The average consumer is exposed to more than 3,000 brand messages on a daily basis. How do they decide which brands to trust? The answer is complex, and their basis of trust has changed significantly over the past few decades.

The “Mad Men” era of the late ’60s and early ’70s, created what we think of now as branding, which involves motivational messaging that can help build a relationship between the company and the buyer. “Relationship marketing” became the theme for branding in the 1990’s, and many strategies pioneered at that time are still in use.

Today, the leading trends in brand messaging include differentiation on high quality of the product and excellence for the customer experience. The biggest difference in today’s marketing strategies? The ways those marketing messages are being delivered. Successful brands are growing engagement through channels that consumers have learned to trust: social networks and online reviews.

Consumers and “word-of-mouth” marketing

Have you heard that 84 percent of millennials don’t like advertising and don’t trust its messages? The situation was summed up by Crowtap’s CEO, Sean Foster: “Fundamentally our relationship with consumers is broken.” His point is that the answer lies not in better advertising, but in moving away from advertising as your brand’s primary communication tool. Foster advised, “It’s about empowering people to help you build a brand. It’s about people over advertising.”

In this new era, where brands struggle to speak to customers directly, companies have found greater success by growing a strong base of brand advocates among a group that consumers turn to frequently — their friends. An often-cited report from Forrester revealed that 70 percent of U.S. adults online trust recommendations from each far more than statements from brands. The report recommended that “marketers must shift from an ad hoc approach where content is an afterthought, to an approach where content production is systematic, integrated, and data-driven. By doing so, brands will enable the four components of a 21st century brand — one that is trusted, remarkable, unmistakable, and essential.”

Why trust matters to consumers

The brands with the most loyal customers are those that prioritize customer trust. Research shows that “brand loyalty is the only tool for any company to survive in an environment of severe competition.” The research team established that brand trust is positively correlated with brand loyalty. It also concluded that purchase intent can be predicted on the larger scale based on perceived quality, which depends on positive word of mouth from friends and family, both on and offline.

The findings were supported in a study of how much brand trust translates into hard dollars and cents for the bottom line. The researchers concluded that brand trust exerts a substantial influence over financial equity for firms worldwide.

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Trust and company value

When it comes to trust and company value, research across the board supports conventional wisdom. People tend to trust who their friends trust, and that extends to brands. Living in an uncertain world with a persistent barrage of conflicting messages, consumers find it necessary to rely on reviews from friends and other connections.

In a rather unscientific but insightful survey, IJ Golding Consulting identified corporate attitude as the most significant factor in consumers’ favorite brands. Consistency, reliability and a positive customer experience were the other top factors. All of those factors are determined by whether the consumer trusts and believes in statements from a company, not how well the company’s products perform.

The price of negative brand sentiment

The flip side of the discussion on brand trust and company value is how to quantify the costs associated with damage to a brand’s reputation. Unlike sales, reputation can be extremely difficult to rebuild after a loss. A study on the most damaged brands in America reported these examples:

  • General Motors: Recalls at GM generated not just operational costs, but also Congressional investigation into company practices, a drop in projected sales and intensive marketing campaigns to reshape its public image
  • Bank of America: The speed of sharing on social media contributed to a spate of customer complaints, regulatory fines and consumer lawsuits. The bank had to buy back shares from investors to assuage accusations of misconduct.
  • Target: The failure to protect consumer credit card data was not the cause of the loss Target suffered in reputation. It came from the company’s slow response in alerting consumers and taking responsibility for correcting the situation. Better communication could have prevented negative sales growth after the data breech.

Denise Morrison, CEO of Campbell’s Soup, admitted the problem faced by brands in many industries. “We are well aware of the mounting distrust of Big Food…We understand that increasing numbers of consumers are seeking authentic, genuine food experiences and we know that they are skeptical of the ability of large, long-established food companies to deliver them.” Understanding the problem is half the battle, but finding a way to engage consumers through a trusted channel is even more vital.

Brands establish a new level of trust with consumers when their teams get proactive and join the online conversation. Every day, brands who partner with ConsumerAffairs benefit from creating a positive customer engagement strategy focused on respond to customer feedback and earning increased consumer trust. As businesses work toward the same goals, engagement and improved customer experience will help customers develop into brand advocates and generate additional streams of revenue to help proactive businesses grow. The bottom line? Brands need to make smarter decisions about their products by listening to customers and strive for outstanding customer experience. That’s how top brands today assure customer loyalty and expand into new markets.