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The Four Factors of Trust

How Organizations Can Earn Lifelong Loyalty
Ashley Reichheld and Amelia Dunlop • Wiley © 2022 • 304 pages

Management / Corporate Culture

Social Skills / Trust

Take-Aways
• People and institutions must develop trust.
• Every business and personal relationship depends on trust.
• Leaders and consumers view organizational trust from different perspectives.
• Trusting your employees helps them sustain positive relationships with your clients.
• Establish and solidify trust throughout your organization.
• Social media creates marketing challenges and can generate mistrust.

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 Recommendation
Trust in people and institutions is at an all-time low. People don’t know who is telling the truth or
which sources to believe. At the same time, individuals and organizations can’t perform at their
best without being trusted. Deloitte’s Ashley Reichheld – writing with Amelia Dunlop – presents a
detailed, easy-to-follow blueprint for establishing and maintaining trust. They explain how to create a
productive workplace, encourage employee engagement, and satisfy your customers by addressing four trust
factors: “transparency, humanity, capability and reliability.” Building trust is meaningful, and you can’t build
anything meaningful without it.

Summary

People and institutions must develop trust.

Trust is a foundational component of any relationship, including the relationships between organizations
and their clients, employees and partners. Trust implies that a company will act with integrity and clarity
while honorably pursuing its objectives. Trust means a customer can download an app without worrying
about unleashing a virus. Trust assures employees they can count on their organization to keep its promises
and to provide support and encouragement. In return, employees feel comfortable sharing their thoughts
and feelings. Trust enables them to be vulnerable with one another.

“Trust always comes down to a relationship, no matter how fleeting. Some relationships
are transactional. Others endure.”

Today, people have extremely low levels of faith in government, business and organizations due to political,
social and economic volatility. But even as trust is threatened, research indicates that it heavily influences
how people act and buy. Consumers are nearly 90% more likely to do business with brands they trust.
Workers who trust their employers are shown to be more motivated and less likely to look for other jobs.

Trust consists of four pivotal factors:

1 . “Humanity” – Consumers expect an organization to have honorable intentions and to treat its
customers and employees with care and understanding. Studies show that a sense of shared humanity
is a significant factor in the healthcare and hospitality industries because human interaction dominates
their processes.
2 . “Transparency” – Companies strive to create an informed, seamless experience for their
customers. Complex sectors such as banking and insurance have a particularly acute need for
transparency because they must gain consumers’ confidence.
3 . “Capability” – Companies must have the fundamental ability to fulfill the expectations of their
customers, employees and partners. Consumers are nearly three times more likely to do business with a
brand that shows them they can trust it to be competent and capable.

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 4 . “Reliability” – Companies can be capable yet still undependable, but that would render them
untrustworthy. Instead, take a look at FedEx, which has built a reputation for reliability by guaranteeing
that shipments will arrive on time. Reliability is especially important competitively because most
consumers have a variety of options, whether for shippers or for other service providers.

Every business and personal relationship depends on trust.

A Gallup survey shows that Americans’ trust in their core institutions, such as schools, banks and medical
providers, has declined steadily since 1973, when Gallup first studied the issue. People, companies,
institutions and governments breed trust by doing what they say they are going to do and demonstrating
that they care about their constituents. Building trust requires effort and persistence. You could choose not
to take on such efforts for your organization, but you would sacrifice the opportunity to build long-lasting
and profitable relationships with your employees, suppliers and clients.

“People want your communications to show you understand them, know their desires
and beliefs, and respect them.”

The most trustworthy organizations invest in humanity, transparency, capability and reliability. Take the
Cleveland Clinic, a respected healthcare corporation that earns a strong humanity score for prioritizing
patients’ needs. The design of the company’s nationwide clinics enables them to serve the needs of specific
communities. For example, a community with a large population of senior citizens may benefit more
from access to a diabetes treatment center than a younger community would.

Hotel companies often rank high in fulfilling the four factors of trust. Marriott International boasts many
first-class properties. Motels branded as Courtyard by Marriott aren’t as fancy as Marriott International’s
top-shelf properties, but guests can still count on clean rooms, friendly staff members and a comfortable
experience. Marriott prides itself on transparency and provides pricing and fee information that other
hospitality firms may not furnish as readily.

“It takes strong, empathetic leadership to give tough messages in plain language.”

Marriott's president and CEO Arne Sorenson didn’t run and hide when the pandemic threatened to cripple
his business. In a video message to Marriott employees, Sorenson explained that bookings were down by
75%. But before making severe staff cuts, he announced that he was foregoing his 2020 salary and that
members of Marriott’s executive team would take 50% pay cuts. His voice trembling, Sorenson explained the
personal pain he felt telling Marriott employees that the company was facing unexpected events it could not
control. He emphasized that everyone at Marriott would share the brunt of COVID’s effects.

Leaders and consumers view organizational trust from different perspectives.

Leaders and consumers do not see eye to eye on the four factors of organizational trust. In a 2021 survey
of 1,000 consumers and 500 business leaders, the gap between how executives (positive) and customers
(negative) perceived corporate performance differed by 45% for humanity, 42% for transparency, 34% for
reliability and 29% for capability. Leaders significantly overestimated their organizational effectiveness
across the board. Many companies focus on factors that sustain their business, such as sales, instead of

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 prioritizing their customers’ entire transactional experience and asking if consumers perceive the company
as trustworthy.

“Even when organizations work to make it easy to do business with them, they often
focus on the wrong approaches.”

The pervasive “trust gap” affects every facet of a company, from advertising to technology to merchandise
development. Leaders have tried to address these relationship problems across the board, mostly by
focusing on providing improved customer service and resolving issues rapidly to consumers’ satisfaction.
But consumers want a longer-lasting trustworthiness shift plus specific remedies that demonstrate
“competence through reliability and capability.”

When mishaps occur, consumers want refunds, exchanges and apologies. Studies indicate that customers
will tolerate an average of three mistakes before they stop trusting a brand, but that three-strikes
margin holds true only when the brand resolves each problem in a way that satisfies the consumer.

“Many financial services companies have a high concentration of neutral trust scores.”

“Ambivalent neutrals” are brands that consumers neither embrace nor distrust. These neutrals dominate
the banking, mortgage and insurance industries. Consumers typically do not form emotional connections
with such companies, which they choose just because they need to work with some enterprise that
can perform specific services. One exception is Edward Jones, a financial services organization with
roughly 19,000 advisors throughout the United States and Canada. Edward Jones ranks 30% above the
average corporation in the financial services industry in perceived “capability.” The company trains all its
advisors, who live in the communities where they work. Edward Jones emphasizes face-to-face relationships
for building trust with clients.

Trusting your employees helps them sustain positive relationships with your clients.

Establishing a trusting relationship with your customers begins by building trust with your
employees. Research shows that an inspired workforce is twice as likely to deliver improved customer
satisfaction than a disengaged workforce.

“Companies with highly engaged workers outperform their competitors by 147% and
enjoy 25% greater profitability.”

Ed Bastian, CEO of Delta Airlines – the only US airline that made a profit during the last six months of
2021 – says the company’s “virtuous circle” is the foundation of its operating philosophy. Happy employees,
he explains, provide better service to customers, whose patronage rewards stakeholders and enables the
corporation to “invest back” in its workforce. Trust isn’t an entitlement, Bastian points out; people and
organizations must earn it.

“Customers watch to see how workers are treated and use this as a guidepost for their
own trust/purchasing behaviors.”

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 When the pandemic cost Delta 95% of its income, Bastian promised not to lay off or furlough even one
employee. Workers had the option of continuing to work or taking “unpaid leave with full benefits.” Roughly
40,000 employees took voluntary leave. During the pandemic, the company invested $500 million in safety
measures for employees and blocked the middle seat in each row aboard its airplanes to protect passengers’
health. Delta’s commitment to its workers and customers earned numerous industry awards.

Establish and solidify trust throughout your entire organization.

You can repair a breach of trust more easily if you have a strategy for making the relationship right again,
rather than just randomly experimenting with possible remedies. If you are facing a breach of trust, examine
your entire enterprise with the understanding that you must institute trust-building actions internally and
externally. Determine the objectives of your trust initiative, then assemble data that outlines your current
situation and your future goals. Use this information to create trust-building actions, on as large or small a
scale as the situation requires. Then, evaluate your success or failure and adapt accordingly.

“Anything any employee, customer or partner says or does could make headlines and
erode trust.”

Chief executives are ultimately responsible for everything that occurs within an organization. Whether it’s
their own actions, a product recall or negative publicity, accountability stops with them. Roughly 95% of
CEOs say they are committed to establishing trust, but most of them take a passive approach – at least until
a crisis occurs. One study indicates that an unfavorable trust-related incident can diminish an organization’s
value by approximately 55%.

The days of the omnipotent CEO who issues commands from a plush office ended with the pandemic.
COVID demonstrated that top executives must digest large quantities of information, delegate accordingly
and satisfy their stakeholders.No longer can CEOs focus exclusively on pleasing their board of directors and
delivering profits to shareholders. Now, chief executives and their lieutenants must build trust and interact
with a variety of stakeholders whose perceptions may differ considerably from theirs.

“Some of the quickest wins come from observing the effects of how you communicate with
people and what access you’re giving them to information.”

Today, trustworthy behavior is becoming a standard hallmark of a quality business. In 2019, the leaders of
the Business Roundtable issued a statement calling for companies to practice ethical conduct and to make
sure that “consumers, employees, suppliers and communities” receive fair value.

Social media creates marketing challenges and can generate mistrust.

Marketing your goods or services now requires much more than a catchy ad campaign. Marketing has
become a science that demands strategy, data, data analysis and feedback. Consumers have many options
for gathering information and opinions, so companies must embrace a savvy, nuanced approach to
marketing and advertising to make an impression and draw customers.

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 Still, marketing must focus on creating a connection between consumers’ needs and the organization’s
offerings. Effective marketing requires empathy – intensely listening to your customers to gain the
knowledge you need to develop a compelling narrative that speaks to their emotions and their needs.

“If you’re trusted as a brand, you don’t have to use your finite marketing dollars to
convince people that your product is high quality and high value.”

The proliferation of online information channels can crowd out business leaders who would like to establish
empathy. Social media, in particular, exerts tremendous influence. More than 50% of the US population
gets its news from social media. Influencers with large followings wield considerable persuasive power when
they support or criticize products and organizations, no matter what a company’s marketing intentions
or plans might be. That leaves business leaders and their marketing departments still doing their best to
perform the necessary but difficult task of establishing and maintaining their consumers’ trust.

About the Authors

Ashley Reichheld is a principal at Deloitte Digital, where Amelia Dunlop is Chief Experience Officer.

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