One of the keynote speakers at our recent event made a very thoughtful comment. He said that the products his customers most prized were "speed and trust". Leaving aside the convenience of a speedy delivery, trust is perhaps the most interesting and elusive quality that any vendor can supply.We know from our experience as consumers (and sellers) that 'trust' helps a vendor charge a higher price - as security and lack of risk means less chance of a vendor walking away with a payment, or more usually, not delivering the right products. Consumers value a vendor that can be relied on to keep their word.But I was reminded about the importance of trust when reading an excellent article in this week's Economist "The faith that moves Mammon". Commenting that the current economic issues are resulting in a lack of credit - and the very word comes from the Latin credere, to trust - the writer explains that two helpful human traits underpin our society: one, the capacity to weigh up costs and benefits of trusting others; the other, an instinct to return favours in kind (and seek revenge when trust is betrayed). When workers are treated generously, they work hard; when customers are swindled, they raise a fuss. These are reinforced by habits and social norms.Usually, humans can be counted on to make reciprocal ties, especially where there are frequent meetings or trades. Supporting this are state institutions: regulators, bankruptcy procedures, courts and ombudsmen. But these are only used to settle a small minority of disputes. The state is just a backstop - in stable societies, transactions between strangers are mostly self-policing. And a reputation for honest dealing is valuable for both firms and employees.The sentence in the article that made me stop and think: Suppliers gamble rewards from future commerce for a short term gain when they bilk [mistreat] their customers.However, let's take it further: suppliers who INVEST in excellent customer service, COMMUNICATE well with customers, seek out FREQUENT contacts can breed trust. And that means a more secure FUTURE revenue stream. These are long term bets that cost now, but that will predictably pay off in returning customers (or a good reputation, and so gain new customers from word-of-mouth).There is often a battle for resources and costs played out between marketers and finance heads. I remember many arguments about how much to spend on a call centre ("it's a cost", insisted the Finance Director, "we should outsource, cut call times, charge for the calls"). On one occasion the finance-driven cost-reduction plan was implemented. It turned out to be a short sighted idea. The cost reductions were not significant enough to balance the business lost from the unhurried, expert help the customers valued. And they truly hated having to pay for calls. They said so many times, and after six months of the cost-cutting experiment, the call centre was brought back into the company, and call costs dispensed with.How can a company know how much to invest? Too little, and the result is lost future business. Too much: not enough margin to operate effectively. The trick is finding the 'Goldilocks' or 'just right' amount. Here is where the Net Promoter Score®* comes in. By asking all the customers if they would recommend the company, the number of 'recommenders' and 'detractors' can be calculated. With a few assumptions, one can predict future business lost and won. And as the score can be tracked in real time (using survey systems like CustomerGauge for example) improvements in the score can indicate how an investment is working.
I read arguments against using Net Promoter Score (NPS) with interest. They mainly consist of saying that Net Promoter is 'too simple'. Actually, that is its very strength. Used as a tool for Operational Feedback, NPS is the closest thing we have to a 'Trust Gauge'. Used with or without a complex predictive model to put some sort of Net Present Value on actions that result in Trust; a Net Promoter Score that climbs just one or two percentage points each month is about the most reliable indicator a company can get that it is doing the right thing.Or in simple terms, a meter that shows Net Promoter Score is a company's 'Future Business Indicator'.