Undervaluing Trust in Marketing Cost Companies $104 Billion

Marketing is a $1.2 Trillion+ industry globally. Companies spend on average 11% of total revenue on marketing and CMOs expect marketing spending will increase by 8.3% in the next year. In the early days of a company, not communicating well with customers and overall poor marketing account for 28% of startup failure.

 

Ok, marketing is important, but how do you do it well?

Since the first recognized advertisements, notifying ancient Romans of upcoming gladiator fights and brothels, marketing has had an interdependent relationship with culture itself. In the 1920s, marketing helped to define consumerism, bringing context and expectations to Americans with more disposable income and opportunities. In the 2000s, social media has pushed brands to become more personal and even more recently, the influx of data and innovation have set new expectations.

As with culture, the role of marketing has evolved over time.

To understand what it is today and what marketers should focus on, it helps to know where we’ve been. Each of these phases build on the previous one, with consumer expectations growing over time. There are no clear endpoints, as some styles of marketing are still fitting in a given channel or occurrence.

 

AVAILABILITY: The Beginning of Advertising until the early 1900s

In the earlier example of ancient Rome, through the newspaper classified sections that started in 1763 to door-to-door salesmen (direct marketing), the objective of marketing was availability. People needed to know what products, services and events existed. Language used in ads was descriptive, as the goal was to inform people. You can still see some of this today in grocery stores, especially in emerging markets where short, simple ads communicate which products are available.

 

RELEVANCE: Consumerism of the early 1900s

Moving into the early 1900s, availability was still key, yet new opportunities opened up as people had more disposable income. Consumerism began, fueled by persuasive marketing. Copywriters began to hone their craft. This was fitting since products and services weren’t essential.

A category became more crowded with products that typically overlapped in functional benefits, sparking the beginning of motivational research and demographic segmentation in the 1950s. Brand personalities were born to strengthen the connection with current and prospective customers.

Relevance overtook availability as, with multiple options to choose from, customers chose the products that were for people like them.

 

PERSONALIZATION: Social Media in the early 2000s

Demographics evolved to psychographics, but the next major shift was in the early 2000s with the emergence of social media. The promises of one-to-one communication at scale, on platforms where individuals set up personally identifiable profiles changed the relationships that companies have with people. While few marketers executed on personalization at scale, customer expectations had changed. They wanted more personal communications and more customized products.

Instead of choosing products for ‘someone like me’, customers wanted products for ‘me’.

 

TRUST: The Proliferation of Data, Devices and Choice in Marketing Today

The growing volume of data from media consumption and the billions of connected devices have once again raised customer expectations. Many companies can now provide products and services which are individualized, including new ones that promise to disrupt industries and established ones that have refined their offerings to meet consumer needs. A constant stream of personalized content and ads are delivered to people during the 142 minutes per day they spend on social media and increasingly through other media channels.

People need to filter these claims to make choices and that’s why today’s marketing needs to establish trust. Trust plays a role for 92% of Americans when making a big purchase. Unfortunately, 54% of companies have experienced a material drop in trust at some point during the past two and a half years, “conservatively” losing out on $104 billion in revenue.

As one example, Trustpilot ratings have shown to directly increase sales – 31% for 1st Formations – and VCs recognized their impact with $55 Million in additional funding for Trustpilot in March 2019.

People must believe that a company will deliver on its claims. 

Today, marketers need to be focused on building that trust, explicitly and implicitly, through every connection point with customers and prospective customers.

Are you considering trust at every marketing interaction?

In future posts, I’ll explore how to build trust along the customer journey.