Trust Equation — as a business system
How to leverage the formula to build relationships with customers
Why Trust Matters
Over the past couple years it seems one can’t read or listen to business news without a story about trust in some form or another. While there are many point solutions that are explored, how should a company think systematically about trust?
Through this article I propose the use of the Trust Equation (shown below). I was first exposed to this framework during an executive education program through Accenture. As an engineer I found this a great way to break down how to manage relationships with others. While I’m not the best practitioner (yet), it was a valuable tool for me.
I’m going to talk about how you would apply this to your business and questions to address through your product development process. I’ll start with a tear down of the formula, share how I have tried to systematically build this out for my current company and then finish with a quick application of the model. If you are interested in applying this to your personal career there are many resources online that discuss this on a personal level (I have included below in the Reference section).
Formula Teardown
Each of the components is pretty straightforward, especially if you think about yourself. I have taken a stab at how I interpret the model to be applied to businesses below.
- Credibility — You earn this over time through various actions you take. This includes your brand reputation, proven experience. Companies that have high credibility are able to introduce a new product and see high adoption rates of a v1 product. Apple has nailed this as customers line up ahead of the product launch to purchase products. I personally have waited for a v2 hardware product before I buy knowing that hardware fixes are not easy to address, but I am more open to a v1 software solution.
- Reliability — Every customer has a brand promise they propose to attract customers, but how well do they live up to that promise. There are sites like Consumer Reports and TripAdvisor that have been created to be a 3rd party source to share this information on products and travel services respectively. Ultimately Reliability comes down to consistency of delivering a great experience or product to the customer.
- Intimacy — This is all about do you feel that you are valued and the company would go above and beyond to provide you with the best customer service and treat you as a highly valued customer. In the tech world this is largely privacy and security measures and in commerce it also includes the customer service experience. Companies that consistently rank well here include Four Seasons hotels, Zappos, and Nordstrom.
- Self-Orientation — How does your product respond when faced with a choice between what’s best for the customer vs. what is best for the company? A topic that has been in the news a lot lately is around Data privacy rules. In late 2015 Apple gained a lot of value from their customers when they stood up to the government on encryption. Contrast this with Facebook who for nearly 18 months denied any data issues related to the 2016 election, only to have a large story break on how Cambridge Analytica was able to leverage the product ‘as designed’ to access 250k+ customer records.
Model in Action
The above probably all makes sense, but how do you build this into your business / product strategy? Here is a look at how I’m thinking about this relates to my current role as lead of Strategy at Porch (this is my MVP solution and over time I hope to harden how this framework applies to products / businesses).
I will focus mostly on the questions to ask yourself as you go through the process and will layer in examples from my current experience at Porch to make it more real.
Credibility
To be the credible source for your industry this means that you are winning the moment of truth when a customer is considering the action that you can deliver. For Porch this is about being a Home Assistant to help customers complete their home projects.
- When Porch is shown along our competitors do people choose us over our competition?
- Why do customer’s come back to Porch and how often do they return?
- When we send out marketing messages what is the engagement rate?
- What is our engagement on social media?
Reliability
The main job customers are “hiring” Porch to complete is to help them “find a pro”. This doesn’t mean just surfacing a list of pros, but means that we are helping them to select the pro to hire for their project. Some of our products allow us to see the final results, but others are not far enough down funnel to capture signal.
- What is the service level on our managed service experiences (e.g. book a handyman)?
- What is the service level for our Pro Network?
- What is the customer satisfaction score, net promoter score and/or customer effort score?
Intimacy
We launched our Home Assistant solution to create a greater level of intimacy with our customers and provide them a 3rd party avenue to get advice on their home projects. We identified that many customers are looking for a 3rd party source to be with them through the journey of their project and not just at the point of project submission, like many of our competitors.
- Does Porch protect your personal data?
- How secure is the system to protect data and identity?
- What is the engagement rate with the Home Assistant?
- What are the types of questions that we are asked?
- How satisfied are customers with our responses / did we answer their question?
Self-Orientation
For this category it is largely an internal look at processes and how decisions are made. This includes a review of key metrics and how focused they are on the customer. I see this category largely a reflection of the espoused behaviors that define the ‘true values’ of a company.
- How aligned is the business model with the mission?
- How often are new features released that have larger impact on customer experience vs. revenue?
- What are the key metrics for the business (e.g. Customer Experience, Revenue, Profits)?
- How would you stack rank the various values? Are these values external or internal focused?
For me it was helpful to go through the exercise above. There are definitely areas we need to improve upon to improve our Trust quotient, but by having a model like the above I can go back to the rest of the Executive team and get their opinions and use it to start a discussion. I am a customer first believer and know that trust can go a long way.
Illustrative Comparison
To illustrate the difference in trust levels between companies I have done a quick analysis on the four largest tech companies to benchmark. Clearly you could debate the score below, but the results are aligned with how “trusted” I perceive these companies to be based on my experiences.
The biggest differences I see for the four companies comes down to Intimacy and Self-Orientation. Amazon has been notorious for customer centric, to a point where employees voiced concerns (see this NYT article). Apple as I discussed above has been a proponent for data protection and has built a loyal customer base.
Facebook and Google I have lower given their business model is predicated on using customer data to make money through ads. In addition, there isn’t as much focus on what customers really want from the solution.
In Closing
Building a lasting company is all about trust. While my scores for the top tech companies show a lot of spread, the reality is that customers are not pushing to break up the top tech companies as they are delivering experiences that the customers crave, despite pushing up product and ad pricing. This is an example of the market power they have been able to generate via trust.
The trust equation provides the basis for a systematic view of trust and can provide a good backbone to evaluate and benchmark your behaviors and identify potential risks. The factors are critical for all businesses to understand and think through their actions to determine how to create deeper connections with their customers. Hopefully this framework helps you think beyond traditional forces to include a deeper discussion on customer trust.
