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Boeing and Starbucks Have A Common Brand Problem: Trust Generating Trust Capital

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Two of America’s foremost brands have new CEOs. Both brands appear to be in crisis. These two brands are very different. One brand is a consumer café brand. The other brand is a durable goods, engineering brand. 

Boeing and Starbucks. 

You could not find two more unrelated brands. And, yet, Boeing and Starbucks have a significant issue in common. This issue is so significant that it should be on the turnaround agendas of both of the new CEOs. 

That common significant issue is trust generating Trust Capital.

You may be thinking that trust in Boeing and trust in Starbucks have totally different implications. After all, trust in Boeing revolves around personal safety, in extreme situations, life and death. Trust in Starbucks revolves around the quality delivery of the expected total brand experience time and again. There are no life and death ramifications when choosing Starbucks, although it may seem like it when you really need that caffeine hit.

Trust is a complicated and elegant component for any brand. Trust is an absolute necessity for brand value. And, brand value is integral to Trust Capital. Research identifies trust as having a significant effect on brand value. And, brand value influences loyalty. And, without brand value there is no shareholder value. 

In a working paper from 2001, research supported the facts that trust

“… creates value by a) providing relational benefits derived from interacting with a service provider who is operationally competent, benevolent towards the consumer, and committed to solving exchange problems, and, b) reducing exchange uncertainty and helping the consumer from consistent and reliable expectations of the service provider in ongoing relationships.”

In other words, trust is the willingness of one party to rely on another partner to deliver what is expected. Trustworthiness relies on employees as well as management policies and practices designed with the customer’s best interests at heart.

Other trust definitions are “a willingness to rely on an exchange partner in whom one has confidence.” Or, “the expectation held by the customer that the service provider is dependable and can be relied on to deliver its promises.” Trust is fundamental in building and maintaining long-term relationships, both personal and brand-business. Trust enhances the quality of a relationship and minimizes perceived risk, financial or otherwise. 

Bottom line: People prefer to do business – whether business-to-consumer or business-to business – with brands they trust. 

A few years ago, the global financial services group, Deloitte, referred to trust as currency. Deloitte stated that trust is an exchange of value. Deloitte defined trust as “… our willingness to be vulnerable to the actions of others because we believe they have good intentions and will behave well towards us.”

Whatever your trust definition, to succeed – to win, organizations must build trust and generate Trust Capital. “Capital” means “… money and/or other assets and resources that contribute to the health and enduring profitable growth of the enterprise.”

In general, most brand-businesses focus on three forms of organizational wealth: Financial Capital, Intellectual Capital and Human Capital. But, Trust Capital is a critical fourth component.

Financial Capital is the money used by a brand-business to buy what it needs to make its products. Financial Capital is the money allocated to provide services to the sector of the economy in which its operation is based.

Intellectual Capital is the combination of three things. 1) Intellectual Capital is the organization’s intellectual property including trademarks, patents, licenses and brands. 2) Intellectual Capital is the brand-business’ unique processes, databases and infrastructures. 3) Intellectual Capital is the brand-business’ special customer, franchisee/owner-operator and supplier relationships for building and maximizing the organization’s wealth.

Human Capital is the collective skills, knowledge or other intangible people-assets of the brand-business’ individuals. Human Capital is the “people talent” of the brand-business helping to create economic wealth.

Add Trust Capital to these three.

Trust Capital is stakeholder confidence in the leadership, credibility, integrity and responsibility of a brand-business to deliver its promises of value to its stakeholders. Trust Capital is a value-creating asset. Trust Capital is an intangible asset that increases the power of marketing expenditures and reduces the cost of new brand introductions. 

Trust Capital is what the organization draws on during troubling events, mishaps or crises, such as coronavirus, plane crashes, perceptions of socio-political-cultural bias or eroding customer traffic. Trust Capital is a most valuable asset in those occasions when a brand needs to defend itself during unexpected, unfortunate situations. Generating and accumulating Trust Capital in a trust reserve – a Trust Bank – provides a trust buttress helping to weather crises of character. 

Trust Capital helps to create enduring profitable growth. But, although Trust Capital is an intangible asset, Trust Capital is an asset that strengthens brands, bringing stability, organizational confidence and the generation of future potential earnings. Aside from the myriad of issues facing Boeing and Starbucks, both Boeing and Starbucks need brand strengthening, organizational confidence and the hope of generating future potential earnings. 

Boeing and Starbucks demonstrate how easy it is for trust to become mistrust in a matter of moments. Whether there has been a disaster or a crisis of mismanagement, having a full Trust Bank reserve of Trust Capital stabilizes the situation helping organizations return to their trusted relationships with stakeholders. It appears that both Boeing and Starbucks have depleted their Trust Banks, especially among their various stakeholders.

Boeing and Starbucks have vastly different operational issues. There are also vastly different constituencies to satisfy. But, trust and building Trust Capital are essential for both brands. And, both brands have new CEOs who can add trust and Trust Capital to their other important, must-do’s strategies. 

When it comes to trust and building Trust Capital, what can Boeing and Starbucks add to their turnaround plans? 

Here are four actions to take right now.

First, create a Trust Agenda.

It is critical to produce the right results by doing the right things in the right way.  This principle applies to every stakeholder relationship. In order to grow trust and generate Trust Capital, the new CEOs at Boeing and Starbucks must have a corporate strategic platform based on a Trust Agenda. This Trust Agenda addresses issues such as: 

  • How will we build trust across our geographies, our brands, our people, our shareholders, our franchisees, our partners, our suppliers and our local communities? 
  • How will we build trust chains throughout all of our relationships, internal and external? 
  • How will we ensure that we include corporate responsibility is integrated into all of our decision-making? 
  • Are we a good global and local corporate citizen? 
  • How sustainable are our actions? A Trust Agenda will ensure that a sustainability opportunity is on the front burner. This means meeting the needs of customers, communities and businesses without compromising the needs of future generations. 

Having a Trust Agenda allows an organization to be a steady force for good while not standing still.

Second, the CEO must be the CTO, Chief Trust Officer.

The new CEOs at Boeing and Starbucks cannot delegate the leadership necessary for building trust and generating corporate Trust Capital. Trust Capital-building is a CEO responsibility. The CEO is the Chief Trust Officer. Chief Trust Officer is a fundamental, ongoing, leadership responsibility. Trust building begins at the top. The CTO role must not be delegated.

The role of Chief Trust Officer is more than a title. CTO is an indispensable, trust-growing and Trust Capital-building task of major cultural and financial significance inside and outside the organization. Studies show that increased trust is a critical factor leading to increased preference and loyalty, generating high quality revenue growth. 

Third, do what you say you will do.

Do what you say you will do is the foundation upon which trust is built. It is a cliché to say that actions speak louder than words. It is a cliché because it is so true. Nothing kills trust more than promising and not delivering. Boeing must deliver high quality, zero defect airplanes. Starbucks must deliver high quality coffee and the Starbucks connoisseur café experience.

Fourth, build Leadership, Credibility, Integrity and Responsibility.

  • Leadership must be demonstrated, not merely claimed. The brand-business must be a thought leader. Is your brand-business perceived to be innovative? And, are you growing in size? 
  • Credibility means your statements and actions are plausible. Be dependable. Be capable, competent and an expert in your field. Provide superior complaint resolution. Be a trustworthy source of information. 
  • Integrity means having customers’ interests at heart. Be accountable for actions. Behave ethically. 
  • Responsibility provides competitive advantage. Demonstrate good global corporate citizenship. Corporate Social Responsibility is not a separate division within the organization. It is a way of doing business. 

As the Edelman Trust Barometer continues to show, there is a global trust deficit. Building trust must be a brand-business priority. Accruing Trust Capital is essential for high quality revenue growth for profitability and success. Without trust there is no brand value. Without brand value there is no shareholder value. Trust plays a critical role in perceived value. Trust Capital leads to high quality revenue growth. 

Businesses want brand-businesses that businesses can trust. Trust is must. The recent story of Costco in The New York Times shows the power of trust and Trust Capital. In describing Sol Price, Costco’s founder, the co-author of The Joy of Costco said, “Everything was about trust. He (Sol Price)  would rather lose your business than your trust.” For Boeing and Starbucks, having  new CEOs provides the needed jump-start for rebuilding trust and generating Trust Capital.

THE SIX RULES OF BRAND REVITALIZATION: ETSY’S BRAND RECOVERY

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Recent news about Etsy indicates that the new leadership under CEO Josh Silverman has implemented a successful brand turnaround. The online crafts seller was in dire straits just a year ago. There was consensus among many that Etsy was doomed, a victim of not only Amazon, but also other direct to customer selling on sites such as Instagram.

However, today, Etsy is thriving. As Financial Times so clearly stated: “The results suggest that the problem was not the threat from a Seattle e-commerce giant but rather its own mismanagement.” Brands do not die a natural death. There is no natural brand lifecycle. Brands can live forever but only if properly managed. Brands under inept leadership falling under the spell of common tendencies for trouble such as losing sight of the core customer, letting bureaucracy and processes take over, playing not to lose instead of playing to win, failing to adapt to changes in the marketing world, or not having a clear direction, inevitably move into the death spiral. Mr. Silverman followed what we call The Six Rules for Brand Revitalization.

Mr. Silverman did the following:

Rule #1 Refocus the organization: Mr. Silverman refocused the organization around a clearly articulated brand direction. He gave employees a vision of a possible dream, a common ambition that all could buy into and implement.

Rules #2 Restore brand relevance: Etsy had evolved to an “eccentric” crafts fair avoiding fundamental marketing approaches, and had favored its craftspeople over the customer. And, although the headquarters still retains its quirky character, there have been substantial brand changes designed to attract new customers. One of the top brand priorities is making and keeping core customers happy.

Rule #3 Reinvent the brand experience: Etsy’s website was cumbersome and off-putting, especially for novices. One of the first changes made was to improve the website to make the site easier to find and easier to use. Marketing the experience is now a priority as Etsy indicates it will increase its marketing budget to communicate the Etsy experience.

Rule #4 Reinforce a results culture: Mr. Silverman focused on stopping the bleeding. He implemented job cuts but also increased commissions, keeping these below that charged by Amazon. The focus is on generating high quality revenue growth. Furthermore, Etsy is solvent enough to begin reinvesting in the brand.

Rule #5 Rebuild trust: Etsy’s craftspeople made a record US$1billion in gross merchandise sales over the last holiday season in 2017. Even though sellers were miffed about the increased commissions, it is clear that the new approach is working, offering them a better platform for their goods. As for customers, an easier, more comfortable, consistent brand experience that delights is fulfilling the promised brand experience. Consistent delivery of the promise to employees, sellers, and customers builds trust. Be consistent.

Rule #6 Realize global alignment: Through Mr. Silverman’s focus, the brand has a common, global direction. Now, that the brand is on solid footing, Etsy is expanding its global presence. Etsy closed a deal with the German crafts site DeWanda, whereby DeWanda shuts down and refers its craftspeople to Etsy.

In speaking with analysts and fund managers, the problem at Etsy was a “classic” management problem. The previous CEO was a technical engineer rather than a brand-business focused leader. And, although there were technical difficulties at Etsy, brands need classic brand management even in our techno-obsessed, digital, online and mobile world. Brands can be murdered by misguided marketing practices. Brands die when they suffer from self-inflicted wounds of mistaken marketing actions.

The turnaround at Etsy has demonstrated that if properly managed, it is possible for brands to thrive in an Amazon-dominated business environment. It is all about winning and keeping customers every day. Brand leadership is a never-ending commitment. And, as Etsy shows us, brand success does not just happen; we must make it happen.

 

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Photo Credit Etsy

THE CAROUSEL OF CREDIBILITY GRAB THE GOLD BAND OF BELIEVABILITY

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What goes around, comes around. From the beginning of advertising, expert testimony was the way to sell a brand. From the remarkable RJ Reynolds cigarette ads that touted that Doctors recommend Camels, to the ADA seal of approval on Crest toothpaste (Look Ma, no cavities!), to Ronald Reagan and GE, to TV star Mariette Hartley selling Polaroid cameras, to today with Marie Osmond and Oprah Winfrey confirming their weight loss results with Nutrisystem and Weight Watchers, respectively.

But, overpowering expert testimony has been the increasing reliance on peer review, peer ratings, and online peer influencers and websites of peers alerting us to situations such as the food safety (alleged) poisonings at Chipotle. Many people do not make a hotel reservation without checking with TripAdvisor, even though faceless, unknowns of potentially sketchy backgrounds are dishing their opinions. They do not make a restaurant choice without checking Yelp. They select a doctor by searching for patient ratings. They select a home-repair person by checking Home Advisor.

Things have changed. The carousel of credibility has turned around with its calliope crooning a new crescendo: experts and academics are now more trusted than peers. The credibility and validity of peer ratings are being questioned.  According to the 2018 Edelman Trust Barometer, just released, 2017 was a good year for faith in experts, and a really bad year for faith in peers. Technical (63%) and academic (61%) experts became the most credible spokespeople relative to “a person like yourself,” which dropped six points to an all-time low of 54%.

In the Edelman press release, the head of the Reputation practice said the following: “In a world where facts are under siege, credentialed sources are proving more important than ever. There are credibility problems for both platforms and sources. People’s trust in them is collapsing, leaving a vacuum and an opportunity for bona fide experts to fill.”

Trust in CEO’s is benefiting. For years, CEO credibility has been on the decline. But as the new study reports, “…this past year saw CEO credibility rise sharply by seven points to 44% after a number of high-profile business leaders voiced their positions on the issues of the day.” In other words, CEOs have moved to standing up for what their brands stand for, a welcome change.

Being the purveyor of credibility has responsibilities. As Edelman points out, “building trust (69%) is now the No. 1 job for CEOs, surpassing producing high-quality products and services (68%).”

Brands must leverage this turn of events. Now is the time to involve expert testimony to enhance brand expertise in the brand’s area of authority. Peer testimony is not going away, but allowing it to totally define and drive the brand is creating a lot of baseless buzz rather than believability.

Brand credibility is a driver of purchase intent. Studies show that the more credible the brand, the higher is the purchase intention toward the brand. Customers show greater purchase intention toward brands that are credible. Research from 2004 indicated that brand credibility could increase the probability of inclusion of a brand in a customer’s consideration set. The years of research on credibility and brand clearly articulate that one of the significant factors in augmenting brand credibility is based on providing expertise.

Credibility means that the brand can be believed to consistently deliver what it promises. The support of “credentialed” individuals is a factor that helps build trust. Credentials means having specific qualifications or checkable achievements as indicators of relevant expertise.

The question for brands has always been “who do you trust?” Brands relied on their heritage, and sometimes the support of experts. But, in the modern social media age, brands relied on the power of peer ratings and comments.

It seems the carousel is spinning around to a new time for trusting the experts over the amateurs. Peer reports and ratings will always be important. But, in a world of information overload, expert testimony will rise in importance. Brands must step out into this brave new world where expertise is the new king. Brands must adopt a new view on how to communicate their expertise as an authoritative source of quality, leadership, and trust.

 

 

 

 

 

 

 

DITCHING THE DARK SIDE, BOOSTING OUR BEST SIDE

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Social media is the premier tool for The Age of I, where people want to be seen as individuals while at the same want to belong to identifiable groups. Social media allows people to communicate their individuality to anyone, anywhere, any time. At the same time it connects people to like-minded others. It embraces individual differences. It fosters communities. Social media opens doors to new ideas. It reinforces familiar ideas. It gives the voiceless a voice.

However, social media has a dark side. Social media can distort the truth while eroding trust, as Facebook is now aware. Marketing has an opportunity to play a role steering social media away from the dark side by promoting our best side.

Facebook has finally recognized that its laissez faire attitude to news postings has created a swamp of suspect stories that torpedo truth and trash trust. As helpful as Facebook can be in our lives, it has a tendency to devolve to the dark side. Facebook believes it needs to address this now, especially since the US will be in election mode for House and Senate seats in 2018.

Facebook is a social media force of galactic proportions. Although Mark Zuckerberg is neither Darth Vader nor obi Wan Kenobi, the good over evil tension of Facebook is a battle worth having. Mr. Zuckerberg believes that by providing a trust metric, Facebook will be able to include trustworthy news sources while blocking less trustworthy sources. We can only wait to see how this turns out. Facebook is asking Facebook users to provide the judgments that create the trust metric rather than allowing the brand to become the arbiter of truth. (There is already serious blowback regarding this metric. For example, The Atlantic and The Shorenstein Center on Media, Politics, and Public Policy have recently expressed concerns.)

Brands no longer have the option of sitting by and waiting for the dust to settle. Brands need to evaluate how they can bolster our best intentions. What can brands do to bolster our better intentions?

Become part of the solution for customers’ important issues

Customers prefer brands reflecting values that match their own.

Behave predictably

Erratic behavior and changing beliefs and practices confuse customers and dilute trust. Consistency breeds comfort.

Provide information

If you do not, customers will find it anyway. Social media is an image-maker or an image-breaker.

Respect the customer

Communications that talk down to, or demean customer’s thinking may be funny and witty, but you may be insulting someone.

Seek out credible third-party testimony

Borrowing credibility works: peers and influencers matter. There is a positive halo effect.

Show you care

Whether globally or locally, find issues that show you care about and then don’t spectate, participate. You are what you do.

Speak up

Do not stay silent. Silence may be golden but only in the library reading room. Be proud out loud.

Be visible and up front

Do not hide from the debates. Don’t obfuscate. Keep it simple. Be clear. Confusion leads to discomfort. Stand up for what you stand for. Customers want to know the simple truth. Someone once wrote, “ A secret is a private truth and that is an acceptable definition of madness.”