The financial meltdown obliterated the balance sheets of many of the largest and most powerful financial institutions. It also undermined their reputations, destroying much of the trust customers and the public used to place in these firms, and the respect afforded their leaders. As we move toward recovery, regaining this lost trust should be at the top of every company's agenda, because customer mistrust will kill even the strongest company faster than almost anything else.
The systemic failure of the financial system was unlike most other instances in which companies have lost the trust of their customers. It is usually a bad customer service incident, or a product failure, or perhaps some other mistake that is then compounded by a badly fumbled public relations effort. Companies that already have a decent reputation for trustworthiness can recover well, if they handle the issue proactively. JetBlue, for example, recovered customer trust following the 2007 Valentine's Day ice storm when it had to cancel more than a thousand flights over a single holiday weekend.
Other companies sometimes never recover, however. Earlier this year the Peanut Corporation of America filed for bankruptcy protection after several salmonella deaths were traced to the company's inadequate sanitation processes. One of the lessons here is that for any company to "recover" the trust of its customers, it must first have earned that trust, and this is something that PCA apparently never did.
Two equally important conditions must be met before a customer will deem a firm to be trustworthy in the first place. The customer must believe that (1) the firm has good intentions (i.e., that the company has the customer's interest at heart), and (2) the firm has the basic competence to deliver on these good intentions. Both of these conditions must be met, and if customers perceive that a company cannot or will not meet either one, outright mistrust can be the result.
In the financial services industry, consumers interpret extraordinarily high levels of executive compensation, especially in the face of poor financial results, as bad intent pure and simple. It may be true that to navigate these perilous post-meltdown waters a sophisticated financial services firm needs the most capable (and expensive) brains available. But a firm looks incompetent when the bonuses are paid whether performance is stellar or not, no matter what the underlying bonus structure or legal issues may be. There's a good deal of consumer and public indignation at the injustice of this, but where is the corporate indignation? In the minds of many consumers, a lack of corporate remorse suggests that these companies weren't trustworthy to begin with.
Although trust lost through bad behavior can generally be restored after a period of good behavior, when bad behavior is accompanied by deceptive statements, trust never fully recovers. This is one of the biggest problems plaguing most public companies, because the first officials on the scene of a disaster are usually the PR folks, and no matter how good it is, spin is the opposite of straight talk.
Regaining lost trust
The single most important step in recovering lost trust is to:
1. Recognize the seriousness of the problem. Ignore or downplay that seriousness and customer mistrust becomes an inevitably fatal condition for any company. Next is to
2. Realize that you have a limited amount of time to respond. Then, follow these basic steps:
3. Apologize. Customers will forgive honest mistakes, but not dishonesty. They can forgive even the grossest incompetence if you just acknowledge your own boneheaded behavior as such, and state clearly how you are cleaning up your processes or policies to make sure it doesn't happen again.
4. Don't make excuses. Never utter either of these phrases: "but you have to understand" or "circumstances beyond our control." Just say "We goofed, we're sorry, won't happen again."
5. Offer a gift. if appropriate, to drive home the sincerity of your apology. An economic gift says to customers that you are taking them seriously, and that this is not just a PR issue. JetBlue voluntarily compensated customers who had been inconvenienced, in an amount above and beyond any regulatory requirement.
6. Promise to do better, and then make a serious effort to do so. A stated promise of better behavior can accelerate the growth of trust, but actual good behavior must follow this promise.
These are the actions to consider when trying to recover your customers' broken trust, but these tactics will be all the more effective if, before the disaster, you enjoyed a highly trustworthy reputation to begin with. A good reputation and the trust of your customers are vital for your long-term success-not just because they help your business in good times, but also because they are key to restoring your credibility in the wake of the service problems, mistakes, bad judgments, and other crises that will occasionally be experienced by any business, no matter how good it is. Business resilience is built on trustworthiness.