The more a company uses data, the more it can build personalized experiences and engender trust on a micro―individual customer―level. And that’s a good thing. But, something to consider: the more micro data is shared within an organization and throughout an ecosystem, the greater the likelihood of macro trust incidences that negatively impact a company’s image.
There is an inherent tension between micro and macro trust. Companies that strive to balance this trust equation will maximize revenues through increased customer loyalty and competitive differentiation, while minimizing trust incidents—thus positioning trust as the new currency for customer experience.
Striking the balance
The sharing and use of data—across an ecosystem of companies—allows for improved customer experiences, but at the same time increases exposure to (data-related) macro trust incidents.
When companies take a hit on trust, they take a hit financially. Accenture Strategy found that on average, a material drop in trust leads to a six percent decline in revenue growth and a ten percent decline in EBITDA growth. For a £25B company, that translates into a loss of £1.5B in future revenue.
The optimal balance depends on the industry, risks versus rewards, and the sensitivity of customer data. Sharing genetic or medical data is obviously more sensitive than sharing hotel preferences. Because of the nature of the data, such companies will need to provide greater incentives to their customers and a higher level of micro trust.
Segmenting on trust
Segmentation is all about demographics, psychographics, geography and behavior. Today, businesses can complement these variables by segmenting their customers based on trust and the willingness to share data. This dynamic of sharing and enhancing service increases micro trust levels as customers see their data is being translated into tangible value.
While companies work to segment by trust and introduce different levels of personalization, it is critical to have offerings that are attractive, not intrusive. Providers should align the experience with their brand, making values such as simplicity, personalization and service excellence tangible for customers.
The fine line between useful and creepy
As companies move toward “market of one” interactions and personalized offers, they must toe the line between “useful” and “creepy”—and bear in mind that this line will be drawn differently for each person.
Millennials, for instance, are generally more trusting. They are used to sharing personal information and will reveal more if they feel a reciprocated improvement in their brand experience. But over time, they are likely to expect greater innovation in return for handing over their data.
Organizations need to design for transparency to clearly demonstrate what’s in it for the customer, ensuring that the data value exchange is fair to them. Transparent design means clearly demonstrating the value both the data owner and data user can gain and designing products and services to give the individual greater control.
A healthy trust tension
From farming to pharma, no industry is immune to trust incidents. What can companies do to better balance this equation and have a healthy trust tension?