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Are you “trustable”?

Book Review: Trustworthy isn’t enough in the social age

Extreme Trust: Honesty As A Competitive Advantage. By Don Peppers and Martha Rogers, Ph.D. Portfolio/Penguin. 326 pp. Extreme Trust: Honesty As A Competitive Advantage. By Don Peppers and Martha Rogers, Ph.D. Portfolio/Penguin. 326 pp.

Extreme Trust is an eye opening read, proposing and supporting the premise that only those companies that truly appreciate the customer and have the customer’s best interest at heart will thrive well into the future.

Banks, especially community banks, depend on trust to do business. The authors contend that simply being trustworthy, doing the right thing, is not enough. A company must have “trustability.”

Defining the new level of trust

Trustability, according to Peppers and Rogers, is defined as “nothing short of ‘proactive trustworthiness’.” It will no longer be enough for companies to do what they promise to do. They must take service a step further and go out of their way to protect customers from doing something that would not be in their best interest.

For example, on Amazon, if a customer tries to make a purchase of the same item more than once a message will pop up and tell the customer it has been purchased in the past. Imagine being a customer having a company actually look out for your pocketbook, as in this case. The result, a loyal customer.

Another example cited concerns Royal Bank of Canada:

“RBC uses its superior insight to extend automatic overdraft protection (with no fee!) to low-risk customers (that is, most customers). That way, the customer gets a break—and so does the bank; instead of having to pay a service rep to handle a call from a reliable customer who demands the fee be rescinded, the bank choses instead to send a note explaining ‘this one’s on us’ and how to avoid this in the future, reducing their own costs in the process. Rather than incurring costs and resentment, and then netting no fee anyway, the bank saves the costs, builds goodwill, and then nets no fee. During the first ten years after instituting this approach, RBC increased per-customer profitability by 13%.”

The banker-reader should be warned that the authors don’t spare the industry in their clear dislike of some practices. They also tend to generalize about the banking industry, even when saying that they aren’t. However, if you can get past such criticisms—you’ve read them all before elsewhere, anyhow—Extreme Trust has important lessons to teach bankers.

One such lesson is the authors’ contention that while profitability is clearly important, those companies that have embraced trustability will forego higher profits in the short term to secure long-term customer relationships. If a customer is happy they will make referrals and generate more future revenue for the company.

Indeed, the book’s first chapter opens with a case study, holding up the insurance and banking company USAA as an example of trustability going back to the 1990s. At that time, the company refunded auto insurance premiums for military members on active duty in the first Persian Gulf War, on its own initiative. The company had reasoned that since they were off serving their country, they couldn’t very well be home driving their vehicles.

“USAA consistently comes out as the most trusted financial services organization in the United States, and customers believe USAA will always do what’s right for them...” the authors state.

What’s amazing is that over 2,000 customer-members of USAA sent the checks back.

Social platforms can launch bank brands higher

One of the factors that has accelerated this paradigm shift of proactively looking out for the customer has been social media. Anti-customer behavior rises to the surface, to be seen by all, in today’s competitive, socialized arena.

Social media forces transparency, the authors point out. It is no longer an option for companies to choose to disclose or let consumers into their business. Social media gives everyone a potential voice, the chance to express an opinion that can make or break a company, with power far beyond old-time word of mouth.

One proactive social media effort cited was Best Buy’s 2009 launch of “Twelpforce,” a service that responds to customer questions and problems via Twitter. In its first year of operation Twelpforce responded to nearly 30,000 inquiries—which has not only improved customer service but also helped educate and motivate the associates who participated. (Today Twelpforce has more than 47,000 followers.)

Companies that accept the fact that social media and technology are here to stay and make the customer “king” again will likely be successful and trustable in the long run.  Peppers and Rogers state, “We’re headed for a world in which all our e-mails and phone calls will be as public as Facebook. There will be no more closed-door meetings unless the doors are made of glass. In such a world, no matter what actions we ultimately agree to take, and regardless of how we ‘position’ ourselves in the media, our intentions are likely to become visible as well. This is the reality of transparency, and it is technologically inevitable.”

The mere fact that in literally seconds an unhappy customer can tweet, text, Facebook, etc., how they feel about something has given consumers some of their power back—in spades.

Peppers and Rogers describe the role of empathy and trust in this way: “Normal, empathetic people crave social connection and trust so much that they become upset, irritated, and sometimes outraged when confronted with what they perceive as lack of empathy in others, in the form of unfair or unjust actions.” 

(Editor’s note: Compliance officers will note with interest the advent of this thinking in an age of the new UDAAP, and a Consumer Financial Protection Bureau that encourages, and maintains public records of, consumer complaints about financial institutions.)

The response to any negative feedback in any social media is imperative and forces companies to let their actions speak as loud as their words. 

Parsing the trustability technique

Trustability relates back to three basic principles, according to the authors:

1. Do things right.

2. Do the right thing.

3. Do both of these proactively.

Tying these together, the authors advise that businesses make their actions more transparent, honest, and less self-interested.  There are trustability tests at the end of each chapter, which are very helpful in keeping track of a company’s progress in trying to achieve trustability.

Such tests include questions pertaining to:

• A  company’s products and services  and how they measure up relative to its competitors.

• How management is responding to social media blasts, particularly negative blasts.

• Whether data about customers is being tracked and analyzed on a regular basis.

• How well a company stays in touch with its customers. Customers like contact and want to be connected.

Moving towards a trustability mindset online

The E-Social world has created a new outlet for companies to reach customers. In order to become seen as trustable, companies need to know how to gain traction in the e-social world. Among the authors’ recommendations:

1. Think long term. Building customer relationships take time, commitment, and resources.

2. Share. People want to contribute and share with others. If you want your business to be trustable, then you’ll find ways to share, too.  Make your company accessible. This will help build trust.

3. Show a “human face.” No one is perfect, and this goes double for business. Empathy is a powerful human emotion and if you want to show your human side, it means being able to understand and reveal the truth even if you have been wrong.

So accept your vulnerability. Your business depends upon it.

4. Rely on evidence. Don’t ignore judgment and intuition, but pay attention to the numbers and data.

Trustability, transparency, and honesty all go hand in hand in gaining and retaining customers’ respect and trust. As children we are taught to be honest, do the right thing, and treat others as we want to be treated—the “Golden Rule.” Companies are now expected to do the same and will be held accountable—with consequences.

Extreme Trust is an excellent resource for any type of business and a refreshing read to gain a perspective on how to keep customers for a very long time.

If you'd like to review books for our online book column, or have recently read a book that you found helpful that we haven't already reviewed, please e-mail scocheo@sbpub.com

Tagged under Books for Bankers,

Michelle Rogan

Michelle Rogan is trust & estate services manager at ESSA Bank & Trust, Stroudsburg, Penn. She is a frequent book reviewer for www.bankingexchange.com

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