Cost of Losing Trust Exceeds the Benefits of Gaining It: PwC Report

The business world is changing fast, especially after the COVID-19 pandemic. As businesses develop more strategies and tactics to survive and thrive in a highly competitive market, one factor will help them cut through the noise and capture more market share and revenues: trust. According to a study by SalsifyOpens a new window , 46% of consumers are willing to pay more to buy from a brand they trust. Similarly, trust is also essential when it comes to employer-employee relationships.

PwC recently conducted a study to understand the state of trust, how it impacts businesses, and how companies can cultivate it. A significant finding was that disparity exists between how much companies think employees and consumers trust them and how much trust actually exists. 

The following are the findings in detail.

See more: Trust in Tech Reaches a New Low, Places 9th in the U.S.: Edelman Trust Barometer Study

Businesses Think They Are Highly Trusted 

The study found that business leaders think they are highly trusted; however, the reality is different. Almost 87% of business executives thought consumers had a high level of trust. However, only 30% of consumers agreed with it. Fortunately, the trust gap between businesses and employees is narrower. While 84% of employers thought employee trust was high, 69% of the latter agreed with it. It is necessary to understand this gap as employees and consumers are crucial stakeholder groups.

Digging a little deeper, the study found that most industries have maintained the same level of consumer trust compared to last year. That said, the health industry seemed to earn a little more trust while the government, tech, and media had lost some trust. 

Trust levels in different industries in 2022 compared to 2021

Source: PwC Consumer Intelligence Series on Trust, June 2022Opens a new window

Businesses need to repair these fractures and gain more trust from their key stakeholders. The company leadership is responsible for investing in strategies that develop trust by actively listening to the stakeholders and having an open dialogue with them.

Companies Should Understand What Matters to the Stakeholders

The study found that businesses and stakeholders are misaligned on various topics when building trust. For example, 47% of senior executives felt trust is more bottom-up than top-down. They believed it was to be built by the consumers, staff, and other stakeholders rather than the senior leadership. However, only 35% of employees and 27% of customers agreed with it, indicating that the C-suite should lead more on trust. About 50% of businesses also invested in racial and social equity. However, only 27% of stakeholders believed businesses investing in racial and social equity to be more trustworthy.

Day-to-day realities demand more of their attention and drive the stakeholders to decide whether the businesses are trustworthy or not. For customers, product/service affordability is the top priority; about 34% selected it as one of the top-three vital steps to build trust. Treating the staff well is another top priority for them. For employees, treating them well is the top factor, with 47% choosing it as one of the top-three vital steps to build trust.

This means that companies are not prioritizing what is most important for the stakeholders. While companies are trying to become good corporate citizens, the stakeholders don’t find it important. So, when building trust, start with getting the basics right. You can then build from there.

The Cost of Losing Trust Outweighs the Benefits of Building It

As industry experts sayOpens a new window , trust is the new digital currency. It alters customers’ loyalty, buying decisions, and employee retention. The positive outcome of building trust is that it can increase a business’s bottom line. Customers will be willing to pay more to buy products from the companies they trust. However, losing trust is costlier. About 71% of PwC’s previous studyOpens a new window respondents said they would buy less from a business that lost their trust. Out of that, 73% said they would spend significantly less. 

Similarly, 93% of employees felt that they would likely remain more loyal if their companies gained their trust. About 90% were also likely to defend the company. About 71% of employees said they were more likely to leave the company if there was a breach of trust. The younger employees were even more likely to do so, with 75% stating that.

The cost of losing trust

Source: PwC Consumer Intelligence Series on Trust, June 2022Opens a new window

All these show the dire consequences of losing stakeholder trust.

Diverse Stakeholder Perspectives Are a Challenge

The study found that as companies look to develop trust, diverse stakeholder perspectives are a challenge for them. The labor market has been turbulent since the pandemic, and the workforce has commanded the C-suite’s attention. While in a previous PwC survey, many senior executives said employees were their top priority, the current survey showed that consumers were the top priority. This may point to a shift where employees are becoming more like customers. 

The study showed that 48% of executives were already working with their consumers, and 47% implemented trust-building plans with their workforce. With supply chain issues also gaining priority, suppliers also have become important. About 43% of business leaders were focusing on developing trust with suppliers. Suppliers want many of the same things employees want. This also makes sense from the point of developing trust with customers. 

See more: To Build Customer Trust, Prioritize Data Protection and Personalization

How To Start Managing Trust So That It Works for You

As trust becomes extremely crucial, the following strategies help you translate trust into behaviors that improve revenues:

• Develop a framework for trust

Identify what trust means for your organization, and align your trust strategies with your business philosophy. Create a societal foundation of trust within the business as it lays the path for economic advancement and social equity. Then, establish a framework of trust-building to move your company forward strategically. Most importantly, view trust as a currency, making it a tangible asset.

• Treat your staff like customers

Understand employees’ needs and establish a culture of trust in the company. Offer your employees customized experiences. Understand their contributions to the company and society. Since trust is critical for growth and employee retention, cultivate employee trust actively.

• Don’t try to be everything for stakeholders

You should also listen to your stakeholders and understand their pain points. Continue working with them while reducing trust gaps with others. Know that you cannot stand for everything. Pick the areas you want to lead and follow through on those commitments.

• Know that maintaining trust requires efforts

Recognize the necessity to maintain trust and build it beyond table stakes. Treat your people and local communities well as it is important for all your stakeholders.

• Know that trust is fluid 

Invest in continuous listening and understanding of your staff and consumers, and be ready to switch gears when needed. Be agile when implementing trust-related strategies. You should also invest in risk management strategies to predict breaches in trust. Make supplier trust a top priority as it could help local workers leading to improved economic mobility.

Summary

Brands that want a competitive advantage in today’s business environment should build trust with their customers, employees, and suppliers. Further, they should understand their stakeholders’ priorities and needs when focusing on these efforts. After all, the cost of your stakeholders not trusting far outweighs the cost of building it.

What steps have you taken to build trust among your stakeholders? Let us know on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .

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