Besides price and quality, trust is also important in the consideration phase of a purchase decision. Trust can be built both offline and online. Before the internet, companies build trust offline by having a proper physical place of business and relying on physical word of mouth based on superior quality and service. Nowadays, consumers will find out more about a company online before a purchase decision or might only interact with companies online, so new strategies to build trust are needed. In this article, we will focus on how companies will build trust online.
Why Do Companies Need To Build Trust?
Trust is one of the most important things a consumer requires from a company before deciding to transact with them. Price and quality mean nothing if we cannot trust the company as we might not receive what we paid for. Without trust, most consumers will not be willing to transact with the company.
Before we decide to purchase from a company, we might do some homework by Googling or asking around if they are legit. Alternatively, if we have seen or heard the company mentioned online or offline, we might be more prone to trust them due to familiarity bias. Once trust is established, we will treat the company/branding as reputable and not need to do research again. When we purchase from a brand that we trust, we can expect to receive a product of a certain quality. This effect can also be transferred across different products and sometimes different categories within the same brand.
Building trust for online businesses is important as we are unable to feel the product before purchasing. This is less of a problem nowadays as consumers are used to shopping online and listing on a well-known platform lets us know that we have at least some sort of recourse if something goes wrong.
Building trust is also very important for new companies as they will need consumers to be willing to take the leap to try your products when they are still unproven.
Which Company Do You Trust More?
Old and trusted
New and unproven
Similar offerings and pricing
Which do you choose?
The higher the monetary commitment and impact of purchase (e.g. health and safety), the higher the amount of trust needed before a consumer commits to a purchase.
Seeing how important trust is, some companies (minority) might resort to shenanigans and shortcuts to build trust to boost their sales. In fringe cases where the deals are too good to be true, consumers might be tempted to transact despite the lack of trust. However, these are usually scams.
How Do Companies Build Trust Offline?
I will briefly touch on how companies build trust offline. Before there is the internet, companies build trust offline. Examples of how they build trust offline would include
- Physical outlets with proper furnishing
- Professional and sincere service staff
- Giving guarantees and warranties
- Seamless experience from purchase to after-sales service
- Quality products
- Word of mouth by customers
- Running print and tv ads
These are still done now in combination with online methods. Some of these offline methods can also be done online now.
How Do Companies Build Trust Online?
Building Trust Online
|Source||Within the company||Outside the company||Both inside and outside|
e.g. quantity sold
e.g. trending keywords
e.g. social media
The source of trust-building can come from both within and outside the company.
Companies can showcase their strength on their website or social media using quantitative and qualitative methods. Whereas, trust building from outside the company can be organic via legitimate word of mouth or manufactured via paid ads and endorsements. Although the source of paid trust-building activities seems external, however, it originates from within the company as the company paid for them.
Trust can also come from a combination of inside and outside the company where consumers comment while the company responds on social media.
There are also some potential red flags to look out for. I am not saying all of them are bad. We just need to be aware of how companies do things so that we can make informed decisions.
Building Trust Online From Within The Company
Companies showcase the number of items sold to show that other people like yourself have decided to make the purchase. The higher the number, the more trustworthy it will seem as it looks as if other people have done their homework and think that the product is good. Thousands of others have bought it, it should count for something right?
E-commerce platforms even have filters to allow us to filter by the amount sold.
Potential Red Flags
We do not have access to their back end so we cannot have any definite proof that the published quantity sold is accurate. If the number is excessively high but you have not heard people around you buying the product, it can be quite fishy. A constantly updating sales ticker can also be suspicious as it might just be a visual plugin to create FOMO.
Notifications Of Recent Sales & Views
When surfing a website, sometimes a pop-up will appear to tell you that other people are viewing the product or that a sale has occurred. The notification is there to persuade you that other people are also interested in what you are looking at, validating your choice. On top of that, it also creates FOMO if we think that the items might somehow run out.
Potential Red Flags
I don’t think these notifications provide much value to the customer besides creating the image that the products are high in demand, pushing you to buy their product. Instead of creating FOMO, every time I see these notifications, it makes me trust the company less.
Also, some of these notifications are fake. They are created by plugins to create the illusion of constant sales despite there being no sales at all. If you are tech-savvy enough, you can press F12 and inspect the code of the website. Check if the pop-up is hard-coded into the website or which plugin the website is using to generate the pop-ups.
If you can’t convince, confuse. Some companies might use the trendiest marketing buzzwords to appear like an expert in the area or allow them to beat the Google search algorithm. The best examples appear in the crypto industry and crowdfunding platforms. Buzzwords like “decentralized”, “DeFi” and “nanotech” might sound really cool and futuristic but can these companies really achieve this?
Potential Red Flags
Do the buzzwords mean anything or are they just there for SEO or to convince you to trust them and place your money with them? If you do not understand what they are talking about, do not assume immediately that they are professionals. Don’t trust people just because they use big words. You need to do your homework and look deeper into the company and what they promise before trusting them.
Building Trust Online From Outside The Company
Mainstream Media Appearances
Appearing in the mainstream media not only help companies reach more people but will also help build legitimacy behind the company. These appearances can come in multiple forms like interviews and ads. Even if they are ads, it shows that the company is willing and confident enough in its products to spend a significant amount of money to appear on mainstream media. Although some of these media appearances might be offline e.g. tv, companies usually dedicate a portion of their website to show that they have appeared on mainstream media. An organic appearance on the media might signal that the producers have done their research and decided to choose to do a segment with the company as they are an authority on the matter.
Potential Red Flags
Appearing organically in the media should be differentiated from appearing as an ad. Imagine if I paid the Straits Times or CNBC for an ad that looks like an interview. I then say on my website or social media that they interviewed me. While technically not wrong, it is misleading. When a company states that it appeared on certain media platforms, we should see if its appearances are organic, paid or even exist in the first place. If we are unable to verify the source of these appearances, it would be prudent to take them with a pinch of salt.
Additionally, even if they appear organically, it might not mean much. How much homework did the producers do before choosing these companies to feature? Even if they did their homework, how can they be sure that these companies are not hiding stuff from them? Both Theranos (convicted) and FTX’s CEO (hiding in the Bahamas) have appeared on the cover of Forbes which can help build their reputations but fast forward to today, these appearances don’t count for much. The media create content, they are not auditors (even auditors and the biggest funds got lied to) so they should not be relied on too much on building a company’s reputation.
Endorsements, Ambassadorships and Sponsorships
These endorsements and ambassadors can come from A-class celebrities with millions of fans to nano-influencers with a thousand followers. Endorsements are a major source of income for these influencers. Social media ad revenue is usually not enough to support these influencers, especially if they have a team supporting them. Endorsements and sponsorships help support content creation.
By placing their reputation behind the company, it can both help in awareness and trust-building for the brand. These influencers hold a certain influence over their followers as they trust them. Many of us don’t have enough time to do our research so we might trust the endorsements of our favourite influencers and we can support them at the same time.
Influencers are also pros at combining their content with ads which makes the ads look less commercialized. Well-made and thought-out ads are better accepted by their audiences.
Potential Red Flags
Did these influencers use the product before agreeing to endorse the products? The most trustworthy endorsements will come from influencers that are organic long-term users of the product even before the company approach them. This means that they are willing to spend their own money to use the product long-term.
When a company is paying money for an influencer to endorse their product, they will usually need to vet through copywriting so the company has some influence over the endorsement. It might not be malicious as companies will need to make sure that the influencer doesn’t overhype the products. On the other end, influencers might need to avoid speaking about the bad points of the products as the companies are paying them. However, this shouldn’t be too much of a problem if influencers only pick products that they will really use and believe in and are willing to place their reputation behind the product.
What other products did these influencers promote? Are they legitimate? If there is anything wrong with their previous endorsements (e.g. FTX, Celsius, Voyager bankruptcy), how did they promote them in the first place and how did they handle the aftermath? Did they promote the products without overhyping them? Did they take ownership of issues with the products or just take down videos and act as if nothing happened?
Is there any declaration that they are paid for promoting that product or are they masquerading it as an organic unpaid endorsement? Check out the different ways to spot ads by influencers here even if they did not make any declarations.
Testimonials, Reviews & Experience
Instead of relying on what the company say, we trust the user experience of other users like us. When we see that other users are satisfied with the products, we might be assured that it is a decent products. If the company responds to the bad reviews to attempt to fix the problems, it can also show that the company cares about the experience of the customer even after the sales have occurred. A satisfied customer might also share their experience with their friends, converting them into potential customers. Reviews can also highlight potential upsides and downsides of the products that we might not have thought of. We can then decide if these downsides will affect our purchase decision.
Companies that do B2B might show who they have worked with before, especially recognizable names. This is to show that they are capable enough and have experience working with big players in the industry.
Potential Red Flags
Can the testimonials and reviews be trusted? For example, does the company have the ability to only publish glowing testimonials or are the reviews posted on a more trustworthy platform so that the company cannot delete bad reviews? Don’t only look at 5-star reviews as they can be given by lazy consumers who cannot be bothered or are self-posted by the company, highlighting all the positives without the negatives. Scroll through the lower-rated reviews to see if there is anything to take note of. Look out for paid reviews and testimonials as there can be a conflict of interest.
Additionally, some companies manage to game the review system by giving freebies if they give them a 5-star review. Examples would include companies adding a card inside their packages to ask for a glowing review and in return, they will give you a gift card or discount codes for your next purchase. This action is illegal. Also, some restaurants give away free starters if you review them on Google Maps. They don’t specify that you have to give them 5 stars but typically you can just give them 5 stars to get the free item. When you show them that you did review them, you might feel pai seh to give them anything below 5 stars.
A company with 4-star reviews might be more trustworthy than a business with all 5 stars. Consumers have different tastes and expectations so it is impossible to perfectly satisfy every customer such that you get 5 stars.
Building Trust Online From Both Inside & Outside The Company
When an individual or team looks professional or successful, we might be more prone to trust them. To look professional and successful, they might do the following
- Taking photos with luxury cars and private properties
- Going for exotic vacations
- Showing cheques of successful sales or claims
This builds the image that they are good at what they do and this is why they are able to achieve success. It also shows that they respect your time and dress up for the occasion.
However, it looks like trust can also be built on the other end of the spectrum where individuals dress up sloppily to build the image that they only care about the business and don’t care about looking too “corporate”. A good example would be the ex-CEO and founder of FTX, the recently bankrupt crypto exchange. A billionaire dressed in a company T-shirt instead of a suit while driving in an old Toyota helped him build an altruistic image where he doesn’t care about the money and just wants to help people. An influencer even called him “the world’s most generous billionaire”. Looking at FTX now, we can see that it is all a sham.
Businesses can also include sustainability and charitable actions to bolster their image. Consumers might be more willing to spend on such businesses as these businesses are willing to spend on efforts that benefits society and are not directly tied to profits.
These images will be posted online on their website, social media accounts and on tv as ads.
The company can also show off business awards that they achieved or the qualifications of their team (e.g. PHDs, MBA). It will give the impression that these businesses are professional and are one of the best in the industry.
Potential Red Flags
While it can be difficult and unfair to not trust anyone in a suit, we should not place excessive weight on the corporate image as they will show you what they think can convince you to trust them. Take corporate image into consideration together with other factors mentioned in this article. Looking and acting professionally can be mutually exclusive. Do some basic searches on the background of the team to see if what they are are true and if they exist in the first place. You might find out that the professional-looking CEO is just a $1 photo from Shutterstock.
We also need to look closely at what is promised versus what is accomplished. We should also look at what the entire business is doing. For example, planting a few trees or doing charity probably cannot compensate for polluting the environment or using sweatshops. Pledging to donate is also different from donating outright. Pledging can come with multiple conditions before a company will make a payment or that big number is spread over multiple years instead of just making a lump sum donation. Even if the company do not fulfil their entire promise, any donation is a good donation towards a good cause. We just have to be aware of the fact that any number appearing on any form of media as marketing should be taken with a pinch of salt unless we are willing to delve deeper to research.
For business awards and qualifications, we need to vet them as well. Business awards can be bought while PhDs can be printed for free. I saw one guru having an honorary PHD from a “school” that he founded himself. Paid business awards are pure marketing while self-given PhDs don’t mean anything.
Corporate Social Media Accounts
Besides using their website, many companies now mainly focus on their corporate social media accounts to reach their current and potential customers.
With high amounts of followers, likes and comments, there is social proof that makes companies more trusted. As long as the comments are not overwhelmingly negative, high engagement in a company’s social media can give the impression that they are popular with other people just like us.
When companies reply to comments online, they show that they care about what we think. They would try to solve our problems and answer our queries.
The humanization of corporate brands makes them more relatable to make us trust them more easily. Instead of a cold corporate entity, they are now a funny, meme-loving, online friend.
Companies can handle their social media accounts in-house or outsource them to professional PR agencies.
This section includes the celebrity and influencers themselves as they are also brands that have commercial value.
Businesses can also make use of user-generated content where users either voluntarily upload or upload content to join a contest. They will then attach a specific hashtag so that these hashtags can trend and be easily searched. Non-users might come across these campaigns and see how other people are using and are satisfied with the products, persuading them that the product is worth looking into.
Potential Red Flags
Since engagement is key to building trust for social media accounts, this is what we will look at.
Typically, a social media account should have a 1-3% engagement rate per post ([likes + comments] / followers]. If an account has many followers but a small engagement rate, it might mean that the followers are not gained organically. The followers, comments and likes can either be bought or gained through contests where users have to engage with them to join.
While if an account has a weirdly high engagement rate, the likes and comments might be fake where they are bought or just spam. Comments will look generic enough to apply to most social media posts. The source of these engagements might also look out of the target market. For example, if a Singapore company operating mainly within the Singapore market has many followers or receives many likes and comments from India, it can be quite fishy.
Guarantees, Trust Seals & Badges
When you are still hesitating about quality, a free trial or satisfaction guarantee might just convince you to make the purchase since you will be able to return the product if you are unsatisfied. A company that is confident about its quality will be able to do this or even give lifetime guarantees. Additionally, as long as we are not totally unsatisfied with the product, the typical consumer will not return the product. If we enjoyed the product for long enough, we might even be paiseh to return the product even if they advertise lifetime guarantees.
Free warranties are also usually offered to assure customers that even if the item is faulty within a certain period, it can be replaced or fixed at no cost.
Also, if you are hesitating about price, a price guarantee will make the company match the lowest price of a similar product that you found elsewhere. If a company puts out a price guarantee, they are confident that they have similarly low prices with their competitors. Companies that are extra confident might give an additional discount (e.g. an additional 10% off their competitor’s price) if you are able to find a lower price item. Also, they will have similar costs to their competitors so they will just earn less if they price match. If the industry’s pricing model is not based on profits but on capturing market share, it is unlikely that they will give price guarantees.
These guarantees can appear in the form of trust seals and badges that say satisfaction guaranteed or secured check-out badges to instil trust. These trust seals and badges can either be given by a third party or created by the company itself.
Potential Red Flags
The key is in the terms and conditions. You can be assured that there is a truckload of terms and conditions behind the “simple” guarantees. Even if you can return the item for free if you are not satisfied, how easy is it to do a return? Do we have to bring it down to their service centre in some industrial estate or do they charge for collection of the product? The cost of returning does not only include the product but also the time and money used to get the product to and from the service centre. If the product is relatively low cost, consumers might choose to just purchase a new product when the return or exchange process is extremely troublesome.
Price matching is also usually under extremely tight parameters. For example, the items might not only be the exact same item, the payment mode, date bought, warranty coverage and other terms must be the same for the price guarantee to kick in.
Search online for the experiences of other people who succeed or fail when dealing with the companies in question and decide for yourself.
Check if the trust badges and seals are legit. They can be obtained legitimately when a company fulfils certain service criteria or they can just be a stock photo that can be obtained for free.
How Can Consumers Verify How Trustworthy Businesses Are?
Essentially, we should verify the claims of the businesses. We can google the business, look at reviews and ask around amongst others to check on their claims.
However, we have limited time and it can be very troublesome if we have to verify every claim.
|No/lower amount of due diligence||Higher amount of due diligence|
|Low cost||High cost|
|Low impact||High impact|
|Transacted before||Never transact before|
|Established company||New company|
|Regulated industry (majority)||Unregulated industry (e.g. crypto)|
A guideline would be to look at the impact (e.g. health and safety), the cost of the product, our past experience with the company and others to determine how much effort to put into doing our due diligence. You should feel comfortable with your purchase and also not rush into any purchases as we tend to make mistakes or miss out on key information.
Should Companies Manufacture Fake Social Proof?
This is a rhetorical question. You might be tempted to use certain shortcuts to build trust for your company since it can be really slow at the beginning. However, you better pray that you don’t get caught or else you might get called out and all trust in your company will be gone.
Instead of lying to your consumers, give away free trials/samples or discounts instead for real users to try out your product and build up trust in your business slowly. It might take time but at least it won’t bite you in the ass in the future.
In order to persuade customers to purchase from them, companies will need to build trust both offline and online, and we will be focusing on building trust online. Building trust can come from inside or outside the company or a combination of both. Companies should not take the shortcut of building fake social proof as it is unethical and will damage their reputation in the long term.
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