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Which Companies Do You Trust? Harris Poll Suggests Not Many

Bill Roth | Tuesday December 7th, 2010 | 4 Comments

A Harris Poll posted this question with a list of various industries:
“Which of these industries do you think are generally honest and trustworthy – so that you normally believe a statement by a company in that industry?”

HALF of all consumers responded “none!” Supermarkets received the highest ranking for trust with only 40% of those surveyed feeling their grocery store was trustworthy. You can see the whole industry breakdown here.

Below, I’ve singled out the list of industries that the overwhelming majority of Americans don’t trust. It’s a telling indictment:

Industry% Trust
Banks20
Electric and gas utilities19
Computer16
Airlines12
Pharmaceutical and drug11
Health insurance10
Telephone/Telecommunications7
Oil4

When only 10 or 20% view an industry or company as trustworthy, there are plenty of business ramifications:

Lower Profit Margins. Surveys consistently show that loyal customers are also the most profitable customers. Price discounting is the flip side of a lack of loyalty where a business has to “buy” a repeat customer-transaction by offering price discounts and promotions like frequent flyer miles. At the level of distrust revealed by the Harris Poll, the impacts are “perpetually-eroded” profit margins as mistrusted companies are forced into buying repeat customers through price discounting.

High Customer Acquisition Costs. Winning a new customer is always expensive and hard to achieve. Imagine the cost associated with winning customers when the overwhelming majority of Americans view you and your industry as mistrustful. With this scale of consumer mistrust the expenditure in advertising and stakeholder outreach has to be huge in order to maintain consumer attention upon your company and products. In this environment, the marketing path of a highly mistrusted company is to substitute consumer messaging with consumer-awareness branding campaigns executed through very expensive multi-media advertising.

Social Media Dilemma. Social media (Facebook, twitter, and blogs) and new media (mobile apps on smart phones) are enabling consumers to be price savvier and better informed on the quality differences across products and companies. Today a consumer can stand before an array of products, whether they are flat panel TVs, toilets or food products, and comparatively shop a product for both price and performance. This is a revolution in consumer buying behavior that will crush poor performing industries and products that have traditionally won market share through price discounting and mass marketing. The winning companies and products will be those that sell products offering Cost Less, Mean More benefits that are successfully positioned with the consumer through social and new media. The social media dilemma confronting America’s industries is that they have approached social media just like they have approached the retail shelf by offering product price discount coupons in order to buy customers. Their fan base is an illusion that will be revealed at Internet speeds when a competitor offers a superior price. It will be revealed as patently false when a competitor succeeds in offering a product that is superior in price and performance.

Market/Government Manipulation. Is big bad? Economics offer two answers to this question. If we assume larger sized companies produce economies of scale, the answer is no. Cost reductions should flow onto consumers in the form of lower prices. The answer is “yes” if a business or industry uses its size to create barriers of entry to products and companies that offer increased value to consumers. The Harris Poll suggests that the American economy is suffering from market and government manipulation that is enabling large company after large company to create barriers that allow them to survive even when the overwhelming majority of their customers hold them in such low trust. Confronted by businesses that they don’t trust, American consumers are confused about what to buy and who to buy from. The good news is that America is still a free market economy and eventually a superior product and company will win the hearts and wallets of the consumer. However, until this free market transformative change is realized, the cost to our economy is reflected in our unemployment levels and the wellness of individuals and the environment.

What Does This Means?

The history of America’s economy is littered with industry-trusts and company monopolies that have failed to survive our free economy and American entrepreneurship. IBM is still a large and successful company but it no longer has the market share monopoly it once held in computing. Pan Am has been displaced by a global air transportation industry created by entrepreneur-led companies like Southwest, FedEx and Virgin. The bottom line is that no industry or company has been able to stop the economic freedom that defines America. And there-in lies the huge opportunity revealed by the Harris Poll on consumer trust for the green entrepreneur.

The American consumer represents $10 trillion of annual buying power. To put this in perspective, that is larger than China’s entire $8.8 billion estimated 2010 Gross Domestic Production. That size of buying power holds the potential of reshaping America’s economy toward Cost Less, Mean More solutions that will restore our competitiveness, jobs and environment.

One mega-trend that is emerging from consumer mistrust of American industries is the consumer’s pursuit of “in me, on me and around me” product and services solutions. Enabled by social and new media the American consumer is on the hunt for price competitive products that will improve their wellness. I have labeled this emerging mega-consumer the Awareness Customer that includes Sustainable CEOs, the Millennial Generation and their mom’s, the Concerned Caregiver. Their $10 trillion of annual buying power is being felt across product segments. Rainforest Certified coffees are experiencing 100% annual revenue growth. Green cleaning products have grown their revenues over 250% during the last four years. Organic cotton clothing has realized 35% annual revenue growth last year.

A second mega-trend is that Americans do trust local businesses. From farmers’ markets to solar installers to the local doctor, Americans still trust the business people in their community. It is for this reason that BUY LOCAL is emerging into a mega-trend. Part of this buy-local trend is being realized through the supply chains of larger companies who are seeking local suppliers that align with the wellness and sustainability expectations of customers. The other part of this trend is the growth of companies like Clif Bar and Seventh Generation that have matured from local start-ups into national brands.

What does this unprecedented business opportunity mean to green entrepreneurs? My economic analysis using survey projections like the Harris Poll on trust is pointing to a global $10 trillion economy for sustainable goods and services by 2017!

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View video interviews Bill Roth has conducted with CEOs on their Secret Green Sauce for growing revenues at Earth 2017 TV.


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  • http://www.trustacrossamerica.com Barbara Kimmel

    Bill: What a great article. Research conducted by our group at Trust Across America points to the fact that often there is a disconnect between reputation and reality. For example, some consumers have built long term trust in companies that no longer deserve it. Other times, high trust companies just haven’t reached consumers with the right message to instill trust that has been honestly earned.

    A closer look at your industry list reveals some interesting facts. Our research shows that currently the Utilities sector is the most trustworthy, but consumers just aren’t “feelin’ the love” there. Seems like the utilities might want to improve their communications efforts. The computer sector also ranks “above average” in our research, but not according to consumer perception. And finally, perhaps the biggest surprise….the most trustworthy public company among those we audited (almost 3000) is in the oil industry! Go figure. Barbara Kimmel, Executive Director

  • http://www.earth2017.com Bill Roth

    Barbara, thanks for the insights. The question of whether a utility is trustworthy has multiple customer touch points including reliability, sustainability and the issue of monopoly control. Same with oil companies who are viewed positively by consumers for their ability to oil but are also confronted with consumer doubts regarding both the management of risks (BP oil well blow-out) and higher pump prices. Sustainability’s concept of a triple bottom line holds real potential for businesses seeking to build trust-connections with consumers that are continuously using social and new media to assess a business and their products beyond the traditional issues price competitiveness.

  • http://www.trustacrossamerica.com Barbara Kimmel

    Thanks Bill. I have posted your article to the Trust Across America Group on LinkedIn for additional feedback. Barbara

  • http://www.trustedadvisor.com/trustmatters Charles H. Green

    Bill,

    The juxtaposition of your (excellent) take on the Harris Poll data, together with Barbara Kimmel’s comment from Trust Across America, provides a great intersection point to talk about the role of communications in matters of trust.

    My sense is that issues of corporate trust and reputation are too often seen as issues of communication, to be managed by the corporate communication function. Leading the pack with that point of view, not surprisingly, are communications specialists, within and without companies.

    Let me suggest they are precisely half right and half wrong. Here are the two halves:

    If your company is more trustworthy than its reputation suggests, then you have a communications problem;

    If your company is less trustworthy than its reputation suggests, then you have a management and leadership problem.

    Barbara’s case of the oil company is the perfect example of case 1: a company that really has objective, verifiable public data to back up the claim that they are transparent, sustainable, trustworthy, etc. Bring on the PR firms and the communications experts: the world legitimately needs to have its perception of that company brought into alignment with reality.

    But: if you’re a company living off a past history of trust, which is nonetheless finding itself constantly in the news over trust issues (sadly, that sounds like Johnson & Johnson), then it’s time to yank the trust issue AWAY from the communications people. You don’t fix real trust issues with spin, even if you spin spin by calling it communications. You fix it by serious, top-down, line-management-based re-dedication to fundamental values and principles.

    Thanks for a thoughtful and provocative post.