It’s easy to understand that trust is hard won, but easily lost. It’s true of any relationship, really, including that between businesses and their customers.
This is an especially important issue for retailers, which have an enormous number of opportunities—online, in store, on mobile, through marketing or all sorts of transactions—to forge, maintain, or break their customers’ trust.
“‘Brand promise' ultimately relies upon the trust consumers have placed in a brand,” says IT solutions company Cisco’s chief marketing officer Blair Christie. “Customers who are loyal to a brand will trust that the next product or service introduced under that brand will fulfill the brand promise.”
Below, Retail Dive looks at just some areas—pricing strategies, quality issues, product reviews, and social media behavior —that hold potential to win (or lose) customer trust.
Pricing strategies
Consumers love a deal. It could be part of human nature, the thrill of the hunt. And these days, driven by a wage gap decades in the making as well as the severe economic downturn of 2008, consumers are super-price sensitive. Perhaps to satisfy that drive for a deal, tacking on “compared to” prices or multiple decreases in price on price tags has become a very common tactic by retailers, especially by discount retailers.
That may seem like a win-win — shoppers get that feeling from getting a deal, and retailers get the price they want on what they’re selling. The problem is that when those original prices were never really ever charged, a practice known as “price anchoring,” it's considered deceptive by the Federal Trade Commission. Price anchoring is increasingly under scrutiny by law enforcement agencies, and more consumers then ever are fighting it in court, too.
A 44-week Checkbook.org survey of several national retailers, including Best Buy, Costco, Home Depot, Kohl's, Macy's, Sears and Target, found that many items listed as on sale rarely, if ever, sold at any other "regular" price. While some of the stores conducted valid sales on selected merchandise, Checkbook executive editor Kevin Brasler called some of the pricing policies “disturbing.”
So while J.C. Penney isn’t the only retailer guilty of it, that retailer's experience with price anchoring exposes a quandary: the practice can erode trust, but it can be very difficult to change.
When he was CEO of J.C. Penney, Ron Johnson tried to do away with price anchoring, but his successor brought it back after Johnson’s “always good prices” approach was deemed a failure. Still, the retailer continues to get criticism (and lawsuits) over it.
"What you need to know is that in many stores, the sales just never end, or hardly ever end," Brasler told Komo news. "The worst offenders, for sure, were Sears, Kohl's and for many of the items we tracked prices on, Macy’s."
Quality issues
There’s another problem, seen at outlet stores, of retailers selling merchandise of lower quality specially made for the outlets.
Last year, members of Congress asked the FTC to look at the practice to see if is misleading under the law. While the FTC decides how to pursue this issue, it has blogged out a warning to consumers that many items found at outlets are, at least, misleadingly labeled.
The Better Business Bureau has also put together a guide warning of sub-par quality of some outlet-only items, telling shoppers that phrases like “suggested retail price” on tags may have decidedly inflated numbers that don’t reflect the actual price at which an item was ever sold.
Some consumers are going so far as to sue. Los Angeles shoppers have instigated class-action lawsuits against Gap and Banana Republic, Neiman Marcus’s Last Call outlet stores, and Saks’s Off 5th for deceptive practices. Attorneys believe more such lawsuits could be filed if the practice continues and more consumers get wind of it.
Once more, the lower quality of the goods could undermine shoppers’ trust in a way that could bleed into retailers’ flagship brands.
Columbia Business School marketing professor Mark Cohen says it is indeed a slippery slope for a retail brand.
“Expansion of these outlet strategies is very, very dangerous," he told Buzzfeed last year. "At what point does your outlet business become too visible to your regular business?”
Product reviews
Research shows that consumers use product reviews to help them make decisions and favor online retailers that include reviews. In fact, a recent survey by PowerReviews asking 800 U.S. consumers how ratings and reviews impact their decision-making, where they look for information, and how it affects their purchase behavior found that consumers want to see reviews, both positive and negative, and expect to see them in every channel.
Matt Krebsbach, director of global public and analyst relations at user-generated content solutions firm Bazaarvoice, tells Retail Dive that user-generated content like reviews are influential and that a larger numbers of reviews lead to improved search results and conversation rates.
“It’s become the proxy for the in-person shopping experience,” Krebsbach says. “Think back to the days when you’d talk to the salesclerk, hold the product in your hands. Now you rely on the experiences of other people with that product. Reviews have enormous currency with businesses — they provide visibility in the marketplace and drive conversation.”
But, he says, retailers have to do two things to ensure that the reviews shoppers see on their sites breed trust: they must include negative reviews and they must ensure that positive reviews are authentic.
“We believe that if an organization truly embraces the power of consumer-generated content that they not only want the positive reviews, but also want the sometimes negative commentary,” Krebsbach says. “Taking the good with the bad helps the company make necessary changes to improve. And proving an authentic point of view as legitimate and trustworthy gives the customer confidence that the decision they’re making is right.”
Social media behavior
Retailers are finding in social media a great way to communicate with consumers, share new products or campaigns, and, increasingly, even sell things. But retailers that don’t respect the essential expectation of transparency in social media risk losing the trust of even their most loyal fans.
Brands have done this in two ways, one that actually runs afoul of FTC rules, and another than may not be illegal, but nevertheless risks eroding trust.
The FTC updated its rules about what is paid advertising (and what is not) in 2009 and again in 2013, in part because of the rise of social media and social media marketing. The lack of disclosure around the fact that Lord & Taylor, for one example, recently paid bloggers and Instagram users for its posts could violate these rules, which require companies to let it be known when posts are sponsored or paid.
If not, damage is done, not just to the retailer skirting the disclosure, but also the participating bloggers and, by extension, all retailers and marketing campaigns, Ted Murphy, founder and CEO of IZEA, a company that connects social media content creators with brands, told Marketing Land.
"I actually think in the long run [being open] is the only way to do this and be successful, because once people feel like they've been tricked or deceived, they lose trust in the brand and they perceive it negatively," Murphy says.
"And the same happens to the creator," he added. "Once people figure out that the person who they thought was just taking a picture in a dress that they liked was actually being paid to do that and was not disclosing that to them, that authenticity and credibility that person had with you is eroded."
The other, sharing brand-relevant social media posts or appropriating photos posted by users, hasn’t been taken up by the FTC. But failing to get explicit consent from social media users, even if they hashtag a retailer or a retailer’s campaign, nevertheless could alarm users and damage trust.
“Asking consent, there’s an absolute requirement to do that,” Tara Kelly, founder-CEO of voice messaging platform SPLICE Software, told Retail Dive. “If you think a photo is alarming — they’ve got their fingerprints, they’ve got their voice prints. Just think about it and you’ll quickly realize that a human being has a right to interact with a brand, anywhere the brand is present, on their own terms.”