The Trust Factor in Customer Loyalty
How important is trust in customer loyalty? Well, here’s an example:
It’s been almost 50 years since I got my first real car – a used 1972 Ford Maverick. Unbeknownst to me and thousands of other consumers, Ford had been building their cars with substandard steel that rusted with unprecedented speed. By 1977, I had to junk it because the fenders were quite literally falling off, and there were gaping holes in the doors and floors.
The consumer outrage over the rust issue was loud and persistent, but all Ford could muster was a steady stream of denials with no hint of even an apology. People were coming up with acronyms for the company, like “F%$#in Old Rusty Dumps,” and “Fix Or Repair Daily.”
Lost trust equals lost loyalty
I haven’t bought a Ford since. How much money did their absence of integrity cost them? And I’m just one customer.
Fast-forward to 2023. Our company was reviewing Virus scanning software on all of our computers. In making our decisions, there was one company that we didn’t even consider – McAfee. Not because their software isn’t any good, but because fifteen years ago, they were hiding an ‘automatic credit card renewal’ in the fine print of their contracts. Instead of a nice email saying ‘it’s time to renew your security software,’ there was one that said, ‘your credit card has been charged.’ The process of even trying to find someone at McAfee to address this – not to mention the gigantic hassle of getting them to remove it – was extraordinarily painful. How could we entertain doing business with a security company that we couldn’t trust?
Customer-focused companies focus on trust
When you look at the customer-focused companies that are thriving today, one of the things they all have in common is how careful they are not to lose the trust and confidence of their customers. Have a problem with an order from Amazon.com, Wayfair or Costco? They will fix it no questions asked.
Unfortunately, there are still a lot of companies who are so focused on containing the costs related to unsatisfied customers, that they neglect to consider the longer term effects. The results can be disastrous.
Trust and the downfall of Sears
One of my favourite examples is Sears. Back in the day, Sears had built their reputation as a company people could trust. If you bought a Craftsman tool from them, for example, and anything (and I mean anything) went wrong with it, they would replace it immediately. My father, and virtually everyone from his generation, wouldn’t consider buying their tools anywhere else. In the early 90’s however, as the company was facing stiff competition from a juggernaut called Walmart, the company decided that this was simply too costly a policy, so they introduced a much more limited and restrictive warranty.
It was just one of the decisions that put Sears in an inexorable decline. The company that once ruled retail, ceased to be the brand one could trust, became just another department store, and has now all but disappeared.
Losing trust cost Ford $500,000 - from just one customer
As far as cars go, I figure I have bought 17 cars since the Maverick, totalling close to half a million dollars. None of it went to Ford. Yes, they probably saved a bit of cash by buying cheaper steel, but what was the ultimate cost for them? And I suspect I’m just one of thousands of customers.
It’s a lesson for all companies. If you don’t treat your customers with care, they will stop caring about you.
