How can we win back customers’ trust?

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One of the most striking findings of this year’s Retail Proposition Strength Index, launched by OC&C at the World Retail Congress two weeks ago, was that customers’ trust in retail brands is in sharp decline.

Of nearly 400 retailers rated by more than 22,000 customers worldwide, two thirds saw weakening propositions, and the leading reason – more important than price perception, value, service or any other attribute – was their falling ratings for trust.

Of course, trust has been undermined across many institutions, from the media to politicians and bankers. A general decline in deference and rise in scepticism is nothing new.

But retailers had assumed that they would maintain consumers’ confidence while traditional sources of authority weakened, and that this would give them permission to extend their brands into new areas. This assumption is under threat.

Retailers should be worried. Not only does the index show that falling trust is the biggest reason for brand erosion: but this results in increased propensity to shop on price and slower long-term organic growth.

‘Trust’ needs deeper examination, as customers’ expectation may be changing. Whereas it was once sufficient for retailers to proclaim standards and then to control and protect the brand, customers now demand to find out for themselves.

Online retailers find this easier to accommodate. Posting customers’ reviews, allowing the category managers to blog, hosting discussion threads, placing webcams in suppliers’ factories all contribute to opening up the organisation.

For bricks-and-mortar retailers it comes less naturally. Transparency takes courage. But to today’s connected generation, an engaged organisation is authentic, a controlling one is defensive and patronising. Retailing may come full circle. 50 years ago, independents and co-operatives were naturally connected into their communities. Trust was personal.

As scale grew economic advantage was achieved but retailers became monolithic and disconnected. For all the talk of customer-centricity, a category killer or a mass merchandiser is a machine for efficient distribution.

Now with innovations in data capture and marketing analytics, retailers can understand customers better and interpret or even anticipate their needs. Customer focus is possible again.

But however skilfully, retailers are still second-guessing their customers. How about putting them truly in charge? The next generation retail model may resemble open source systems such as Wikipedia, Android or Linux.

Could retailers open up their assets to allow customers to configure their own products and services? The most trusted retailer may be the one whose community of customers and suppliers collaborates for innovation and value creation. Amazon Marketplace and eBay are the nearest to this today – and show rising trust ratings in the index. There is an audience out there, already ready to define its own products and services. True trust would be to allow them to share what you have, and find ways to do it faster, better, or cheaper than you.