Mistrust and suspicion are the watchwords in Yankelovich Inc.’s 2004 study of consumer attitudes toward marketing.
The good news, according to Yankelovich, is that that mistrust and the unwillingess to volunteer personal information do not necessarily go together.
Consider 18- to 39-year-old consumers, who are the least likely to believe that companies operate with honesty and integrity.
Those same young people are more willing to share personal information and less concerned with ID theft than their older counterparts, who generally are more trusting of companies.
Only 26% of the youngest group were very concerned that personal data collected by a business would be hacked and used to steal their identity, compared with 37% of those older than 55.
Why the disconnect? On the one hand, young consumers have grown up reading stories about corporate misdeeds and political scandals; thus the lack of trust. On the other hand, they’re hip to the hype, as Craig Wood, president of Yankelovich’s Monitor MindBase division, puts it.
“They fully understand that they are getting sold something,” he says. “They’re attuned to the tone and loudness of today’s companies.”
In addition, “they were raised in the Internet generation, in which computers are our friends, not our foes,” he continues. “They have grown up in an environment in which online interactions — both commerce and interpersonal — are pervasive.”
Still, some observers are skeptical.
“My son’s age group — 20 to 25 — gives virtually no information without an established business relationship,” says Robert S. McKim, president of knowledge-management consulting firm MRE Enterprises LLC.
| Actions taken when a retail business lost my trust | Actions I’d take if a company releases personal data, and I start getting unsolicited mail as a result | |
|---|---|---|
| Tell friends and family | 76% | 56% |
| Stop shopping there for some period of time | 58 | 44 |
| Let the business know concerns | 55 | 67 |
| Increase business with competitor | 49 | 29 |
| Reduce number of times business is visited | 18 | 21 |
| Cancel store credit card | 13 | 21 |
| Write about experience in Internet forum | 12 | 1 |
| Complain to Better Business Bureau or Chamber of Commerce | 11 | 31 |
| Would not change anything | 3 | 10 |
| Source: Yankelovich Inc. | ||
In contrast, older consumers will volunteer it to a well-branded institution, according to McKim. “They view the Internet [and other forms of direct marketing) as a way of having direct contact with a firm they have had loyalty to over several years,” he says.
Yankelovich also reports that young shoppers consider spam a “cost of doing business” online: Only 17% of those under 40 felt strongly that spam was a valid reason for limiting their online purchases, compared with 27% between the ages of 40 and 55 and 32% of those older than 55.
So what is the determining factor in building trust? According to Yankelovich’s research, it’s the history and quality of interaction between consumer and marketer. “Just because someone has your trust or does not have your trust does not mean they will or will not share information with you,” says Wood.
And that trust is deteriorating.
According to Yankelovich, 66% of all respondents agreed with the following statement: “If the opportunity arises, most businesses will take advantage of the public if they feel they are not likely to be found out.” Fifteen years ago, that figure was 54%.
This means that distance marketers, especially online firms, are being held to a higher standard of behavior. Marketers need to consider this when asking consumers for personal information.
Another problem is the fact that consumers are opting out of marketing channels at an alarming rate. Thanks to the federal do-not-call list, the 18% of consumers who had removed their name from a telemarketing list in 2001 has nearly doubled to 34% in 2004.
And this resistance is spilling over to other channels. In 2001, 23% of all consumers had removed their name from a mailing list, a tick or two over the 20% reported in 1999. This year it was 35%.
And what about spam? According to Yankelovich, in 1998 60% of all consumers felt they received too much junk e-mail. This increased to a whopping 87% in 2004.
Leave aside spam for a moment. Responsible direct marketing requires a certain knowledge of the consumer in order for marketers to provide the right offer, at the right time, for the right price, through the right channel. But Yankelovich has found that 71% of all consumers believe that protecting their personal information and privacy is more of a concern now that it was a few years ago. Here, there is a correlation between age and belief: 63% of the youngest consumer group agree, compared with 77% of those between the ages of 40 and 55 and 75% of those older than 55.
And only 11% of all consumers strongly agree that retailers are doing everything they should to protect consumers’ personal information.
To a certain extent, marketers are to blame for this, according to McKim. “There are far too many people in a company who have access to information they don’t need to have,” he says. “A database administrator never needs to see a customer’s name and telephone number. They might just need the city, state and ZIP code. And a lot of times companies are sending their entire file to a print house, not just the name and address.”
More than that, consumers feel that the promise inherent when a company requests personal information has gone largely unfulfilled. A mere 14% of all respondents gave top ratings to the idea that retail companies use their data to send advertisements that are relevant to their wants and needs. Only 9% strongly believe that sharing information allows a company to get to know them and provide them with products that fit their lifestyle.
The upshot? Hold on to your gigabytes: On a scale of 0 to 10, only 6% strongly believe (giving it an 8, 9 or 10 ranking) that it benefits them to give retailers their personal information. Ouch!
A further shock for direct marketers is that “trust” is encroaching on “value” as a business driver. On a scale of 0 to 10, consumers gave the statement “I tend to shop at businesses that have earned my trust — even if they tend to charge more than their competitors” a 6.4 average.
When marketers fall from grace, they fall hard. Ninety-four percent of all consumers reported spending less with companies that betrayed their trust — and that spending fell, on average, by 87%. Since that figure likely includes a lot of 100% losses — a consumer who flat-out won’t go back — the damage is not only significant, but hard to recover from as well.
But a company that has built a relationship with a consumer has a bit of latitude before trust is completely destroyed. “After a one-time breach, the overwhelming majority of consumers come back,” says Dan Goldstein, president of Privacy Research & Consulting. “It takes two or three times before the majority will say, ‘I am done with them.’ Consumers are resilient; they stick with companies they want to do business with.”
Nonetheless, there are consequences even for a first offense.
Yankelovich asked consumers to consider a scenario: Suppose a company gave out your personal information, and as a result you started getting unsolicited mail. How could that company regain your trust?
More than 25% said their faith would be irrevocably destroyed. Another 14% indicated they’d want the company to keep their information private, while 11% would need assurances that the breach would not happen again. Trailing the pack, at 2% each, were those who’d be mollified by “better prices” or “better customer service.”
However, 16% said they would accept a discount, a gift card, or some sort of compensation. This indicates that some consumers simply want fair market value for their personal information. But that may not be as positive as it sounds.
“If information like that is for sale, where does that stop?” Goldstein asks. “What is the dividing line between what is regulated and what is not?”
In fact, Yankelovich asked this very question. Thirteen percent strongly agreed with this statement: “For the right incentive or opportunity, there is no information about myself that I would not be willing to honestly report to a retail company.” (To put that in perspective, an overwhelming majority still has limits to what it would disclose to a retailer.)
What does it take to build trust? Yankelovich touts “P&R2,” which incorporates four things marketers presumably were taught in business school.
The first is precision targeting. According to Yankelovich, 52% of consumers wish for less marketing and advertising than they are exposed to today, while only 7% want more.
Second is relevance in message and tone. While this seems obvious, 59% of all consumers indicated that most marketing and advertising has very little relevance, while only 14% say that retailers use their personal information to send them advertisements that address their wants and needs.
The third is power. Consumers want to feel they are in control, and that they’re dictating the terms. Those who don’t get it resist any relationship with the company. Fifty-three percent complain that they still feel they are at the mercy of marketers.
And finally, consumers want reciprocity for their involvement with a company. That means value should be provided for all interactions at the time of contact.
That value can consist of information, entertainment or compensation, but it has to be something that demonstrates appreciation and respect.
The respect a firm gives them is considered by 70% of all consumers when they decide where to shop.
Tales of Lost Trust
Can a negative personal interaction really overcome a good product? You bet.
When I moved to my current apartment a decade ago, I treated myself to a meal that didn’t come wrapped in paper at a small neighborhood restaurant. The food was good, the atmosphere pleasant and I was a dedicated, if not regular customer for several years. Until…
I went there on a second date. Shortly after we ordered, the waiter approached the table and mentioned that he recognized me as having been there a week or so before — with another woman. (It really wasn’t me.) I didn’t have a third date, I didn’t complain to the management (which was a mistake) and I didn’t go back to the restaurant for four years.
Wait staffs turn over very quickly in New York City, and I’m sure he was gone within six months, but it took a lot longer for the bad taste to dissipate. (I’ve also never forgotten what the waiter looked like — tall, skinny, with a mop of very curly brown hair. It’s probably a good thing I haven’t run into him.)
It wasn’t until I needed a place to host a friend’s post-wedding lunch that I decided to try it again.
This time, our group was welcomed, the bride and groom were fawned over, and the restaurant has re-won me as a customer. But it lost out on four years’ worth of peanut butter pie sales in the interim.
— Richard H. Levey
Below are two lists of what positively and negatively influences consumer trust in companies. The percentage following each indicates the number of Yankelovich survey respondents that gave each factor an 8 or higher ranking on a 0-to-10 scale.
As a whole, the negatives tended to score more highly than the positives. In fact, among the top nine factors cited, negatives outnumbered positives 2 to 1. Furthermore, when consumers were asked about the positive and negative sides of an attribute, such as company reputation, testimonials or community participation, the negative influence had a stronger impact than the positive factor. The one exception was customer service experience.
Conclusion? The eminent market research specialist William Shakespeare got it right when he wrote Marcus Antonius’ elegy for Julius Caesar: In consumers’ minds, the evil that men do lives after them; the good is oft interred with their bones.
| Positive customer service experience | 73% |
| Good recommendation from family or friends | 59 |
| Strong company reputation | 55 |
| Positive rating from third parties (Better Business Bureau, Consumer Reports) | 46 |
| Provides privacy policy to customers | 45 |
| Positive testimonials from current customers | 39 |
| Endorsements from non-celebrities | 26 |
| Company contributes to charitable organizations or the community | 21 |
| Regularly see or hear company’s commercials on TV or radio | 7 |
| Negative customer service experiences | 69% |
| Negative rating from third parties (Better Business Bureau, Consumer Reports) | 61 |
| Poor recommendation from family or friends | 59 |
| Weak company recommendation | 59 |
| Does not provide privacy policy to customers | 53 |
| Negative testimonials | 50 |
| Company does not contribute to charitable organizations or the community | 23 |
| Endorsements from celebrities | 15 |
| Rarely see or hear company’s commercials on TV or radio | 6 |
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