If Trust is so important, why do so few companies measure it?

Most people understand implicitly that good Business to Business (B2B) relationships are built on a strong foundation of trust. But if Trust is so important, why do so few companies measure it? It’s a question that has always intrigued me. I must admit that I’m still struggling to find the answer.

The fact is that CEOs keep tabs on all sorts of KPIs. For operational performance, there are lots of service level agreements (SLAs) and other three letter acronyms (TLAs). Logistics companies even have five letter acronyms like DIFOT – Delivery In Full On Time. For financial performance, the CFO has an eye-watering array of metrics. For customer performance, there is customer satisfaction (CSat) and Net Promoter Score (NPS).

But rarely, if ever, is there a metric for Trust that is discussed by the leadership team or reported to shareholders.
 

How Important is Trust?

A couple of weeks ago, I ran a short poll on LinkedIn, asking people what they thought was the most important element of a strong B2B relationship. It wasn’t a trick question as we believe at Deep-Insight (based on pretty good academic research) that the three key pillars of a great B2B relationship are Trust, Commitment and Satisfaction.

I wasn’t surprised by the winner but I was intrigued by the margin. It appears that Trust really is seen as the cornerstone of a strong B2B relationship.

Trust Commitment Satisfaction
 

Trust, Commitment and Satisfaction

How are they all related? Here’s how we explain it.

If you take a purely commercial view of any business relationship – and you shouldn’t – it’s all about the revenues you can generate from that relationship over the long term. I know that’s a bit mercenary but that’s how some people view things. The greatest predictor of a long-term relationship is Commitment and it’s important that you measure your clients’ commitment to you. We ask that question quite bluntly to our clients’ customers: “Are you committed to a long-term relationship with [Name of Client]?”

It turns out that the answer to this question has the highest correlation with the likelihood of the company buying from our client again in the future. The opposite is also true. A poor score is the best predictor that the customer will defect to the competition.

But remember: commitment to a long-term relationship is only the outcome of other factors. Two of the most important factors are Trust and Satisfaction. Trust is all about fairness, honesty and acting with integrity. It’s a reflection on what clients think of your brand but, more important, it’s their perception of how trustworthy your people are as well.

Satisfaction, on the other hand, is a measure of how well you meet (or exceed) a client’s expectations. It’s more transactional than Trust, and also more volatile. For example, you can be satisfied with your IT service provider today, but deeply unhappy tomorrow when the network crashes and your factories or stores can’t operate. When the IT service provider pulls out all the stops and fixes the problem in double-quick time, you’re both relieved and satisfied again. Satisfaction scores can fluctuate wildly. Trust scores? Not so much.

 

Trust at Serco

One of our clients that takes Trust seriously is Serco. It’s one of Serco’s four stated values: Trust, Care, Innovation and Pride.

Trust at Serco

Serco is quite clear about both what Trust is, and what it is not. Here are the behaviours it expects from its people:

  • Do what they say they will, try their best and see things through
  • Consistently provide the highest standards of customer service
  • Have a can-do, will-do attitude
  • Are open and honest
  • Communicate truthfully, clearly and concisely
  • Aim to always do the right thing and never compromise our values
  • Think through the consequences of their decisions
  • Speak out when they see something wrong
  • Understand who our customers are, listen to them and act upon their feedback
  • Challenge assumptions in an appropriate way
  • Acknowledge when they make mistakes and take responsibility for correcting them
  •  

    Similarly, Serco believes Trust is not demonstrated if employees or the leadership:

  • Make promises that we cannot keep
  • Rush to provide solutions before listening to others’ needs and opinions
  • Fail to keep customers and colleagues informed
  • Are not straightforward and transparent
  • Allow disrespectful or discriminatory behaviour
  • Knowingly use Serco’s resources for personal gain
  • Break our Code of Conduct or the law
  • Falsify or misrepresent information
  • Ignore and don’t speak up when we see something wrong
  • Choose to ignore adverse criticism
  • Blame others for mistakes we have made or things we have missed
  • Shift our responsibilities to others
  •  

    Why do so few companies measure Trust?

    How many companies measure have identified Trust as a core company value and measure it in a systematic way? The short answer is that very few B2B companies measure Trust at all. Serco is one of the few that even identifies it publicly as a core value. Isn’t that strange? Business magazines and articles are full of ideas and tips for becoming trusted advisors. A lot of CEOs and company boards talk about “trusted relationships” with clients in their annual reports to shareholders.

    Trusted Relationships

    Interestingly, the same CEOs and boards talk about trusted relationships but then quote the company’s Net Promoter Score (NPS). Now don’t get me wrong. There’s nothing wrong with NPS but it’s not a measure of Trust. It’s a measure of Advocacy. Yes, the two are related but it you’re going to talk to shareholders and clients about “Trusted Relationships” or “Acting as Trusted Advisors” then you really should go and measure your performance directly.

    Sometimes NPS isn’t enough. It’s a good metric – simple and easy to understand. But it’s one-dimensional. If you really want to understand how trusted a relationship you have with your clients, you need to measure Trust as well as NPS of CSat (Customer Satisfaction). As a CEO or Sales Director, you need to understand if your key clients are Ambassadors who trust you implicitly, or Stalkers and Opponents who want to get out of the relationship because levels of Trust (and Commitment and Satisfaction) are so low.

    If you want to know more about measuring Trust, have a read of this blog.

    Alternatively, get in touch with us today.
     
     

    Why are Trust and Commitment so Important in B2B?

    Trust and Commitment

     
    The following words are from two American academics Rob Morgan and Shelby Hunt. We’ll come to these guys shortly.
     

    —————————

    “Commitment and trust, rather than (or at least in addition to) power and dependence, are now central to discussions of business relationships.
    Researchers and practitioners have come to view most interactions between business parties as events that occur over the course of a relationship between two or more partners.”

    —————————

     

    The funny thing about business-to-business (B2B) is that it’s less about business and more about relationships. In fact, B2B is really P2P: person-to-person. People buy from people. In large organisations, the decision to go with one particular service provider over another is often down to the answer to one simple question: “Do I really want to work with this person?”

    The answer to that question is usually based on the perception of whether the individual can be trusted or not. Without trust, there can be no commitment.
     

    I thought companies bought mainly on price?

    Large business contracts are often put out to tender. Companies will often produce a clear set of evaluation criteria to help guide the choice of service provider. Price is always one of the evaluation metrics. Even so, the final decision is often made on softer and unwritten criteria. Few decisions are made solely on the basis of price. Often, they are made on a combination of price and solution/ functionality. But when it comes to making the final choice to award any contract, subtle psychological elements come into play.

    “OK, I know these guys seem to have the [INSERT: ‘best product’, ‘lowest price’, ‘most innovative solution’]. But what if it all goes wrong? Will they sort out the issues or will they leave me in the lurch? Will I lose my job?”

    Fundamentally, we like to buy from people we think are honest, who treat us fairly and who act with integrity. In other words, we buy from people we trust. Price is generally a secondary consideration. It can’t be ignored but rarely is it the most important factor in the decision-making.
     

    Morgan and Hunt

    Two American academics figured this out a long time ago. In 1994, Rob Morgan and Shelby Hunt wrote a seminal paper on what really drives a long-term relationship between two business partners.

    The Commitment-Trust Theory

    The Commitment-Trust Theory of Relationship Marketing quickly became a hit, not just in academic circles, but among senior business executives who were trying to identify why people were likely to do business with you.

    Morgan and Hunt realised that long-term business relationships are built on a mutual and cooperative working relationship between two partner firms. Focus on Trust and Commitment if you want to foster and nurture such relationships. That’s why we built these key metrics into the heart of our Customer Relationship Quality (CRQ) methodology.


     

    Customer Relationship Quality (CRQ)

    Deep-Insight’s CRQ model works on three levels. Let’s take a quick look at each level. From the bottom up:
     

    The Relationship Level

    Trust and Commitment are the most important building blocks for a good relationship but don’t ignore Satisfaction. This is simply a measure of whether the customer’s expectations have been met or exceeded. Satisfaction is quite transactional. Customers can be happy one day and deeply unhappy the next, if they experience a problem. If the problem is solved, satisfaction levels increase quickly.
     

    The Uniqueness Level

    Experience is a measure of how easy you are to do business with and if you are seen as a trusted partner. You can have the best products or services in the world but if your clients can’t work with you and don’t see your people as trusted partners, you will not be seen as ‘Unique’. Deep-Insight defines Solution as a combination of Innovation, Leading Edge and Value-For-Money. These are three related but slightly different concepts but if you score well on all three, you have an offering that can help your clients compete in the marketplace in a way that none of your competitors can do. When we talk about ‘Solution’ we’re not just talking ‘Product’. It’s as much about how the account managers, sales and delivery teams position your company’s product or service, as it is about the product or service itself.
     

    The Service Level

    Service covers three separate elements: Reliability, Responsiveness and Customer Care. Reliability measures whether or not you do what you say you do. Do you walk the talk? Do you do what you promise? Essentially, can your clients rely on you (and the ‘you’ refers to both the brand and the individuals working with the client). Responsiveness measures whether or not you react quickly to issues that arise. Better, still, are you proactive in anticipating customers’ needs or issues. Customer Care is all about making the customer feel valued.
     

    Are you interested in building Trust and Commitment with your key clients? Would you like to find out more about our Customer Relationship Quality (CRQ) model? If the answer to either question is yes, contact us today.