With the markets in recovery mode and the recent financial crisis becoming a distant memory, it seems like a good time to reflect on what we’ve learned, if anything.
As I dug a bit deeper on the topic of “lessons from the financial crisis,” which only returned about 40 million results, the idea of rebuilding trust came up more than a few times. I then stumbled upon a presentation that I think offers some interesting perspectives on the topic.
Titled simply “Trust,” the author, Justin Basini, argues that trust building begins with managing risk and clearly communicating them as opposed to marketing products and services benefits.
It sounds simple enough, but it’s actually a fairly radical idea given the investment industry’s historical focus on product benefits, as opposed to managing risks, expectations and discovery of clients’ needs and objectives.
To clarify, Justin is not saying that the industry shouldn’t discuss benefits. He’s simply saying that there needs to be a more balanced approach to communicating benefits, as well as risks and expectations in a clear and simple way.
Unfortunately, this tendency to focus on benefits, as opposed to risks, was amplified during the recent economic crisis.
Most crises’ start with a mistake, and either move into the social conscience as a conspiracy or incompetence. For the entire investment industry, public perception moved directly from crisis to incompetence due to the complexity of the issue and the belief that business leaders simply didn’t manage risk appropriately or didn’t realize what they were getting into.
Top-down communications don’t work right now
The question then becomes, how do you deal with it? Many firms continue to apply a “top-down” approach to communications. Meaning, the CEO or spokesperson comes out with the corporate approved message. The age of top-down communications, however, is dead (at least for the time being). Messages now flow through numerous and sometimes unexpected channels. As a result, marketing and corporate communications need to adapt.
You must empower and arm your entire company with the right messages for partners and consumers. This is critical because society doesn’t trust the face of corporate America – the CEO. They’re more likely, however, to trust their peers.
What this also means is that for the time being, the trust challenge is not solved by differentiation but rather by whom and how your message is delivered.
Making a difference and finding what you truly believe
Companies and the entire industry also need to prove to distribution partners and investors that they’re worthy of trust. One of the ways you can do this is by recognizing and communicating what your role is in the global economy and what your responsibility is to your community and to people’s lives.
In other words, how do you make a difference as opposed to how are you better or different?
It sounds risky, especially given the negative market environment we’ve just experienced, and finding that right message can be difficult, but in reading another interesting post by Steve Gardner, President of Gardner Nelson + Partners it’s clear that the companies that are willing to communicate what they really believe, no matter what the market environment, will be rewarded in the long run.
P.S. As this post was publishing I received an email about John Hancock’s new “Trust” campaign. The ads are aimed at stressing the importance of trusted advisors with one boasting, “People don’t trust the market. People don’t trust the economy. People don’t trust the government. But you, they trust.”
Seems we were thinking along the same lines.