This week I decided to purchase a Panasonic DVX 100 camera.
I found it online for $899 through shopcartusa.com.
After the purchase was made, we received a notice that we need to purchase some additional “required accessories.” A call was made to their customer service line and we learned that batteries, cables, and other necessary items were not included in the original purchase.
Final sales price? $2,350.00. I canceled the order and bought it somewhere else.
This is an all-too-common marketing scheme that says, “We’re sacrificing the foundation of trust for the gratification of quick sales.” And that’s a really bad strategy.
In 2005, Stephen Covey was interviewed by Jay Abraham and they discussed what it really means to build a foundation of trust in every aspect of your business.
In regard to various benefits of building trust, Covey commented:
“…trust is the key accelerator, the key facilitator of all that is accomplished for good…”
“…the lack of trust is the key deterrent, the key frustrator, the key compromiser…”
“…the faster you gain trust the quicker the sale is closed, the faster the purchase is made, the more the size of the purchase, the more items are purchased, the more frequency the purchase, the more people they’ll refer to you…”
“…the faster your team gets this, the faster, the clearer, the more completely everyone will execute. Everyone will accomplish more…”
Covey illustrated the principle clearly with the following examples:
STEPHEN: When you as an entrepreneur and an influencer, when you build trust in your relationships, when you establish it — suddenly you’re able to move with incredible speed. I like to say that there’s nothing as fast as the speed of trust — for that matter, or as profitable…high trust organizations out-performed low-trust organizations by 286%. That’s nearly three times higher, in total return.
STEPHEN: Here’s what I mean by “the speed of trust.” I’m going to describe a deal that took place. And as entrepreneurs, we’re always involved with making deals of some sort, with investors, customers… That’s part of our modus operandi. Well, here’s a big deal of two large public companies, but it’s really all about making a deal.
Warren Buffett is the CEO of Berkshire Hathaway, one of the most respected leaders in the world and his company wants to acquire another company from Wal-Mart. The company that they’re buying is called McLean Distribution. They’re a $23 billion enterprise, so this is a big deal — a $23 billion acquisition by two large companies.
Now, Warren Buffett, he is very trusted, and he’s very credible. And he has trust and confidence in his counterparts that he’s dealing with at Wal-Mart. And here’s how Buffett described how he was able to do this deal, this $23 billion acquisition.
He wrote the following in his annual report: “To make the McLean deal, we had a single meeting of about two hours. We then shook hands. Twenty-nine days later, Wal-Mart had their money. We did no due diligence. We knew everything would be exactly the way Wal-Mart said it would be, and it was.”
So here’s a big, $23 billion merger done in 29 days with no due diligence. I used to work on Wall Street as an investment banker for a short period. I was involved with big deals. Deals of this size would normally take a year to close, because you’ve got to go through so many hoops and hurdles to jump over. And also, you would spend tens of millions of dollars doing due diligence with accountants, attorneys, auditors, verifying, validating that everything’s right. But because they had trust in this relationship, they were able to move with incredible speed — 29 days instead of a year — and with low cost… no due diligence versus tens of millions of dollars. And that’s what I mean by “operating at the speed of trust.”
STEPHEN: Here’s the implication: In the same way Buffett can do this, you can do it as an entrepreneur as well in your relationships with your customers, with your investors. By establishing trust, by getting good at this… Getting good at building trust and establishing it with everybody you’re working with — that will enable you to move with incredible speed and low cost.
In fact, I’ll give you an entrepreneur example, Jay.
JAY: Please.
STEPHEN: Here’s a donut and coffee vendor in New York City. This is a one-person shop. He has a cart on wheels, and he carts his little stand on wheels. He sets up shop right outside of an office building in Manhattan, New York City’s Manhattan. And people come by to go into work, and they buy a donut and coffee from him. And he noticed that there were these long lines forming, and then some people would get out of line because it was too long. And he realized that what was taking him so much time was making change for his customers.
So he decided, “I’m just going to put a little basket on top of my cart here with dollar bills, nickels, dimes and quarters, and I’m going to just serve the customers donuts and coffee, and they’re going to make their own change.”
JAY: So you put the onus on them.
STEPHEN: Yup. He put the onus on them. “Make your own change. I can serve you the donuts and coffee. I can move faster.” And what happened was he went through customers twice as fast. He doubled his customers. He was able to process all these people. He added no new cost, twice the speed, twice the customers, and guess what? They were honest with him. They didn’t rip him off. I mean, he had some risk in this, of course. Maybe someone takes some extra nickels or quarters.
I remember listening to this interview back in 2005…it’s an insightful discussion that EVERY entrepreneur should study. I’ve included the entire transcript for you. Jay and Stephen really torque it down to relevant, day-to-day implications that any entrepreneur, any business owner, start up, or professional will “get”–instantly.
From the interview, here are 13 steps you can take right now to establish a foundation of trust:
1. Talk Straight: Telling the truth, and using clear, simple language.
2. Demonstrate Concern: That’s basically saying, tell people you care.
3. Create Transparency: Be open. Be real. Be genuine. Transparency means openess.
4. Right Wrongs: Just make things right when you’re wrong. Apologize quickly. Recover.
5. Show Loyalty: Be loyal to people.
6. Deliver Results: Nothing establishes trust faster with a prospect of customer.
7. Get Better: Continuously improve. Increase capabilities. Be a constant learner.
8. Clarify Expectations: Have common expectations with everyone you’re working with.
9. Practice Accountability: Take responsibility for results.
10. Confront Reality: Take issues head on, even the tough issues.
11. Keep Commitments: Do what you say you’re going to do.
12. Listen First: Really understand what’s important to people.
13. Extend Trust: Demonstrate a propensity to trust people until they prove otherwise.
Check out these great posts for more information about this topic:
Trust Matters
Quick Fix #7: Honesty Sells
Do Your Customers Trust You?
The Trust Factor by Kelly Robertson
