In one of the sessions with Coburn Ventures we discussed the topic of loyalty as well. Pip drew us a diagram to illustrate that loyalty has two distinct ends: no relationship vs. loyalty. Most companies say they strive for the latter, but what they really mean is ‘trapping the customer’ somewhere in the middle.
Upon seeing the video of Casas Bahia, at first I thought: wow, this is the example of a company that is turning the tables on trust. They start from the good of the human, and just want to help people even at the bottom of the pyramid, to own products that they can hardly afford. Compared to the banking system it appears to be a great way of building a relationship of trust. Instead of you having to prove what your worth, they just give credit to you and trust you will eventually pay it of.
But on second thought, I realized: this is a method of entrapment. By giving all those ‘poor’ people products they create a imbalanced relationship, that is not about trust at all, but about dependency of the one on the other.
Either way, the strategy seems to be successful for the company. What do you think: is this a method to build trust and loyalty or not? And even more important: is this a sustainable mode of operation?
I think the concept of “trust building” isn’t as easy as 1-2-3…
We had a riveting conversation at Bagels & Beans here in Amsterdam about how to build trust – whether it’s inside a community, in a client-service provider situation, or even just a friendship.
The upshot: I suspect there are all sorts of ways to generate trust, but one that is very effective is the idea we’ve talked about at Coburn Ventures for a few years now that involves – for lack of a better word – vulnerability-sharing and reciprocation.
Huh?
Let’s say there are two people, Jorgen and Dave and let’s assume they just met each other and their trust level is essentially 1 on a scale of 1 to 10 (1 being low).
In what ways can the trust inside their relationship get to 2? Or 5? Or 10?
One very effective – albeit sometimes uncomfortable – way is for one party to share information about themselves that makes them vulnerable (ie, the other person – if they REALLY wanted to – could use the information to hurt the person who shared the information).
So … Dave may tell Jorgen that he stole a vase from the apartment he’s staying at in Amsterdam.
If the person on the receiving end demonstrates that they are NOT going to use the information to hurt the person who shared the information, trust is built. Maybe the “1” goes to “2”.
But … if, say, Jorgen were to make himself equally vulnerable by telling Dave something about himself, the trust level would go to “3”. If Dave demonstrates that he is not going to hurt Jorgen with that information, maybe we get to “4” … and so on.
I think this is fairly easy to comprehend when applied to individuals … but is it applicable to corporations? Can an enterprise build trust this way? I think so…. particularly considering a corporation can have 100s of “touch points” with their customers. Are those interactions happening with these thoughts in mind?
Is this the **only** way to build trust? Nah. I think demonstrating that you keep promises is another way to get from “1” to “2”. But that’s a conversation for another day…
jorgen, what was the conclusion on similarities and/or differences between social networks and communities
Most importantly: social networking sites are not communitie
However, communities do exist within these spaces, when people gather around something they have in common and interact with each other. It is within these interactions that community emerges, not on the location per se. So, there is no such thing as a Flickr-community, but there can be several communities inside it.
I think trust is built by communicating within the community. The more persistent members of a community are likely to have given their views and opinions several times. If these views and opinions are taken into account by the rest of the community, some form of trust is built. This said, I don’t think the building of trust necessarily has to to with sharing secrets as we discussed earlier, It can also be built by ‘well-formed opinion and view’. Offline example: An acountmanager is given trust in telling the company’s story.
maybe trust has to do with consistency. just maybe we are reviewig trust not as a concept but too much as a value, a very positive one in our current culture. one example:
at a former company we had two main shareholders. one was always in it for the money, very very ego-centri and totally the oposite of what we as dotcom-rebels were trying to achieve.
the other was very unstable, never knew if he would be approahing an issue from ego, money or idealistic point of view. to my experience he was very much on our side, but once in a while totally suprised us.
so. one was consistently bad, the other most of the time good, but sometime very very bad.
in the case of trust (we have had this debate before back then) i trusted consistent views more than the swinging one.
so does trust equal predictability and is it inherently neither good or bad?
Hmm, I don’t think so. ‘Cause in that case you could also argue that you could trust the second shareholder to be consistently unstable, surprising, or swinging. I think the value judgment is important here. Trust is not the same as ‘being sure’. There’s a little more to it then just that. Consistency increases ‘being sure’, in this case about the actions of the shareholders. But trust carries something in it of ‘loyalty’. You had hoped that the second shareholder was ‘loyal’ to the cause of the dotcom-rebels, but every now and then he wasn’t. That decreased your trust in him…and I think honesty comes in there somewhere too.
I do agree that trust can both be good and bad. You can trust someone to not support you, or be loyal to you.
trust has to do with keeping to a promise. such a promise can be absolute (agreed upon) or not (expected). with consistent i mean - the promise. if somebody behaves in a certain way it can almost become a promise of future responses. trust is my faith that he keeps his promise. (in statistics this variable is called Mu - I think … long time ago =)
I think this form of entrapment actually can be inside the domain of trust. With entrapment you form a sort a imposed loyalty, you gave something to someone under certain conditions. With loyalty you form trust. …But this reasoning only works when the ‘giving’ party is the stronger one.
Somehow to me, trust needs to be a free choice, otherwise there’s no trust. So, imposing something on someone doesn’t quite qualify for that in my opinion…
trust is relative. it is your personal faith or.judgement that someone or somebrand will keep to their (implicit or explicit) promise. loyalty is the amount of effort you are willing to put up to keep to your promise. therefor neither trust nor loyalty can be forced. entrapment is a big word… for me too much blaming it all on the corporation leaving consumer responsibility,but… I do would like to raise another issue. is loyalty important? yes. How does commitment relate to that. is the 24 month subscription for an Iphone, loyalty, entrapment, or plain commitment ?
Well I would say it is entrapment, because you don’t have a choice, not to take that 24 month subscription. Commitment would be when they give me an offer and say: well, we can make it this price, but then you have to commit yourself to us for 2 years. Contrary to what is customary in the Netherlands, in the US you pay $ 500 for the phone + a 24 months subscription fee. As the iPhone is produced for only $200, there’s absolutely nothing I get in return for my commitment of 24 months. Do I have alternatives? No, so I would feel trapped…
Commitment is an interesting concept to this discussion. Because it puts the ‘burden’ of trust on the ‘acting’ party. Whereas we’ve been talking about trust so far as the expectation that someone is going to act in a certain way, commitment is the act of saying: I’m going to do this. So it’s a shift from passive involvement to active involvement. Very interesting indeed in relation to loyalty…
very interesting discussion (again!)
there is one thing that keeps surprising me, and puzzles me. why do we always start with the assumption trust has to be built, implicating a relationship always starts at 1 (on the scale of dave)?
in the Casas Bahia case it is clearly shown that there is a business model in reversing this trust development principle. apart from the motives behind the company they have reversed the trust building into trust degradation. they have developed a scheme (sorry for the word) that makes it profitable to take the risk to trust.
would this discussion have been totally different when we would have assumed trust starts at 10? i think this is an interesting question, especially because, as arjan points out, trust is often cultural. in holland, for example, we trust a lot. we trust banks will not steal from us, we trust the local government to operate when we need a new passport, we trust our employer to transfer our salary. in argentina a lot of these things are not so evident. in holland ebay (marktplaats) is successful because we trust the postal system. in argentina it is not so successful, partly because of that.