Astute business leaders have long recognized that trust is a vital element of competitive success. But traditionally, trust has been viewed as a "soft" issue - one of those things we know is important, but find difficult to measure. New research by Accenture Strategy quantifies the impact of trust on both revenue and earnings.
So far this year, I've published seven posts here that have addressed some aspect of trust. I've devoted this must attention to trust because it has a significant impact on virtually all aspects of marketing. Trust lies at the heart of all business relationships, and back in January, I argued that widespread buyer skepticism of vendor-provided information was one of those elephant-in-the-room issues for B2B marketers.
Lack of trust produces a major drag on marketing performance. If buyers don't trust what you say, they won't give you credit for understanding their needs, or for providing relevant, personalized, and engaging content and experiences. It's no coincidence that most companies aspire to be seen as a "trusted advisor" by their customers and prospects.
Most business leaders instinctively understand that earning and maintaining the trust of existing and potential customers is essential for success. But because trust is intangible, its economic and financial impacts are difficult to measure and quantify. A recent analysis by Accenture Strategy has now established a clear and measurable link between trust and both revenue and earnings.
The Accenture Strategy "Competitive Agility Index" is a measure of a company's competitiveness that is based on three equally-weighted components:
- Growth - Year-over-year enterprise value growth and revenue growth
- Profitability - Multi-year views of return on invested capital, net debt, and EBITDA margin
- Sustainability and Trust - A quantitative view of environmental, social, and governance factors, including the United Nations Global Compact principles, and a proprietary measure of trust based on publicly available data
In this research, Accenture Strategy used more than four million data points to calculate index scores for over 7,000 companies operating in 127 discrete industries. The index is designed to measure overall competitive agility, not specifically the impact of trust. But Accenture found that trust factors had a disproportionate effect on the overall index score - and on both revenue and earnings (EBITDA).
The Accenture analysis also makes the importance of trust abundantly clear. The authors of the study report wrote: "Our 2018 analysis revealed that more than half (54 percent) of the companies we examined experienced a material drop in trust at some point during the past two and a half years. . . Across the 54 percent of companies in our sample that experienced a drop in trust, revenues at stake conservatively equate to at least US$180 billion, based on available data."
Based on this analysis, Accenture Strategy argues that companies must make trust a strategic priority. The study report states: "Your leadership team must embrace trust as a core element of business strategy. All teams - at every level - must walk the talk. The choices they make every day need to support trust as a key element of their corporate business strategy."
The analysis by Accenture provides compelling evidence that trust has a significant impact on corporate financial performance. Therefore, it's important for marketers to make enhancing trustworthiness a key objective for all of their programs.
Illustration courtesy of chuks mbata via Flickr CC.