire swiftly. By the same token, being cause-driven must be more than statements and words. In a simple example of a brand taking tangible steps to live out their values, consider an initiative by the Giant supermarket chain in January 2021.
With a network of over 160 stores in the Washington DC area, the Giant group has long been passionate advocates for minority business leaders. On a hunch that their customers were similarly committed to this cause, Giant has begun labelling over 3,000 products as being produced by ‘minority owned businesses.’ Giant defines the term minority as individuals who are Black, Asian-Indian, Hispanic, LGBT and Asian-Pacific.
One of the world’s most trusted brands, Patagonia, has also won the hearts and minds of the marketplace through an unswerving commitment to their purpose of “Saving our home planet”.
While many brands have a purpose related to environmental sustainability, Patagonia’s devotion to the cause goes so far as to urge people to reduce their environmental impact by not buying its products. Now that’s commitment to the cause!
In April 2019, Patagonia also took the bold and purpose-driven step of walking away from one of its most devoted customer groups – finance professionals. On Wall Street, Patagonia’s fleece vests have almost become an unofficial uniform over the years. Despite this popularity, Patagonia announced that they wouldn’t be supplying any new corporate clients with co-branded products if the client company engaged in environmentally damaging activity – a move that will cut off much of its business with the Wall Street crowd.
While some criticized the move as brand activism gone too far, Patagonia has reaped enormous rewards from being ruthlessly committed to their cause – they are trusted and admired like few other companies.
In the words of social entrepreneur and author Bryant McGill, “When trust is lost, everything is lost.” I firmly believe that the opposite is also true: When trust is gained, everything is gained.