Consumer trust is vital to brand loyalty

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By: Wise Marketer Staff |

Posted on May 31, 2012

In most relationships, broken trust inevitably leads to a break-up, and this could not be more true when it comes to the relationship between a retail brand and its customers, according to Michael Green, director of insight for Transactis.

The company recently conducted a survey of 1,000 British consumers and found that 95% would cease to do business with a company if it handled their private details irresponsibly, got them wrong, passed them to third parties, failed to keep them secure, or otherwise abused their trust.

Not only would an overwhelming majority take such action, but more than two-thirds have in fact already done so: 69% of those surveyed say they have actually terminated their business relationship with a company within the last three years because they felt it had mishandled their personal data and they "could no longer trust that firm".

These results make it crystal clear that the responsible use of personal data is essential to gaining customer trust, maintaining loyalty and reducing the risk of a broken consumer relationship. It is evident that to keep a customer, a firm has to gain his or her trust. Consumers, in turn, want to be able to trust firms, but recent news stories have raised the spectre of companies using data for purposes beyond what people might have foreseen when they agreed to share their data with these firms, sparking new doubts.

Google, for one, made headlines across Europe and North America with its controversial new privacy policy, under which it would track users across various services (including its search engine, Gmail, YouTube, its Android mobile platform and the Google+ social network) to develop targeted advertising.

Concerns about the creeping growth of a corporate 'surveillance society' means consumers are more conscious than ever of companies collecting their personal data and using it to track their behaviour, needs and preferences. Many consumers have become acutely aware that companies gather information about them not just by tracking website interactions but through transaction records, loyalty schemes, newsletter registrations, event participation, sign-ups for discount vouchers and other dealings with businesses.

These concerns had already been building, other research has confirmed. Figures released at the end of 2010 by the UK Information Commissioner's Office revealed that 60% of UK consumers felt they had "lost control over the way their personal details are collected and processed". The ICO report went on to say that the public showed "high levels of concern over the potential mismanagement of their information" with passing or selling personal details to other organisations and the secure handling of such data being named as consumers' biggest worries.

Developing a trusting relationship Establishing consumer trust, however, goes beyond just keeping customer data secure or making sure not to use it in an unauthorised way - firms also need to demonstrate that they are actively making intelligent and effective use of this information. A research report compiled by Transactis at the end of 2010 revealed that nearly 90% of British consumers assume that a company is looking after their personal data carefully and intelligently if they are receiving a good service from that firm and its communications are sensible and relevant.

Customer trust therefore goes hand in hand with astute use of personal consumer data and failure to do so raises flags - and prompts action. One Transactis study showed that firms that merely fail to employ personal data effectively - thus calling their responsible handling of it into question - will see an impact on the bottom line, as 83% of consumers would be inclined to switch to a competitor if a company ignores their personal details and simply sends them blanket marketing messages.

While consumers may sometimes be unsettled by the idea that the companies they deal with are using their personal information to track their behaviour and create more targeted marketing, they also do not want to be carpet-bombed with a deluge of untargeted and largely unwanted communications because companies have no means of refining their marketing campaigns to reach the right individuals. Consumers have high expectations today and effectively using customer data is essential to meeting those expectations.

This is best demonstrated by the evident trust consumers have in supermarkets. In the survey, respondents were asked specifically how they would rate the organisations they deal with directly - such as "your main supermarket" and "your bank" - in terms of handling of personal details responsibly. Overall, "your main supermarket" topped the results, with 84% of consumers rating their store brand as "good" or "very good".

The confidence consumers have in supermarkets is a strong indicator that the vast majority of customers are aware of, and value, the application of insight gained from loyalty programmes - especially those run by leading supermarkets. They see these companies collecting data on what, where and when they are purchasing, and then using this data to good effect in a multitude of ways - for instance, to provide bonus reward points on needed purchases, to send discount offers sent through the post on appropriate products, or to print out useful coupons at the till when a purchase is being made.

The research also shows that firms need to demonstrate an understanding of customers' preferences in terms of message, channel, offers and timings. The previous report showed that 92% of consumers believe the companies that achieve the greatest customer satisfaction are the ones doing the best job of looking after their personal details and using them to add value for their customers.

Just as apparent is the fact that failing to keep track of personal data or ignoring the information to hand clearly impacts customer trust. The same research revealed that 78% of UK consumers say they begin to doubt a company's ability to look after their personal information if it continually asks for personal details they have already provided.

Clearly, using data effectively to deliver products and services that demonstrate careful management of consumer information and transparency is essential to achieving true customer trust - which in turn results in customer loyalty and continued purchasing. The majority of consumers (83%) stated that, if a company deals with their personal details responsibly and employs the information to provide a good service, they are more inclined to keep buying from that firm than its competitors.

Similarly, 76% of consumers say that if they can see a company utilising their personal details to tailor services and offers - namely, justifying the customer's confidence in their handling of private data - they are more likely to continue their custom and not defect to a competitor. It's clear then that consumers are happy to continue to build relationships with companies that have proven themselves trustworthy.

Without a doubt, how a company manages customers' personal data has a lasting effect on the relationship - and careful stewardship keeps them from breaking it off. When it comes to utilising customer information, companies need to do more than just get the contact details right.

With so much information to hand, companies must prove they know their customers in terms of the products they consume, the service options they want, their preferred communication channel, the appropriate time to contact them and their desired delivery procedure. Only then can consumers have full confidence and a relaxed attitude toward a relationship in which the other party holds sometimes very private information.

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