Customer Trust

Christopher Wylie

MGMT 6351

BusinessWeek Assignment

October 30, 2009

Dr. Ron Sardessai

Why do companies as diverse as McDonald's, Ford, and American Express all

value consumer trust?

Organizations are valuing consumer trust more than ever. Companies such as McDonalds, Ford Motor Co., and American Express are rethinking their marketing strategies to help ensure they continue to build and maintain a loyal base of clientele (Kiley & Helm, 2009). According to a survey published by Edelman, an international public relations company, 62% of the survey participants trust businesses less this year than the previous year (Seidman, 2009). With changes in trust levels becoming more drastic, companies are being more attentive to the integrity of their relationships with customers (Kiley & Helm, 2009).

Consumers are now using public opinion in making their purchasing decisions. McDonalds used their influence to force some of their suppliers to start treating their animals in more ethical ways (Kiley & Helm, 2009). These actions received positive reviews from their critics, and trust in the company improved.

Consumers look for companies that care about their opinions. A company's brand is one of their most important tactics in reaching their targeted consumer. When a consumer is loyal to a brand, they prefer that particular brand over another business' brand, no matter the circumstances. With this goal in mind, Ford Motor Co. has enhanced its marketing budget to reflect advertisements being produced that regard Ford as being the innovative and smart preference when choosing a vehicle (Kiley & Helm, 2009). Ultimately, Ford is no longer concentrating on making consumers feel good about the vehicle they purchase but to feel smart about it.

The actions of these companies all show that many companies still value the trust of their customers. Organizations must continue to build loyalty if they want to survive the turmoil in today's economy. Consumers have access to a plethora of information, at the touch of a button, and with this type of accessibility, businesses must remain conscientious of how they are practicing and operating, along with what they are producing. The phrase "the customer is always right" stands true during difficult economic times, when companies are vying for business, from anyone, anytime.

What factors have contributed to the recent erosion of consumer trust?

Diminishing customer trust in recent years has been attributed to several factors. Some of these factors include unethical business practices, mismanagement from top managers, and product or service quality.

Unethical business practices have been big headlines in the news in the past few years. Very publicly scrutinized companies, such as Enron and WorldCom have caused consumers to doubt the way companies conduct business. For example, accounting practices are now heavily regulated because of these scandals (Bernstein, 2002). Financial reporting, in general, is also monitored and publicized, in order to prevent stakeholder loss and business failure. Daily functions of businesses are important to customers, especially in today's society, because if one aspect of a company is not performing at expected levels, the rest of the departments or sectors become indirectly influenced. Consumers are more aware than ever before, because of advanced technology and media, of how businesses should be managed. Mismanagement could result in customer-loss.

This leads to another factor that contributes to the erosion of consumer trust – mismanagement. In today's business world, automakers are making headlines for taking money from the government. The government bailout is a result of CEOs, from those automakers, not running the companies effectively. If these companies would have failed or do fail, countless jobs are at stake, with the economy being held by an even smaller thread (Thomas, 2009). With the government spending tax payer money to bail out companies from going under, logically, customers realize how inefficiently, and poorly businesses are being managed, particularly if upper management is allocating excessive funds for themselves. With consumer research on the rise, their trust in these businesses is diminishing.

Consumer trust is also lessened by service and product quality.