Consumer Trust in Company Culture: A Competitive Advantage
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Contributor / Larry Rosen
Chairman and Chief Executive Officer
Harry Rosen Inc. / Retail
Relationships built on trust are the reason for Harry Rosen’s long record of success in the competitive field of quality menswear. Its mission is grounded in trust, and the word “trust” is central to the firm’s mission statement. Two keys to fulfilling this mission are rigorous employee training and a company culture that continuously reinforces its philosophy. For example, Harry Rosen changed the name for “sales associates” to “clothing advisors” to better reflect the relationship of trust that the company cultivates with customers.
Transcript
I'm Larry Rosen, the CEO of Harry Rosen Inc., Canada's largest quality menswear retailer, and for us, trust has always been the centerpiece of our organization. And without earning the trust of our customers, without earning the trust of our associates and earning the trust of our vendors, I don't think we could point to 62 years of fairly significant success in men's retail.
We find that when you can earn a man's trust and make the process easy for him, he'll reward you with his loyalty over the years, and when you think of a man's shopping every year and building a business wardrobe and a personal wardrobe, that's pretty good annuity to have if you can keep his trust.
And so, everybody knows it's part of our cultural mission as a company not to let a customer down, not to lie to a customer. If something doesn't look right on a customer, you tell them. I mean, it's not about the sale today. It's about the long-term relationship we have. So it's not uncommon to hear on a selling day that, "You know what? That's not the right thing for you today. I don't have exactly what you need." To us, selling isn't about short-term. Selling is about lifetime value of a customer. And, you know, the other part of it is when you violate trust, when you let a customer down and listen, we have 1,000 associates, somebody's going to do something that upsets a customer where he feels he's been betrayed, and how we recover from that is so critical. I personally spend a decent part of my week dealing with customer problems¬¬ — we'll do whatever it takes to earn back that trust.
And even when they've lost confidence in us, when we react the way we do with that very, very proactive approach to earning back their trust, they come back to us. And in fact, they become more passionate about our brand.
BUMPER: Fostering a Culture of Trust
There's — the things that keep our associates in line with our values — there's really two things that really make a difference. One is, we as a company spend more on training, I believe, than any other company per associate. We train them on how to deal with the customers. We teach them all the philosophy of earning customers' trust. The other part that really is important, and this is, I mean, people have written on this, but it's not easy to quantify, is the culture of our company.
Our culture supports the right behaviors. It's funny because on occasion, a competition have come in and hung out big dollars and hired away people thinking they're going to get — going to get a piece of our expertise — but when the culture is a surrounding, the behavior isn't as natural, and people — people will behave in accordance with a great corporate culture.
BUMPER: Redefining Customer Engagement
It's interesting because on a strategy level, when we saw that the landscape was changing three or four years ago when the American department stores announced they were coming in, we realized that we had to look for competitive advantages that were compelling that couldn't be duplicated. Why do customers really choose us? What makes us a compelling choice? And what can we do that they can't imitate?
A pinnacle moment for us as an organization — as a relationship-based seller — came a few years ago when we used to call our associates on the floor, we used to call them sales associates. And we realized that that term really, I mean, everybody has this thing of a salesman on the floor and they, you know, the guy you have to hide from and who, when he approaches you, says, "May I help you?" and you say, "I'm just looking. Thank you."
And we changed their name to clothing advisors because we wanted a name that said that these are experts, that they're highly trained experts that are going to help make the shopping process for you easier. That one little change improved the whole culture of the organization, and I think it improved the client experience because we consistently refer to our people on the floor as clothing advisors.
You think it's, I mean, well, that's a simple name change. But it really encapsulated what we were trying to do and what our key competitive advantage was.
The change of name from a sales associate to clothing advisor, I think it really related a lot to the issue of customer trust. It supported our competitive advantage, but it also supported the fact that our clients could have trust in our associates to help them build their wardrobes and shop with us long-term.
We find that when you can earn a man's trust and make the process easy for him, he'll reward you with his loyalty over the years, and when you think of a man's shopping every year and building a business wardrobe and a personal wardrobe, that's pretty good annuity to have if you can keep his trust.
And so, everybody knows it's part of our cultural mission as a company not to let a customer down, not to lie to a customer. If something doesn't look right on a customer, you tell them. I mean, it's not about the sale today. It's about the long-term relationship we have. So it's not uncommon to hear on a selling day that, "You know what? That's not the right thing for you today. I don't have exactly what you need." To us, selling isn't about short-term. Selling is about lifetime value of a customer. And, you know, the other part of it is when you violate trust, when you let a customer down and listen, we have 1,000 associates, somebody's going to do something that upsets a customer where he feels he's been betrayed, and how we recover from that is so critical. I personally spend a decent part of my week dealing with customer problems¬¬ — we'll do whatever it takes to earn back that trust.
And even when they've lost confidence in us, when we react the way we do with that very, very proactive approach to earning back their trust, they come back to us. And in fact, they become more passionate about our brand.
BUMPER: Fostering a Culture of Trust
There's — the things that keep our associates in line with our values — there's really two things that really make a difference. One is, we as a company spend more on training, I believe, than any other company per associate. We train them on how to deal with the customers. We teach them all the philosophy of earning customers' trust. The other part that really is important, and this is, I mean, people have written on this, but it's not easy to quantify, is the culture of our company.
Our culture supports the right behaviors. It's funny because on occasion, a competition have come in and hung out big dollars and hired away people thinking they're going to get — going to get a piece of our expertise — but when the culture is a surrounding, the behavior isn't as natural, and people — people will behave in accordance with a great corporate culture.
BUMPER: Redefining Customer Engagement
It's interesting because on a strategy level, when we saw that the landscape was changing three or four years ago when the American department stores announced they were coming in, we realized that we had to look for competitive advantages that were compelling that couldn't be duplicated. Why do customers really choose us? What makes us a compelling choice? And what can we do that they can't imitate?
A pinnacle moment for us as an organization — as a relationship-based seller — came a few years ago when we used to call our associates on the floor, we used to call them sales associates. And we realized that that term really, I mean, everybody has this thing of a salesman on the floor and they, you know, the guy you have to hide from and who, when he approaches you, says, "May I help you?" and you say, "I'm just looking. Thank you."
And we changed their name to clothing advisors because we wanted a name that said that these are experts, that they're highly trained experts that are going to help make the shopping process for you easier. That one little change improved the whole culture of the organization, and I think it improved the client experience because we consistently refer to our people on the floor as clothing advisors.
You think it's, I mean, well, that's a simple name change. But it really encapsulated what we were trying to do and what our key competitive advantage was.
The change of name from a sales associate to clothing advisor, I think it really related a lot to the issue of customer trust. It supported our competitive advantage, but it also supported the fact that our clients could have trust in our associates to help them build their wardrobes and shop with us long-term.
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Establishing Trust in Your Organization: What an Army Colonel Learned on the Ground
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Contributor / Col. John A. O’Grady
Col. John A. O'Grady
Government
Breaches,Definitions,Government,Reciprocity,Regulation,Reputation Management
In the organization in which I am in, the word trust gets thrown around a lot. And in that regard I started to find myself getting very frustrated by constantly getting hit with the word trust and then no one really then explaining what that meant.
We decided to unpack trust and really think about what that meant to us as a group, and it did a couple of things. It raised a level of awareness and it provided a common framework from which we could all then understand trust.
So the trust equation is really just that, it’s a word equation. So trust equals integrity or honesty plus reliability or dependability, plus competence, plus communication, plus genuine care.
So in crisis management, the trust principles are a great tool to first analyze what areas of trust have been most affected. And then it allows you to – once you’ve done that – apply individual and organizational energy most effectively at those areas first to start to re-establish trust.
BUMPER: Theory to Practice: Principles of Trust in a Crisis Situation
So there was a pretty critical moment in Afghanistan where the local governor of the province that I was in did not show up at an event that had a lot of work leading up to it to even bring to fruition. Multiple constituencies were attending this event and it was going to be a formal acknowledgement of a deal to bring on local militia. Everybody is there and the governor does not show up. The whole thing pretty much falls apart along with all the work that had gone to bring us to that moment.
In my next meeting with him a week later I said, “Hey look, by not showing up, your integrity…people think you’re a liar now. You weren’t reliable on being where you said you were going to be.” In talking to him about that he was concerned because ultimately his driver went the wrong way and he was in the back of the car not really paying attention. Communications aren’t good and so we had no way to just pick up the phone and be like, “Hey, we’re going to be a half-hour late” type of thing. And so everybody left, he never showed up and that was really the reason, and he was ashamed a little bit because he thought his competence and that of his driver would come into question. And he’s the governor; he’s supposed to know where everything is. What do you mean you don’t know how to get to a town in your province? It’s not that uncommon in that area. It’s not easy.
BUMPER: Establishing Trust Through Honesty and Genuine Care
So we used that to frame that discussion and then what I was able to do to present to him a way forward was bring again into light the kind of equation, and say, well I understand your concern that your competence is called into question, but by not addressing this and just taking it kind of in one area of competence which is really not as big a deal as maybe you think it is, we’re affecting the integrity, genuine care, dependability, reliability. So you have a choice here.
So in that situation with the governor it was also an opportunity for both he and I to use parts of that trust equation as well and demonstrate to each other that we were willing to be honest with each other. He didn’t have to share with me that bit about the competency. You know I could demonstrate to him that, hey, I genuinely care about what’s going on here, man. I genuinely care about how you’re viewed.
We ultimately ended up establishing trust with each other and moving the trust peg in the right way using those different components of the equation.
The net result was then to take this meeting that had completely collapsed and a month or two later re-establish that meeting and bring to fruition the security forces in that area that had a very positive effect in a local…a very localized way. So it was a win, really, in a number of different areas with a number of different constituencies starting with me to him, and then larger [win for] us [and] the populous through the security forces.
We decided to unpack trust and really think about what that meant to us as a group, and it did a couple of things. It raised a level of awareness and it provided a common framework from which we could all then understand trust.
So the trust equation is really just that, it’s a word equation. So trust equals integrity or honesty plus reliability or dependability, plus competence, plus communication, plus genuine care.
So in crisis management, the trust principles are a great tool to first analyze what areas of trust have been most affected. And then it allows you to – once you’ve done that – apply individual and organizational energy most effectively at those areas first to start to re-establish trust.
BUMPER: Theory to Practice: Principles of Trust in a Crisis Situation
So there was a pretty critical moment in Afghanistan where the local governor of the province that I was in did not show up at an event that had a lot of work leading up to it to even bring to fruition. Multiple constituencies were attending this event and it was going to be a formal acknowledgement of a deal to bring on local militia. Everybody is there and the governor does not show up. The whole thing pretty much falls apart along with all the work that had gone to bring us to that moment.
In my next meeting with him a week later I said, “Hey look, by not showing up, your integrity…people think you’re a liar now. You weren’t reliable on being where you said you were going to be.” In talking to him about that he was concerned because ultimately his driver went the wrong way and he was in the back of the car not really paying attention. Communications aren’t good and so we had no way to just pick up the phone and be like, “Hey, we’re going to be a half-hour late” type of thing. And so everybody left, he never showed up and that was really the reason, and he was ashamed a little bit because he thought his competence and that of his driver would come into question. And he’s the governor; he’s supposed to know where everything is. What do you mean you don’t know how to get to a town in your province? It’s not that uncommon in that area. It’s not easy.
BUMPER: Establishing Trust Through Honesty and Genuine Care
So we used that to frame that discussion and then what I was able to do to present to him a way forward was bring again into light the kind of equation, and say, well I understand your concern that your competence is called into question, but by not addressing this and just taking it kind of in one area of competence which is really not as big a deal as maybe you think it is, we’re affecting the integrity, genuine care, dependability, reliability. So you have a choice here.
So in that situation with the governor it was also an opportunity for both he and I to use parts of that trust equation as well and demonstrate to each other that we were willing to be honest with each other. He didn’t have to share with me that bit about the competency. You know I could demonstrate to him that, hey, I genuinely care about what’s going on here, man. I genuinely care about how you’re viewed.
We ultimately ended up establishing trust with each other and moving the trust peg in the right way using those different components of the equation.
The net result was then to take this meeting that had completely collapsed and a month or two later re-establish that meeting and bring to fruition the security forces in that area that had a very positive effect in a local…a very localized way. So it was a win, really, in a number of different areas with a number of different constituencies starting with me to him, and then larger [win for] us [and] the populous through the security forces.
Measuring Trust: Through Competence—or Warmth?
Applications
Contributor / Adam Waytz
Adam Waytz
Psychology
Breaches,Distrust,Government,Leadership,Measurement,Reputation Management,Social Psychology
BUMPER: Trust and First Impressions
I think what the research suggests is that first impressions go a long way and that people are making a decision about, “Do I trust this person? Do I trust this organization? Do I trust this brand?” relatively immediately.
And furthermore, trust is very difficult to restore once it is breached.
BUMPER: Warmth vs. Competence in Gauging Trust
So, the work of Susan Fisk and others has shown that warmth really predominates judgments of trustworthiness, more so than competence.
So, the first and the most important thing that people are basing their judgments of trust on are, “Do I feel that this is someone that’s benevolent? Is this a person or a company or a brand that’s kind, that’s good, that I would like to be friends with?”
The problem is, in the world of business, people tend to focus on conveying competence.
When they want to restore trust or when they want to gain people’s trust initially, businesses tend to focus on competence: letting people know that they’re intelligent, that they’re capable, that they have the ability to act on whatever their intentions are.
Consumers and people in the world and just people who are engaged in social life care about competence second. They care about warmth first. This is also important for leaders as well.
Amy Cuddy and colleagues wrote an article in Harvard Business Review that I like to refer to which is called “Connect, Then Lead.”
Often leaders think that they need to convey their competence to the organization above all else. But the most important thing is first to connect with subordinates and peers and other executives on this dimension of warmth.
I think why we focus so much on competence in the world of business is that competence is much easier to measure. We can see performance ratings; we can see sales numbers; we can see return on investment.
Competence is something that is very visible, so we tend to focus on what is visible and what’s quantifiable.
Warmth is something that feels a bit squishier, a bit more abstract, and even a bit less quantifiable, yet warmth is what people are really thinking about when they’re judging, “Do I trust this person? Do I trust this organization? Do I trust this brand?”
Now, some companies and some organizations have gotten much better at quantifying warmth or quantifying things like social responsibility: “How much is my organization engaged in fair practices towards its workers? Positive interactions with the community? Benevolent actions towards the environment?”
And we can start seeing the emergence of the corporate social responsibility scores. I think this is a step forward in organizations trying to capture warmth in a more quantifiable manner and then conveying that to potential consumers who really care about these dimensions.
I think what the research suggests is that first impressions go a long way and that people are making a decision about, “Do I trust this person? Do I trust this organization? Do I trust this brand?” relatively immediately.
And furthermore, trust is very difficult to restore once it is breached.
BUMPER: Warmth vs. Competence in Gauging Trust
So, the work of Susan Fisk and others has shown that warmth really predominates judgments of trustworthiness, more so than competence.
So, the first and the most important thing that people are basing their judgments of trust on are, “Do I feel that this is someone that’s benevolent? Is this a person or a company or a brand that’s kind, that’s good, that I would like to be friends with?”
The problem is, in the world of business, people tend to focus on conveying competence.
When they want to restore trust or when they want to gain people’s trust initially, businesses tend to focus on competence: letting people know that they’re intelligent, that they’re capable, that they have the ability to act on whatever their intentions are.
Consumers and people in the world and just people who are engaged in social life care about competence second. They care about warmth first. This is also important for leaders as well.
Amy Cuddy and colleagues wrote an article in Harvard Business Review that I like to refer to which is called “Connect, Then Lead.”
Often leaders think that they need to convey their competence to the organization above all else. But the most important thing is first to connect with subordinates and peers and other executives on this dimension of warmth.
I think why we focus so much on competence in the world of business is that competence is much easier to measure. We can see performance ratings; we can see sales numbers; we can see return on investment.
Competence is something that is very visible, so we tend to focus on what is visible and what’s quantifiable.
Warmth is something that feels a bit squishier, a bit more abstract, and even a bit less quantifiable, yet warmth is what people are really thinking about when they’re judging, “Do I trust this person? Do I trust this organization? Do I trust this brand?”
Now, some companies and some organizations have gotten much better at quantifying warmth or quantifying things like social responsibility: “How much is my organization engaged in fair practices towards its workers? Positive interactions with the community? Benevolent actions towards the environment?”
And we can start seeing the emergence of the corporate social responsibility scores. I think this is a step forward in organizations trying to capture warmth in a more quantifiable manner and then conveying that to potential consumers who really care about these dimensions.
Regulating Trust: Love It or Hate It?
Applications
Contributor / Kent Grayson
Kent Grayson
Marketing
Institutions and Context,Regulation,Reputation Management,Sharing Economy,Social Psychology
BUMPER: Regulating Trust: Love it or Hate it?
When we think about trust in the marketplace, we’re usually thinking about trust between the buyer and the seller and, do I trust you enough to give you money so that when you give me a product or when you provide a service, that it’s going to be good?
But there’s another level of trust that exists in exchange relationships, and that’s trust in the context in which the exchange occurs.
There’s a lot of research on the relationship between institutional trust and individual trust, and some research suggests that the more institutional trust exists, the less people feel like they have to build trusting relationships, because they’re protected by the institution.
But there’s also research that suggests that the more we trust in institutions, that provides a useful foundation for building even stronger trust with exchange partners. And the jury is still out on which is true and which isn’t.
A lot of firms don’t like to be monitored by professional associations, and they don’t like rules and laws that keep them from doing things that they might want to do with customers, and those laws and rules can make companies be less efficient and less profitable.
But they can also enhance the trust that the customer has in the institutions that protect trust and without them, the consumer may not want to engage with firms in the entire category.
And this is particularly relevant for new industries. We hear a lot about the sharing economy. One of the problems about some companies that operate in the sharing economy is that these institutions don’t necessarily exist which protect consumers from these problems.
If you’re working in a sector where there isn’t institutional trust, you have to build your trust one person at a time. At the grassroots level. And it seems like, for some of the companies that are operating in the sharing company, that if they do that and they start to build a critical mass, then the critical mass of trust within a particular social network serves as a certain institutional trust.
BUMPER: When Trust Makes Things Too Easy
Based on the research that I’ve done with a colleague in the mountain climbing industry, it seems that as consumers, when we’re going about our daily decision-making process, we sometimes are willing to place faith in institutions without necessarily knowing what those institutions do and without investigating.
So, the FDA — people think, “Oh, well, I’m going to buy this new product because the FDA approved it.” But there are lots of people who think the FDA is not very trustworthy. And there are reasons to maybe think that in certain product categories.
But many people still sort of, almost without thinking about it—it makes things easy. As I mentioned, institutional trust makes things easy for consumers. They believe, “OK, well I can trust this,” when that trust is misplaced.
And the amount of implicit trust (let me put it this way), the amount of implicit trust that exists in the institution of guiding and maybe in the professional associations that monitor is amazing to me as someone who doesn’t climb mountains.
They say, “Well, I went to a website, and I found this person, and my friend says they’re good, so I signed up for them to give them 60,000 dollars, to have them take me to the highest peak in the world where I might die.” And they’re still willing to place trust.
When we think about trust in the marketplace, we’re usually thinking about trust between the buyer and the seller and, do I trust you enough to give you money so that when you give me a product or when you provide a service, that it’s going to be good?
But there’s another level of trust that exists in exchange relationships, and that’s trust in the context in which the exchange occurs.
There’s a lot of research on the relationship between institutional trust and individual trust, and some research suggests that the more institutional trust exists, the less people feel like they have to build trusting relationships, because they’re protected by the institution.
But there’s also research that suggests that the more we trust in institutions, that provides a useful foundation for building even stronger trust with exchange partners. And the jury is still out on which is true and which isn’t.
A lot of firms don’t like to be monitored by professional associations, and they don’t like rules and laws that keep them from doing things that they might want to do with customers, and those laws and rules can make companies be less efficient and less profitable.
But they can also enhance the trust that the customer has in the institutions that protect trust and without them, the consumer may not want to engage with firms in the entire category.
And this is particularly relevant for new industries. We hear a lot about the sharing economy. One of the problems about some companies that operate in the sharing economy is that these institutions don’t necessarily exist which protect consumers from these problems.
If you’re working in a sector where there isn’t institutional trust, you have to build your trust one person at a time. At the grassroots level. And it seems like, for some of the companies that are operating in the sharing company, that if they do that and they start to build a critical mass, then the critical mass of trust within a particular social network serves as a certain institutional trust.
BUMPER: When Trust Makes Things Too Easy
Based on the research that I’ve done with a colleague in the mountain climbing industry, it seems that as consumers, when we’re going about our daily decision-making process, we sometimes are willing to place faith in institutions without necessarily knowing what those institutions do and without investigating.
So, the FDA — people think, “Oh, well, I’m going to buy this new product because the FDA approved it.” But there are lots of people who think the FDA is not very trustworthy. And there are reasons to maybe think that in certain product categories.
But many people still sort of, almost without thinking about it—it makes things easy. As I mentioned, institutional trust makes things easy for consumers. They believe, “OK, well I can trust this,” when that trust is misplaced.
And the amount of implicit trust (let me put it this way), the amount of implicit trust that exists in the institution of guiding and maybe in the professional associations that monitor is amazing to me as someone who doesn’t climb mountains.
They say, “Well, I went to a website, and I found this person, and my friend says they’re good, so I signed up for them to give them 60,000 dollars, to have them take me to the highest peak in the world where I might die.” And they’re still willing to place trust.