While I was chairing the Arkansas Symphony Orchestra board for four years during the worst financial crisis to hit the U.S. economy in generations, I often averred that the Symphony was not simply a collection of musicians, a series or performances and youth educational programming. No, it was a sacred trust, a bond with the city and the state. The board’s primary obligation was to protect and steward this trust for today and for generations.
“A sacred trust” is equally an apt description of your brand, just as it is for a cultural institution. Trust is the foundation of economies and your brand is only as strong as the bonds of trust it represents.
Is your product actually what you say it is? Is your service “as good as your word?” How trustworthy are the promises you make to your customers and your markets?
When companies break trust with their customers they break the bonds that form the brand and brand equity. A little breach might create some reparable harm while a major breakdown can create cascading damage that requires years to rebuild.
John D’Allesandro, former CEO of John Hancock Financial Services and the author of Brand Warfare, described the ferocity with which the CEO must defend and protect the brand reputation. He wrote that a hundred years of brand equity could be washed away in one public scandal. In his view, departmental leaders and executives would always see issues and opportunities from their isolated vantages but the CEO was uniquely positioned to see the whole and make decisions for the brand.
A few examples first of broken trust and broken brands, then some ideas on how to ensure that your trust quotient–and your brand equity–remains strong.
Facebook has been wracked by scandals over the years, many of which have eroded trust with its users. Significant was the Cambridge Analytica scandal, in which a political consulting firm gained access to data on millions of Facebook users without their consent. More recently and more damaging, the Wall Street Journal reported a series it termed “The Facebook Papers,” exposing numerous internal research reports indicating that Facebook properties such as Instagram measurably harmed mental health, particularly among teenage girls, yet the company did nothing. No wonder millions of users chose to delete their accounts while others have called for greater regulation of social media.
Volkswagen
In 2015, Volkswagen was caught cheating on emissions tests for its diesel engines, which represented 70% of the U.S. passenger diesel market. The company had installed software in its vehicles that could detect when emissions tests were being conducted and reduce pollution levels during the tests. However, when cars were on the road, they could emit up to 40 times more polluting nitrous oxides than allowed by law. The company was forced to pay $30 billion in fines, penalties, restitution, and settlement of lawsuits; but none of that made the problem go away. The brand that was known for selling cute (Beetle) and sporty (Jetta) fuel-efficient cars in the U.S. continues to wear this stain–is any mileage efficiency or emissions data believable now?
Wells Fargo
Wells Fargo, a financial services giant, admitted its employees had created millions of fraudulent accounts. The employees created the accounts without customers’ consent, in an attempt to meet aggressive sales targets set by the company. Subsequent revelations showed the company repeatedly misapplied loan payments, wrongfully foreclosed on homes, illegally repossessed vehicles, incorrectly assessed fees and interest, and charged surprise overdraft fees. The scandal led to widespread coverage of the company’s toxic culture, nearly $4 billion in fines and refunds, and extensive damage to the company’s reputation. Wells has run massive ad campaigns and undertaken sweeping internal changes in an attempt to repair the damage. But every time I send my mortgage payment to Wells Fargo I get a little tweak of mistrust and resentment; I’m still doing business there but I don’t like it.
Peloton
Peloton–all the rage for its socially connected stationary bikes and treadmills–shot itself in the foot after it initially refused in 2021 to recall its Tread and Tread+ treadmills following reports of injuries and a child’s death. The company initially issued a warning to users to keep children and pets away from the machines but took no further action. Peloton was hammered for its slow response and lack of transparency with customers; many took to social media to express their disappointment and threatened to boycott the brand. After an extraordinary surge in sales during the Covid-19 pandemic, the company’s results have disappointed. While many factors come into play, one must wonder to what extent the company’s broken trust has played into the decline.
Robinhood
Robinhood is a stock-trading app that allows users to buy fractional shares, essentially enabling the “little person” to invest any dollar amount in the stock market. In January 2021, Robinhood faced backlash from customers after it restricted the trading of certain stocks, including GameStop and AMC, during a surge in their prices fueled by social media. Many customers accused the company of protecting the interests of Wall Street investors and hedge funds at the expense of individual investors, and some even filed a class-action lawsuit against Robinhood. Robinhood may have had legitimate business reasons for the decisions, but they flew in the face of the brand proposition the company had sold to its customers.
Protecting Your Brand Trust
These examples are egregious, extensive, and publicly humiliating cases of broken trust. Few companies will experience such scandals in their lifetimes, but they nevertheless point up several principles that any company leader can adopt to preserve and build trust and brand equity.
Set the Course with Culture
When a company’s culture is aligned with its brand and focused on its customers, cheating scandals like Volkswagen’s and Wells Fargo’s are almost impossible to create. Many companies have been affected by rogue actors, but these are the anomalies, not the rule. Only toxic, misdirected cultures can create widespread and systemic abuse. In coaching our clients to develop brand leadership, we bring the Six C’s of Customer and Brand Centricity to the fore. These six competencies of building brand culture drive the development of a distinctive and common mindset throughout the organization.
Put Customers and the Brand First
D’Alessandro’s book said it well: the company leadership must advocate for customers and for the brand above all short-term, transactional, and performance objectives. Our cautionary tales prove the point; in each case, the company was pursuing some business objective that was in conflict with its customers or its brand’s trustworthiness. D’Allessandro cautions the business leader to remember that one decision can put millions or billions of dollars in brand equity at risk.
Act Quickly and Transparently in a Crisis
No company can predict or control events and reactions entirely. The effective brand leader must anticipate and plan for crises; this is crisis communications planning and management at its core. Decades of crisis response case studies underscore that the company leader must act quickly and decisively to protect the brand. This is material for another blog entirely, but begin with rapid response. Data shows that bad news travels around the world in about 24 minutes, while the average corporate response takes 24 hours. It’s best to have a plan and messages that can be deployed immediately as you take stock and prepare more comprehensive statements. Be transparent; say what you know and what you don’t know. Keep updating the public as new information emerges. Accept responsibility, make amends and put in place correctives.
Your brand is a trust with your employees, your customers, and the public. Recognize the imperative of trust and invest in strategies to build and maintain it to earn the loyalty of customers and credibility in the market.