5 ways 'distributed trust' is changing brand loyalty

"People are saying they don't trust politicians or journalists, but they will get in a car with a total stranger on Uber, or they'll rent their home on Airbnb. Trust use to flow upwards to experts and authority - now it's flowing sideways to strangers, peers, and neighbors." -- Rachel Botsman

Getting customers to stick around for the long haul is harder than it's ever been. An enormous 76 percent of customers report that it's easier than ever to take their business elsewhere.

Also: If being customer first is so important, why don't companies do it?

But that doesn't mean that brand loyalty is becoming a thing of the past. Rather, the way successful companies engender brand loyalty is changing rapidly and irrevocably in the Fourth Industrial Revolution.

Between 2003 and 2013, MARKABLES data (chart above) shows that the value investors put on customer relationships doubled. Research also shows that 80 percent of customers now say that the experience a company provides is as important as its products and services, and thus is central to brand survival. In short, building customer relationship value is rapidly becoming the key driver of brand strength and a vital part of engendering customer loyalty and trust.

Also: What Overstock.com learns about its customers from decades of data

The challenge for businesses, however, is that building customer relationship value is getting more and more difficult, thanks to two main driving forces: Trust is falling, and technology is continually raising customer expectations about what constitutes a superior experience.

The way companies can build trust has changed

People are increasingly distrustful of institutions, including businesses and brands. Two-thirds of those surveyed in the 2017 Edelman Trust Barometer expressed low levels of trust in "mainstream institutions."

At the same time, author and TED Talk speaker Rachel Botsman proposes that people are building new kinds of relationships of trust that flow laterally between individuals via social channels. Here, trust isn't so much rooted in organizations (including brands) but distributed amongst people who have often never even met. Examples of this "distributed trust" include services such as Airbnb and Uber that depend on strangers trusting each other, as well as user-generated reviews on TripAdvisor and Amazon. Many people see such reviews as trustworthy because they believe the reviewer is motivated by helping others to make a decision, rather than by trying to sell them something.

 Money is the currency of transactions. Trust is the currency of interactions. -- @rachelbotsman

Customers expect personalized, connected experiences

In a world where trust is being distributed in these new kinds of ways, and with technological innovation continuing to empower customers to expect more from the companies they deal with, switch brands when they're not happy, and share their experiences online, companies must ensure they match up to customers' expectations of a superior experience if they want to stay competitive.

And what customers increasingly expect from a superior experience is personalized, connected experiences across a wide number of customer touchpoints and channels.

Research [PDF] shows that 70 percent of customers say that connected experiences, such as seamless handoffs between departments and contextualized engagement based on earlier interactions, are very important to winning their business. Almost half (49%) have no patience for disconnected experiences.

Also: These are the things Apple customers hate the most 

At the same time, Salesforce's recent "State of the Connected Customer" report found that 76 percent of customers expect companies to understand their needs and expectations, while 53 percent now expect the offers they receive to always be personalized.

Gaining a 360-degree customer view.
To deliver personalized, connected experiences, businesses must develop a 360-degree understanding of each one of their customers.

Achieving that 360-degree understanding starts with capturing data in real time -- for example, by monitoring point-of-sale systems or analyzing web traffic -- and then making this intelligence actionable. However, this process can be challenging for companies that aren't able to integrate data across the entire customer journey. According to McKinsey, "sprawling legacy systems, siloed databases, and sporadic automation are common obstacles."

At the same time, research shows that the average number of data sources marketers draw on has grown by 20 percent since 2017. With sources multiplying, it can be an uphill battle for marketers to keep up, and as a result, most organizations are using only a fraction of the data they have access to.

To prevent valuable customer intelligence from slipping through the gaps, companies must share data in a way that breaks down silos and allows users across the business to have a complete view of the customer in every interaction. Every company must operate like a technology company, and every company must be a data-driven company, with an active investment thesis on artificial intelligence (AI) technologies.  I recently wrote about 'three technology trends that will redefine marketing in 2019' and how marketers face increasing scrutiny from customers and regulators alike and AI capabilities continue to  advance. Although personalization is treasured by customers, transparency into how data is used is a customer expectation. In fact, 78 percent of them are more likely to trust companies with personal information if it's used to fully personalize their experience. The challenge for companies to compete in an environment of distrusted trust is also the impact of what IDC refers to as the era of multiplied innovation. So how can businesses move at the speed of trust? 

Five Ways to Move at the Speed of Trust

There are five things organizations can do right now to help ensure they can meet the challenges of building customer relationship value head-on.

Also: Windows-as-a-service fail: Microsoft keeps customers in the dark 

By taking these initial steps toward integrating data sources across the entire customer journey, businesses will be better positioned to implement new customer engagement models across marketing, sales, and service. And, by doing so, deliver the customized experiences customers are crying out for.

1. Understand that customer data is an asset: First, companies must understand that customer data is an enterprise asset that adds significant value to your business. Without data, businesses can't leverage the technologies of the Fourth Industrial Revolution — including artificial intelligence and machine learning — that will help them meet customer expectations. Gallup research tells us that companies that leverage customer behavioral insights "outperform their peers by 85 percent in sales growth and more than 25 percent in gross margin."
2. Empower a chief data officer to work across the organization: Organizations can no longer afford to have a haphazard approach to data management. Appointing a chief data officer to proactively grow capabilities is now critical for success. Deloitte says "organizations today need senior leaders to not only manage and govern the data, but also to leverage the data using emerging technologies that can generate actionable analytical insights and tangible business benefits."
   
3. Build a culture of trust with customers: Consumers and business buyers alike are looking for differentiated experiences based on trust and understanding, according to Salesforce research [PDF]. This is only achievable if businesses can leverage data insights to tailor interactions to customers' individual needs. Unfortunately, recent high-profile data breaches and data misuse scandals have made customers wary. More than half (57%) of consumers are uncomfortable with how companies use their personal information, while 54 percent don't believe businesses have their best interests in mind. To regain customers' trust, businesses must have strong data security policies in place. They must also be completely transparent about how they plan to use information, and give clear details on how the customer experience is likely to improve once a customer trusts a brand with their data.
4. Bring business units on-board to break down silos: Customer experience doesn't belong to any one department. More than two-thirds (70%) of customers say connected experiences, such as seamless hand-offs between sales and service departments, and contextualized engagement based on earlier interactions, are very important to winning their business. This means individual business units within an organization must align their thinking on the management of customers' data to help bridge the gaps between siloed data sources.
5. Don't put off starting data projects: Make data shareable and accessible now, even if you have a longer-term plan for building data capability. By "using 'two speed' IT, where specialist business and IT teams fast-track digital development," McKinsey suggests, "businesses can get a jump on high-value customer initiatives even as they build out their longer-term transformation."
   

By taking these initial steps toward integrating data sources across the entire customer journey, businesses will be better positioned to implement new customer engagement models across marketing, sales, and service. And, by doing so, deliver the customized experiences customers are crying out for.

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