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Trusted Advisors: Why Trust Drives Growth, Even During Downturns

 

 

 

 

 

 

 

 

 

 

JONATHAN JORDAN
GENERAL MANAGER
EDELMAN SOUTHERN CALIFORNIA
JONATHAN.JORDAN@EDELMAN.COM
(323) 857-9100

It’s no secret that market downturns, inflationary environments, and recessions cause companies to tighten their belts and hold investments until market conditions rebound. But in today’s climate, companies can walk and chew gum at the same time: They need not sacrifice growth and innovation during a market slump.

While it may be prudent to cut some business expenditures during a downturn, leaders must continue to invest in reputation management and stakeholder trust regardless of market conditions. Why? Because ultimately, business trust drives business growth.

For 22 years, my firm, Edelman has been obsessed with the concept of trust. Our annual Edelman Trust Barometer, intellectual property made available for free, is the leading global indicator of stakeholder sentiment around businesses, NGOs, government, and media.

DEFINING TRUST

What gets measured gets managed, and over the years, we’ve finely calibrated a formula for both measuring and managing stakeholder trust. There are four attributes that we explore in our research:

1. Ability: Is the company good at what it does? If so: To what extent do stakeholders perceive the company to be good at what it does? How does the company prove that through its leadership competency, financial performance, and the quality of its products or services? Is the company able to attract top talent?

2. Purpose: Does the company have a positive impact on society? How does the company prove that through its actions and impact?

3. Dependability: Does the company keep its promises? How does the company prove that through its loyalty, and transparency with stakeholders, and its demonstratable impact over time?

4. Integrity: Is the company honest? How does the company prove that through its care of its employees, fairness, morality, and its legal compliance and transparency?

To measure trust, we assess sentiment for these attributes across internal stakeholders (employees, management, shareholders), consumers (general public, opinion leaders, activists, informed public, belief-driven buyers), business stakeholders (partners, purchase decision-makers, suppliers, investors), and what we call shapers (public authorities, regulators, media & journalists, NGOs, trade associations, and trade unions). The result of this assessment leads to an understanding of where a company may under or overperform. It provides directional feedback that guides a company to become more trusted.

TRUST AND BUSINESS IMPACT

Over the years we’ve uncovered the insight that trust drives business growth, even in market downturns. When a company is trusted, consumers are 14% more likely to purchase its products, seven times more likely to pay a premium price, seven times more likely to give the right to use their data, five times more likely to advocate for a company, and seven times more likely to engage in fighting for a cause.

In short, trust, when measured well, is a single underlying factor behind the metrics businesses need for growth – a leading indicator for the multi-stakeholder era. Companies today can use our proprietary trust scores to measure overall health and hedge against specific reputational risks.

WHY IT MATTERS

Trust takes years to cultivate, but can be tarnished in seconds. Between cancel culture, disinformation, and echo chambers, the media landscape is more complicated than ever. One wrong statement can spark social media movements that lead to company boycotts. One wrong move can impact a company’s market cap or spur employee walkouts. And on major social issues, companies are often panned for silence as much as they are for the wrong statement.

In this climate, trust becomes a necessary protection – providing padding against the worst outcomes for business, and acceleration of the best. As the great Peter Drucker once said, “Business has only two functions– marketing and innovation.” The equation for succeeding in both functions has more variables than ever before. But one thing is clear, and consistent: The common denominator is trust.

Edelman is a global communications firm that partners with businesses and organizations to evolve, promote and protect their brands and reputations.
Learn more at Edelman.com.

 

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