On June 13, 2017, Bloomberg TV interviewed Geoffrey Drabble, the CEO of Ashtead Group, a UK-based industrial company that leases heavy duty, infrastructure equipment.
Earlier this year, Mr. Drabble spoke with Financial Times. What makes his comments important is his view about our changing world, and its effect on business, in general, and his business, in particular. He says that today we live in uncertain times, and because of this, people do not wish to commit to ownership. As he stated in his FT interview, he goes skiing once or twice a year.
Why have a garage filled with skis and other skiing paraphernalia when he and his family can easily rent the equipment? As for Ashtead Group, industrial equipment is expensive and requires maintenance and insurance. Let Ashtead Group provide what you need for your project, whether an arterial road or an airport runway.
This view on business underpins many offerings today. Why buy a dress for a formal wedding when you can rent one through Rent the Runway? Why own a car when you can have a Lyft or Uber by swiping your phone? Why buy a vacation home when you can stay in one via Airbnb? Why buy a home when you can avoid the financial commitments by renting one? Owning the benefits without owning the product is a result of many things, not the least of which is a concern over economic obligations.
This desire to avoid commitment is just one of uncertainty’s effects on our economy. Of course, we recognize that the stock markets globally have an inherent distaste for uncertainty. And, we know that political leanings are forcefully impacted by uncertainty as well. In order to have businesses stay afloat while being buffeted by waves of ambiguity, insecurity and doubt, it is imperative to build trust.
Trust is not just a relational asset; it is an economic asset. Here is why: every branded product or service has value. We base this value on the customer’s perception of the branded product or service worth. The calculation each one of us makes is whether or not the brand experience (functional, emotional and social benefits) is worth the brand costs (money, time and effort). This is the standard customer perceived value equation. However, today, there is an additional component to this value assessment: trust. Trust acts as a multiplier when customers take their mental assessment of the branded product or service value. Trust is essential to the calculation of brand value.
Without trust, brands have little value. Trust positively or negatively affects the customer’s internal assessment of what they are getting for the costs they put in. If trust in a brand is high, the perceived brand value is increased. If trust in the brand is low, the perceived brand value is decreased. If there is no trust, then it does not matter what the benefits per costs were: there is no value. In fact, even if you gave your brand away for free, it would not matter. As we learned in math class, anything multiplied by zero is zero. Without trust, nothing else matters.
From a business perspective, trust is an essential economic element that must be factored into value.
As we make our way through this rapidly changing world of skepticism, instability, bewilderment and unpredictability, businesses must understand all their brand relevant drivers of trust, and incorporate these into strategies and actions to ensure that the creation, nurturing, building, and growing of Trustworthy Brand Value.
Failing to do so is an economic formula for failure.
Larry Light, a global brand revitalization expert, is co-author with Joan Kiddon of Six Rules for Brand Revitalization. He also is the Chief Executive Officer of Arcature, a marketing consulting company that has advised a variety of marketers in packaged goods, technology, retail, hospitality, automotive, corporate and business-to-business, as well as not-for-profit organizations.
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