Building customer trust as a startup is crucial for long-term success. Happy customers typically translate to repeat or long-term customers — which means more revenue — and can help evangelize your product and contribute to earned growth.
But for many founders building companies for the first time, customer trust can be a tough nut to crack. You might be unsure how to build or gauge trust, let alone retain customer trust once it's earned.
Learning how to build customer trust — as well as how to measure that trust, and how to avoid breaking it — gives your company a far better chance to succeed and grow in the long term.
Let’s dive into some key ways to establish and maintain trust with your customers.
Why is building customer trust important?
Building customer trust is the cornerstone of a successful business for several reasons. When customers trust a brand, they feel confident they're buying quality products and services. Their satisfaction not only drives loyalty and repeat purchases, but positive word-of-mouth referrals, which are invaluable for business growth.
According to a PwC survey, business executives listed the following business areas as negatively affected if customer trust is lacking:
- Customer engagement (42% of executives)
- Ability to expand into new geographic markets or customer segments (41%)
- Profitability (38%)
Customers typically have a range of options to choose from in the market, and if they don’t trust a company, it's often easy enough for them to switch over to a competitor. (It's worth noting as well that four in ten customers in the PwC survey said that they've stopped buying from a company due to a lack of trust.) In a world where consumers have countless options, earned trust sets a brand apart.
The survey also identified three ways in which trust drove business growth:
- 61% of consumers said they'd recommended a company they trust to friends or family
- 46% purchased more from a company they trusted
- 28% were willing to pay a premium
All that is to say: Both executives and consumers think about trust when it comes to making decisions about where to spend and invest money. For founders looking to build trust with early adopters and customers, investing in this now will pay big dividends in the future.
Customers can also be used to provide feedback and share insights. At Notion, Camille Ricketts and her marketing team tapped into top users from their community to attend product sessions and share feedback. Collaborations like these can not only strengthen the bond between the business and its customers, but can support innovation as the business improves its products and services to address customer needs and preferences.
Ways to build customer trust
Businesses can employ a number of key tactics to increase customer trust, across their company culture, communication style, and usage of metrics.
Be authentic and transparent
Authenticity and transparency — around product, pricing, policies, and business practices, just to name a few — are the bedrocks of trust. Share your brand's story, values, and mission authentically, and openly address challenges or shortcomings. Encourage your customers to provide feedback and actively listen to their opinions, experiences and concerns.
Provide excellent customer service
Excellent customer service requires a company to be responsive, empathetic, and proactive in meeting customer needs. Listen to customer inquiries and concerns (are you seeing a theme here?), provide timely and helpful responses, and strive to go above and beyond expectations.
Actively engage customers
Facilitating meaningful interactions with your customers can help strengthen your relationship with them. For example, you might engage with customers on social media, responding to their comments with personalized replies that show you value their individual needs and preferences. Hosting events, surveys, and focus groups can provide opportunities for deeper engagement and feedback, too.
Share customer feedback and reviews
Social proof can go a long way toward convincing new customers to buy a product or service — think about how Google Maps, Yelp, and on-page reviews influence consumer spending. According to Gartner Digital Markets, 86% of businesses find verified reviews essential for purchase decisions. Sharing customer feedback and reviews on your website, social media channels, and marketing materials can demonstrate transparency and build trust.
Create a positive work environment
A positive work environment and exceptional customer experiences go hand in hand. According to PwC, employees care most about fair pay (77%), fair treatment (77%), protecting employee data (72%), and ethical behavior by the business (72%). Provide training and development opportunities to enhance employee skills and job satisfaction. Encourage open communication, recognize contributions, and prioritize well-being. Motivated employees are more likely to deliver outstanding service, and they'll do a better job of representing your company to current and potential customers.
Track trust-based metrics
While "trust" is an abstract concept, plenty of metrics exist to help quantify and qualify customer sentiment. Sure, you need to keep your eyes on the bottom line, but metrics like Net Promoter Score can provide insights into what customers think of a business in just one question, and SaaS churn helps demonstrate to tech companies how often customers are trying a service and leaving.
How a startup can break customers’ trust
Startups can inadvertently break customers' trust through a variety of missteps or lapses in their operations. While there are many ways to break customer trust, some obvious examples include:
False advertising
Exaggerated claims or promises about products or services that can't be fulfilled lead to disappointment and customers feeling misled. One example: Back in the day, Snapchat promised that pictures or videos users sent would disappear within seconds. That wasn't true, and the company had to settle with the FTC on charges it misled customers.
Poor customer service
Ignoring customer inquiries, providing unhelpful or dismissive responses, or failing to resolve issues promptly can erode trust. Customers expect quick and attentive service, and according to a survey from TCN, a cloud call center platform, more than 60 percent of Americans aged 18-40 were willing to abandon a brand after a poor customer service experience.
Ignoring feedback
Disregarding customer feedback or failing to act on it can signal to customers that their opinions and experiences aren't valued. Furthermore, displaying fake reviews erodes trust — even negative, verified reviews can be helpful by providing an opportunity to address customer concerns.
Data breaches
According to a Pew Research Center study, 34 percent of Americans have had fraudulent bank charges, a hacked email or social media account, or an attempt to open a line of credit or apply for a loan using their name in the last year. Failing to adequately protect customer data can result in breaches or leaks that compromise sensitive information such as personal details or payment credentials. This violation can have serious consequences for both the affected customers and the reputation of a startup.
Lack of transparency
Keeping customers in the dark about changes to products, services, or policies can breed suspicion and uncertainty. Look no further than the colossal blowups at Theranos or FTX to see how tech startup wizardry turned out to be prison-worthy fraud.
Hidden fees or charges
Surprise fees or unexpected charges that aren't disclosed upfront can feel deceptive to customers. According to the FTC, "consumers are fed up with hidden fees for everything from booking hotels and resort fees to buying concert tickets online, renting an apartment, and paying utility bills." A proposed rule could ban junk fees, saving Americans $10 billion over the next decade. Surprise fees simply erode trust and alienate customers.
Inconsistent quality
If a startup's products or services vary significantly in quality or reliability over time, customers will lose confidence in the brand's ability to deliver. Even having inconsistent or poor-quality product descriptions can lead to customers questioning the product or service — if the brand can't recognize typos and bad punctuation, what could its product quality control look like?
Metrics that help quantify customer trust
Quantifying trust in a business context can be challenging, as trust is an abstract concept. Thankfully, several key metrics can provide quantifiable insights into customer trust.
Customer satisfaction scores
Customer satisfaction surveys and metrics such as Net Promoter Score (NPS) can gauge how satisfied customers are with their overall experience. High satisfaction scores often correlate with a higher level of trust in the brand.
Online reviews and ratings
Online reviews and ratings on platforms like Google, Yelp, and social media can provide insights into customer sentiment and perception of the brand.
Repeat purchase rate
This metric is fairly simple to calculate: Divide the number of customers who've purchased more than once by the total number of customers over the same period. A high percentage suggests customers trust the brand enough to return for additional purchases.
Customer retention rate
This metric measures the percentage of customers who continue to engage with the brand over a specific period. A “good” retention rate will vary by product and by market. According to Mixpanel, a SaaS or e-commerce company would have to achieve an eight-week retention rate of 35% to earn the "elite" label.
Customer feedback and complaints
Analyzing customer feedback and complaints can reveal lackluster performance or areas requiring improvement. A high volume of positive feedback and a low number of complaints suggest a high level of customer trust.
Brand reputation
Brand tracking studies, media engagement, and social media sentiment analysis are just a few ways to monitor brand reputation, according to Pradeep Dabas, a marketing expert who works with startups. A strong and positive brand reputation is often indicative of high levels of trust among customers.
Conclusion
As you can see, building customer trust is a process. It’s one that’s gradual — the earlier you start, the better. Companies that grow to be successful due to customer trust and love have a bond that is incredibly valuable — but also can take just one misstep to erode. Follow your instincts as a leader and put the customer front and center for everything you do, and that trust should only grow and be a boon for your business.