If there was any doubt left that companies need to be digitally connected to succeed, the COVID-19 pandemic has surely put that to rest. All businesses now need to invest in continuous digital transformation and they need to keep up with every digital advancement and fully exploit them from here on out. From the sudden dependency on e-commerce as a result of the pandemic to the expansion of mobile and conversational commerce to operational and service automation to experience innovation and the integration of AI and machine learning everywhere, digital transformation is both a mandate and an opportunity for differentiation and competitive advantage.
And yet, the trouble with digital transformation up until the pandemic was, ironically, its over-reliance on digital. To drive business from a technology-first perspective is to miss a bigger and more important fact. Business is still a fundamentally human enterprise. While technology provides us with the means to connect, it is the relationships we form that keep us connected and keep us doing business together.
This is why we recently introduced "Relationship Transformation" (RTx) as a model for DX. At its core, RTx is rooted in relationship dynamics as a blueprint for DX. RTx takes a human-centered approach to transformation and innovation and provides leaders with a new, more holistic way to be relevant and grow in the connected world. It gives purpose to digital transformation and other growth initiatives and promotes our relationships, with our customers first and foremost but also with our employees, business ecosystem partners, and communities, to the top of our priorities. Furthermore, it re-emphasizes among business and technology architects the "R" in CRM (Customer Relationship Management) and reminds leaders of the importance of placing people and relationships at the core, digitally and physically.
Klaus Schwab, founder and executive chairman at World Economic Forum, alerted business leaders to the importance of people, purpose, and values in 2016, "In the end, it [the 4th Industrial Revolution] all comes down to people and values. We need to shape a future that works for all of us by putting people first and empowering them."
For managers who would like to know where to start on their RTx journey, we'll be offering several suggestions over the next couple of articles. But ahead of them all, there's no better place to begin than Trust, the power behind successful relationships.
Relationships, powered by Trust
Here's a simple fact: The vast majority of us, 95% according to the Salesforce Connected Customer report, are more likely to be loyal to companies that we trust. Being loyal means that we're likely to buy more from them, try out their new products, and refer and recommend them. And in HBR's, "The Value of Keeping The Right Customers," it was discovered that costs of retaining customers are anywhere from 5 to 25 times less than acquiring new ones In other words, there's a direct line, from trust to loyalty to increased revenues and reduced costs.
The importance of building trust with customers isn't new, but it is magnified in times of disruption. Customers aren't just putting more emphasis on the importance of trust in their relationships with brands, they're also demanding a higher bar for earning that trust. According to Salesforce, 82% of business customers and consumers said that a company's trustworthiness mattered in 2020 more than it mattered in 2019. Earning trust now becomes a strategy, like any other sales, marketing, or service strategy. It won't be easy though. Sixty-one percent of customers admitted that in 2020 it's more difficult to earn their trust.
During the pandemic, it became immediately clear that digital transformation roadmaps accelerated by years. The truth is that the same can be said about trust. Salesforce research found that 90% of customers revealed how a company acted during the crisis revealed its trustworthiness. In just a few months following COVID-19, 31% trusted a company less because of a company's response to the 2020 crises.
The stakes are high. Not investing in a strategy of trust is to miss a massive shift in consumer trajectory and the keys to brand preference and loyalty. This all adds up to a rallying cry for relationships and RTx as a driver for digital transformation and modernization. Earning their trust is a mandate in building relationships, which power business and growth in this Novel Economy.
All of which suggests that trust should be a top priority for CEOs and a core part of any organization's RTx and growth initiatives. But how do we build, nurture, and maintain trust? What does a trust strategy look like?
The Four Elements of Trust
As Joe Gebbia, co-founder of Airbnb, astutely observed, "Trust is still, and will always be, the foundation of our company, and one of my main objectives has been to find new ways to understand and innovate all aspects of trust in our service, our company, and our community."
Beyond being an innovator and disruptor in travel and hospitality, Airbnb is quite literally in the trust business. Hosts have to trust that guests will care for their properties. Guests have to trust that hosts will deliver a safe and delightful experience. And, everyone has to trust Airbnb. Here, digital technology facilitates more than just transactions between hosts and guests. It is also a critical part of the trust equation that powers the Airbnb brand and value proposition.
So, how can you cultivate trust and prioritize relationships in your DX strategy moving forward?
The first step is to understand what trust is. And, as it happens, trust is not just one thing. Research by The Trust Project at Northwestern University, by Rachel Botsman, author of "Who Can You Trust", and by others has shown that our assessments of whether we can trust a person or an organization are based on one or more of the following four considerations:
Competence: The ability of organizations, their people, and their technology to do what they say they can, to live up to their promise. Oftentimes we have to take a leap of faith to buy a service or product or to hire someone based on their claims of competence or performance. We rarely retain them if they fail to deliver.
Reliability: The ability of organizations, their people, and their technology to do what they say they will, when they say they will, every time. In a complex world, we want predictable performance without fire drills or heroics. We entrust our business to those we know we can count on.
Integrity or Honesty: The character of organizations and their people that drives them to tell the truth and do the right thing without regard for the consequences to them. Integrity is the most defining element of trust, meaning that the erosion of trust from a lack of integrity is a lot more difficult to repair than from missteps in competence and reliability.
Benevolence or Empathy: The character of organizations and their people that drives them to put the interests and success of their customers first in their decisions and actions. We are used to working with companies who put their own success first but our relationships with them rarely move beyond the transactional.
An Assessment of Trust
We intuitively apply these same four elements whether we are assessing how much (or how little!) we trust individuals, business units, or entire companies. We even apply them to our assessment of the technologies that companies use to conduct business with us. An organization's trust strategy must, therefore, take into consideration its entire scope of operations, both human and technological, although its primary focus will naturally be on those parts and people that are customer, partner, or community-facing.
The second step, therefore, that any organization can take is to assess its own trustworthiness and develop a plan to improve it by asking itself how they currently perform in each element and what they can put in place to improve. In our next article, we will offer up a simple Trust framework that can be used to perform that assessment.
Business is about relationships and relationships are powered by trust. Trust is not easy to define but we all know it when we feel it and, just as strongly, the lack of it. And, despite its apparent squishiness, it has a measurable, quantifiable impact on corporate success and growth. We can design for it, we can behave and make decisions for it. No company should leave something so important to chance.
This article was co-authored by Henry King, an innovation and transformation strategy leader at Salesforce and author of Flow by Design, a new paradigm for the design of customer experiences and business processes in a connected world. King is a former CIO with over 35 years of consulting and executive experience, both in the US and internationally, with expertise in innovation, design thinking, and information technology. He has been published in Fast Company, Huffington Post, ZDNet, and Businessweek. King studied Classics at Oxford University and teaches postgraduate innovation and design classes at the School of the Art Institute of Chicago and the Institute of Design.