Digital Value Creation

The Trust Equation

March 22, 2021 Tamas Hevizi
Digital Value Creation
The Trust Equation
Show Notes Transcript

All digital transformations ultimately need to improve customer experience. Digital project's ultimate value is when they increase revenues and business growth through better customer interactions, loyalty, and higher value exchange. Customers buy more from businesses they trust. We all understand trust in human interactions. But what does Trust mean in the Digital World? Let's take a look

All digital transformations ultimately need to improve customer experience. Digital project's ultimate value is when they increase revenues and business growth through better customer interactions, loyalty, and higher value exchange. Customers buy more from businesses they trust. We all understand trust in human interactions. But what does Trust mean in the Digital World?
Let's take a look

Years ago I was at a leadership seminar that focused on the Trust Equation. I found it one of the most profound concepts in business. There are many variations and the one I learned was as  follows:
Trust equals intelligence plus emotional intelligence and the ability to execute divided by your perceived self-interest.

TRUST = (IQ + EQ + XQ) / SELF INTEREST

It's simple to understand. You are trusted more and have more credibility if you know your business, can relate to the customer's needs, and can deliver for them. Now, trust can be eroded if you're more interested in winning than serving the customer.
I remember at that seminar the trainer ripped our corporate presentations apart because it was mostly about ourselves and not our customer's needs. 
The opposite is also true, you have the most trust if you are perceived to have the customer's interest first. As the old fiduciary mantra goes " Always put the client's interest ahead of the firm".
The formula is true for people as much as businesses. Think about who you trust to serve you. They should be smart, caring to be able to walk the talk, and put you first. Makes sense.
Now - how does Trust show up in the digital world?
I think the equation holds up very well. It is easy to see how high trust organizations performed better in the crisis than low trust ones.
As the crisis unfolded businesses did their best to adopt. Some put the customer first others their own self-interest. Arguable some had no choice because they were in firefighting mode. It is important to understand though that customer trust suffered as a result. The good news is that the assessment and the prescription are in the same formula. What you have to do to improve trust becomes clear. Know your business, build rapport and relate to your customer needs and deliver on your promises. When you have to make tradeoffs, make sure the customer perceives they are winning and not losing. 
The digital winners in the crisis built high trust. Let's look at some examples. 
Look at Amazon, Dominos, or Starbucks. They had similar playbooks. Amazon demonstrated a high IQ by understanding where disruptions will happen. They had high EQ by prioritizing schedules and over-communicating to customers constantly during ordering and deliveries of any delays. They showed high XQ by not missing adjusted expectations and delivering on time. Some delays were inevitable. Amazon implemented proactive policies for cancellations and refunds to show customers first and lower self-interest. Don't get me wrong. They made money. But they had the best year of their business but the customer perceived this with high digital trust.
Dominos and Starbucks adapted similarly while keeping high trust by keeping elements of the equation top of mind. Both maintained their ordering accuracy (their process IQ) and stayed proactive in communication (EQ) and maintained service levels throughout (XQ). 
The flip side was a popular restaurant that refused to implement even the most basic website or even a second phone line for orders. Customers were on hold for long times, they had no database of their customers, even those who were regulars for years, food was not ready when promised and they raised prices to cover for lack of customer traffic. They failed on IQ, EQ, XQ, and self-interest at the same time. A considerable feat. They went from a restaurant sold out for the last 2 decades to one that folded in 3 months. They never even made an effort to build trust. Their loyal customer base, myself included, would have been there for them if they tried. 

I believe simple concepts like the trust equation are the best for guiding digital teams on what's important and keeping in mind that it is all about the customer in their terms.  

I often sketch out the trust equation for both people and companies I deal with. It can be quite enlightening. And maybe, just maybe, do it on your own business and yourself. Have fun with it.