The Earning of Trust

Consciously or not, trust underpins much of how we operate.  For example, when we do our weekly grocery shop, we are trusting that others have produced our food in adherence to health and quality standards, transported and packaged it safely, labeled nutritional information accurately, charged us a reasonable price to purchase it, and so on.

But of course, there is a risk with us trusting others in this way.   Buying meat from a supermarket that has not taken adequate precautions could result in our getting sick. As such, whenever there is trust, there is potential for loss. As humans, we are highly averse to loss[i] – so why do we continue to trust others?

The answer is that it is also impossible for us to operate completely independently, which makes trust a necessary basis for any interaction.  The fact that we no longer live in a subsistence economy means we cannot grow and store all our own food!  We need others to help us with that, so inevitably we need to trust them.  We could check everything in their process to make sure that they were doing what was required but if we did that it would not only be logistically changing (or impossible) but in this case, trust would then not be required.

Despite the risks involved, a well-placed act of trust pays significant dividends: for businesses and governments, a level of trust with consumers means that contractual arrangements (to check the validity of the other’s claims) can be reduced, thereby avoiding higher transaction costs. Trust in a doctor’s judgment means that the institutions avoid paying for exhaustive tests. Economists Stephen Knack and Phillip Keefer even found a direct relationship between increases in trust (as measured in survey responses) and increases in national economic growth.[ii]  Therefore, it is in everyone’s interests that trust flourishes – without it, society as we know it couldn’t exist.

But what actually is trust?

‘Trust’ is a term that we use so often and in so many contexts, that when we stop to ask ourselves what it means, we can struggle.  Broadly speaking, it characterises a feeling of confidence in our ability to predict another’s behaviour.

Whether we trust someone also depends greatly on the returns we receive relative to the extent to which we’ve put ourselves at risk. For example, the consequences of a doctor giving us incorrect medical advice are greater than a grocery clerk telling us the wrong aisle for mayonnaise. We expect more from doctors, so while it’s a bit scarier and takes a bit more effort from our side in order for us to trust them, the returns we get from giving that trust – good medical advice in exchange for accurate descriptions of our symptoms – are higher than that which we can expect to receive from the grocery store worker.  Trust and risk are inextricably tied up with each other.  The greater the risk, the greater the trust that is required.  But the greater the returns accrued from a well-placed trust.

Three levels of trust

In line with this reasoning, philosopher Phillip Petit has outlined three different types of trust, each of which incorporates higher levels of buy-in from the trustee.[iii]

The most fundamental form of trust is the ability to rely on others to do what they say they will do.  This is basic trust. Most brands are able to operate reasonably well in terms of ‘basic reliance.’  It is widely understood that if we order something online, the products will arrive in line with our expectations, and if anything has gone wrong, it will be fixed.  Companies such as Amazon, Walmart and McDonald’s have made a virtue of demonstrating this form of trust – you can be sure that the product and service experience is consistently reliable, whether you visit them in London or New York, in-store or online.  Of course, there is not too much risk here – if we do not get what has been contracted, we can generally have recourse to successfully complain.  So whilst it is important to get this right, it also offers brands the least opportunity for building trusted relationships.

Once basic trust has been achieved, the next level of consideration is whether the other party will treat you well.  Do they have your well-being in mind in the way they conduct their affairs? This is called ‘active trust.’ In a corporate context, this is often associated with consumers being a little more vulnerable. When we sign up to a company’s loyalty scheme, for example, we actively rely on the brand to use that data for our benefit, such as offering us discounts bespoke to our spending patterns, and not in a way that will not harm us, such as selling it to a third party without our consent. In situations of active trust, we are not necessarily communicating our needs and expectations but assuming that our best interest and well-being are considered.  There is more risk here particularly in digital environments where we cannot realistically be expected to review all the terms and conditions.  Showing a thoughtful duty of care for customers is therefore important.  There is also more risk for brands which find it increasingly hard to protect customer data against security breaches.  So getting this right offers brands a way of starting to build more meaningful levels of trust.

The highest level of trust identified by Petit is interactive trust, which is built when at least one party involved in an interaction explicitly makes their needs known to the other. By telling the other party our expectations, we make ourselves even more vulnerable.  Essentially, we are asking the brand for something that may not be strictly part of the rules and regulations—but we are hoping they will comply with our request.  In the process of making the brand aware of our needs, the stakes are raised for both parties: we are telling them what they need to do to please us, leaving more room for disappointment than if it was left unsaid.

A typical scenario here is in the area of retailer returns.  This has huge potential for abuse as we can all purchase items use them for a brief purpose (evening out wearing a new outfit, watching a football match on a large screen TV) and then return it.  However, a generous policy here potentially has significant, albeit hard to measure, benefits for the retailer as it is demonstrating interactive trust.  The retailer is taking a risk by recognising the potential for abuse.  The honest customer is taking a risk by asking for a return even though the policy does not expressly allow it.  Brands such as   Nordstrom, that have a generous returns policy, are demonstrating trust in their customers – which in turn earns them trust from their customers.

What should brands do?

It is clear that trust is not a one-dimension characteristic.  A better understanding (and associated measurement) of the topic offers brands a more effective means of ensuring that investments to build trust are used wisely.

Most activity by brands on trust building is arguably focused on the lower echelons – reliability and ‘active trust’. There are, of course, varying levels of success with some brands failing on the basic contracted proposition but also there are many cases of brands not offering sufficient ‘duty of care’ particularly in relation to customer data.

I would argue, however, that these are mere table stakes for a brand which needs to demonstrate trust in a more powerful way.  Interactive trust requires both the brand and consumer to take real risks.  For a brand to make a meaningful promise then there is a risk that the cost of the promise outweighs the returns.  So, for example, UK retailer John Lewis famously has the promise of ‘Never knowingly undersold’.  The risk for John Leis is that the costs of carrying this through (by price matching competitor offerings) could outweigh the benefits of the additional sales it can generate.  The risk for the customer is that by trusting John Lewis and not shopping around, they could miss out on better deals.

Of course, this is how it works in personal relationships – trust is built by both parties taking a risk and having some ‘skin in the game’.  Brands are increasingly seeing trust as an asset that is critical to driving their business.  But to really make it happen requires a strong nerve.  Whether brands are brave enough to do what is needed remains to be seen.

By Colin Strong



[i] Kahneman, D. & Tversky, A. (1984). “Choices, Values, and Frames,” American Psychologist, 39 (4): 341–350

[ii] Knack, S., and P. Keefer, “Does Social Capital Have an Economic Payoff? A Cross-Country Investigation,’’  Quarterly Journal of Economics, CXII (1997), 1251–1288.

[iii] Pettit, P. (1995), “The Cunning of Trust,” Philosophy and Public Affairs 24, 202–25

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Colin Strong is Head of Behavioural Science at Ipsos. In his role he works with a wide range of brands and public sector organisations to combine market research with behavioural science, creating new and innovative solutions to long standing strategy and policy challenges. His career has been spent largely in market research, with much of it at GfK where he was MD of the UK Technology division. As such he has a focus on consulting on the way in which technology disrupts markets, creating new challenges and opportunities but also how customer data can be used to develop new techniques for consumer insights. Colin is author of Humanizing Big Data which sets out a new agenda for the way in which more value can be leveraged from the rapidly emerging data economy. Colin is a regular speaker and writer on the philosophy and practice of consumer insight.

Categories Customer experience, Marketing, Trust