“The growing storm of distrust is powerful and unpredictable. Trust in institutions has evaporated to such an extent that falsehood can be misconstrued as fact, strength as intelligence, and self-interest as social compact. This has been a slow-motion meltdown, an angry delayed recognition of permanent decline in economic and social status by those who have not kept pace with globalization and dramatic technological change.”[i]
These words are not the rantings of a marginalized dystopian. They are the informed perspective of Richard Edelman, the CEO of the world’s largest PR firm: Edelman. Their Trust Barometer is now in its 17th year and spans the globe.[ii]
One group, however, has been tracking trust in the U.S. even longer. Gallup’s monitoring of trust in various institutions stretches back almost 40 years. The picture it paints is one of a slow, relentless, grinding decline in the level of trust in key institutions.[iii]
The high cost of low trust
“Mistrust doubles the cost of doing business.” – Professor John Whitney, Columbia Business School
When trust is lacking, relationships suffer and loyalty evaporates. That has significant economic impacts. Our research consistently shows that trust—or a lack thereof—is a powerful driver of brand loyalty and market share.
There has also been decades of research proving that messages coming from trusted sources are much more persuasive—which has big implications for the effectiveness of your advertising.[iv]
Lack of trust hurts big brands and big business the most
The biggest brands and the largest corporations have the most to lose when it comes to trust. And at the same time, trust hands an advantage to smaller brands.
There is a decided lack of trust in big business, but small business is not tarred by the same brush. The most recent tracking by Gallup indicates that while just 18% of Americans trust big business, fully 68% of Americans trust small business.
The same size effect holds true for brands too. Our research has shown a decreasing trust in large brands and an increase in trust in smaller brands. In the consumer packaged goods world, this has led to a multibillion dollar erosion of sales by national and international brands. To learn more read our whitepaper Truth, Trust and the Power of Transparency: how mass CPG brands can survive and thrive in a post-truth world.
Lack of trust is constraining emerging elements of the economy
A lack of trust is not having an impact just on big business. Smaller firms that are part of the sharing economy—such as Uber, Airbnb, Etsy, car2go, TaskRabbit, Kiva and Kickstarter—are finding that a lack of trust is greatly limiting their growth.
Becoming acutely aware of this, some firms such as BlaBlaCar—a popular European ridesharing service—have invested heavily in research learning streams to understand how they can build trust. To learn more read our whitepaper The Battle for Trust and the Sharing Economy.
To earn trust, you first have to learn about trust
We believe it is essential to continually ask two simple but powerful questions:
In learning about building trust we have developed a series of engagements. We often start with online qualitative explorations of what people look for when searching or purchasing. Nuanced deep dives into how they feel about what they see and what frustrates them about the information they could not find, provides a rich starting point for generating ideas.
We then often move on to an iterative process of testing, refining, retesting and optimizing tools that facilitate search and help build trust. We typically start with idea filtering, before refining and moving on to optimizing the offer, communication testing and in market monitoring.
Trust can be built. But it takes effort to investigate, test, iterate and evolve. It’s not simple.
The question is, can you afford not to invest in trust?