Optism™

In 1991, the insurance company USAA sent out refunds of the insurance premiums that servicemen had paid while serving in the Gulf War reasoning that these soldiers can’t drive their cars while they are thousands of miles away. Over 2,500 of these soldiers returned the money, in effect saying “keep your money but just be there when we really need you.”

This is the opening story of a new book by Don Peppers and Martha Rogers entitled Extreme Trust, which examines why being honest and transparent with your customers is not only ethical business but smart business. There are a number of trends that are pushing this importance of trust to the forefront including  concerns about permission, privacy and identity, the rise of mobile and social media, the implementation of big data and the ease in switching your business to another company.

There are plenty of examples where trust and even extreme trust is on display and where it falls down. Apple tells if you have already downloaded a specific song so you don’t pay for it twice. Comcast has a service outage but only gives you a refund if you call to ask for it. A bank may offer overdraft protection on your checking account which is a convenience, but then will process your debits not in the sequence you made them but with the largest items first in order to maximize your overdraft charges. Facebook makes a change to its policies that impact your privacy without telling you. We can see how some companies are focused on short-term gain, some companies display occasional trust and a few companies display extreme trust.

The advent of mobile enables the potential for  us to share a massive amount of data with companies by giving them access to  our location, search history, product comparisons or QR code scans, app downloads, social media networks and even our purchase history. Companies have been asking for this data for years, but companies need to realize that this is a double-edged sword. Consumers expect companies to protect this data against security breaches (TJ Maxx, Linkedin, eHarmony) and not violate our trust (Facebook, Comcast). While companies can still be profitable while not be trustworthy, the expectation of trust is rising and more companies will find themselves underwater.

A lack of trust especially around a person’s identity and privacy is the overwhelming reason why consumers are reluctant to adopt mobile commerce and mobile wallet solutions. If companies fail on trust, consumers have social media to not only broadcast their displeasure, but also to self-organize and ensure that the impact is felt for an extended period of time. Evidence of this can be seen in independent research from 2011 conducted by Jeff Hasen, noted mobile marketing expert, author and CMO of Hipcricket, in partnership with Zoomerang. The results were published on MobileGroove and in a nutshell – 40 percent of respondents said they have used their mobile phone to communicate with family/friends/social networks about a negative retail experience and 46 percent have used mobile to share their positive in-store experiences.

What should companies do?

Companies should be dazzling consumers by proactively earning their trust on a daily basis. Stories of trust should be everywhere and not an anomaly. Companies should not only be asking for permission to use a consumer’s data, but they should also be very explicit and transparent with people as to what they are doing with the data. This becomes extremely important in the mobile arena and will help with adoption of mobile wallets and mobile payments given the many players in the ecosystem that will have access to a consumer’s data. Very often companies are using consumer data to up-sell and cross-sell new products and services, but companies should be analyzing this data to provide value back to the consumer.

Peppers and Rogers outline a number of examples of how consumers’ expectation of trust will force companies to act differently. Some of these examples are further impacted by the pervasiveness of mobile.

• Banks will lose revenue from overdraft charges, but gain more loyal customers because depositors will receive notifications of low balances on their mobile bank apps or via text messages.
• Retailers will lose revenue from unused balances from their gift cards, because consumers will now have their gift cards on their mobile phones and will expect to see balances automatically –and therefore will be less likely to forget about the cards. On the flip side, if consumers are aware of remaining gift card balances, they may spend even more with the retailer.
• Credit card companies will have to coach customers on avoiding excessive borrowing.
• Mobile phone providers will win more business by helping customers find the cheapest plans for their usage patterns increasing the likelihood that consumer recommends the provider to their friends via social media.
• Health insurers will be focused on how they can improve their subscribers’ long-term health, not increasing their revenue.

When was the last time a cable company called you up and said, “We noticed you are on the gold package, but our records indicate that you are not watching these 10 channels so do you want us to move you down to the silver package, saving you $20 a month?” Companies should do more to support their existing and loyal customers’ business along with giving them discounts — not by saving discounts for their newest customers.