Comment & Blogs
Date:19 June 2012
Losing trust can break the relationship between brand and customerBy Michael Green, Director of Insight, Transactis
Companies hold in their systems a lot of personal data on the individuals they deal with, but when they fail to use this data responsibly, appropriately and effectively, the confidence – and loyalty – of those consumers can easily be lost. Building a strong relationship between a brand and a customer takes time, diligence, understanding and investment. But as with any relationship, the bond that has been built can easily be shattered if trust is broken.
New research shows that when it comes to consumers and brands, the failure to handle customer data conscientiously and effectively can have huge impact on customer trust and, in turn, loyalty. A survey of 1,000 British consumers Transactis carried out in the first quarter of this year reveals that 95% would cease to do business with a company if it handled their private details irresponsibly, got them wrong, passed them to third parties, failed to keep them secure, or otherwise abused their trust.
The findings demonstrate that not only would an overwhelming majority take such action, but more than two-thirds have, in fact, already done so: 69% of those surveyed say they have actually terminated their business relationship with a company within the last three years because they felt it had mishandled their personal data and could no longer be trusted. It is clear then that the safe and effective handling of consumer data is essential to gaining trust, maintaining loyalty and reducing the risk of a broken customer relationship.
Fears of the growth of a corporate ‘surveillance society’ have made consumers more conscious than ever of companies collecting their personal data and using it to analyse their behaviour, needs and preferences – not just by tracking website interactions but through transaction records, loyalty schemes, newsletter registrations, event participation, sign-ups for discount vouchers and other dealings with businesses.
Gaining the trust of consumers, however, is not just about keeping customer data secure or ensuring it is not used in an unauthorised way – firms also need to actively demonstrate that they are making intelligent and efficient use of the information they hold. The research indicates firms that fail to employ personal data effectively, thus calling their responsible handling of it into question, will see a breakdown in loyalty, with 83% of consumers saying they would be inclined to switch to a competitor if a company ignores their personal details and simply sends them blanket marketing messages. Consumers have high expectations today and effectively using customer data is essential to meeting those expectations.
This is best demonstrated by the evident trust consumers have in supermarkets. In the survey, respondents were asked specifically how they would rate the organisations they deal with directly – such as “your main supermarket” and “your bank” – in terms of handling of personal details responsibly. Overall, “your main supermarket” topped the results, with 84% of consumers rating their grocery store as “good” or “very good”.
The confidence British consumers have in their supermarkets is a strong indicator that the vast majority are aware of, and value, the application of insight gained from personal data gathered through loyalty programmes – especially those run by leading names in the grocery trade. They see these companies collecting data on what, where and when they are purchasing, and then using this data to good effect in a multitude of ways – for instance, to provide bonus reward points on needed purchases, to send discount offers sent through the post on appropriate products, or to print out useful coupons at the till when a purchase is being made.
According to the research, 76% of consumers say that if they can see a company utilising their personal details to tailor services and offers – namely, justifying the customer’s confidence in their handling of private data – they are more likely to continue their custom and not defect to a competitor. Clearly, consumers want firms to show they understand their customers’ requirements in terms of products and services and their preferences in terms of communications, offers and timings.
Without a doubt, how a company manages customers’ personal data has a lasting effect on the relationship – and careful stewardship keeps consumers from losing faith in a brand’s ability to deal with them fairly, efficiently and responsibly. To really gain the trust of its consumers a firm has to do more than just get the contact details right: with so much information to hand, companies must prove they know their customers in terms of the products they consume, the service options they want, their preferred communication channel, the appropriate time to contact them and their desired delivery procedure. Only then can consumers have full confidence in a brand and a relaxed attitude in their relationship with it.About Michael GreenGreen joined Transactis, the UK consumer insight and database marketing firm, in 2011 as Director of Insight. Green has gained experience both on the client and agency side in the UK, Europe and Asia Pacific, working for a broad range of brands, including John Lewis, Nissan, Barclays, NatWest, Shop Direct, General Motors and UNICEF. He sits on the Data Council of the Institute of Direct and Digital Marketing in the UK.