The Noodle

Modeling

How to build a brand that's predicated on trust

It’s an intriguingly fascinating exercise, this practice of creating a brand people want to associate themselves with. Nobody knows that better than business model expert and Strategyzer.com co-founder Alex Osterwalder, whose book, “Business Model Generation,” serves as a definitive guide for visionaries, game changers and challengers striving to defy outmoded business models and design tomorrow’s next great enterprise.

But what do your customers really want? And how can you continue to get them to trust your brand? Osterwalder’s answer is simple: create value for your customers, your organization and society as a whole.

Easy, right?

“It’s all about the search for the perfect business model,” Osterwalder says. “That’s what business is about. That’s what entrepreneurship is about.”

To help entrepreneurial businesses in their quest, Osterwalder created what he calls a Business Model Canvas, a roadmap, if you will, on the journey to success. Within his model is the Value Proposition Canvas, which he says involves “getting out of the building” to find what your customers really want. “The choice then depends on which customer segment you can build the most scalable and profitable business model around. It’s all about using tools.”

If you relentlessly build great value propositions, your customers will believe you. Learn to use your tools like a surgeon does. Surgeons go to medical school to learn the anatomy of the body, and then they learn how to use tools to fix the body. Their learning never stops. It’s only in business that we think there is a quick fix – a magic formula.

Alex Osterwalder, Co-founder and Business Model Expert

Once your business model is established, you can work to build trust in your brand. By continuously delivering on that brand promise, Osterwalder says you can start laying down your foundation for success. “If you relentlessly build great value propositions, your customers will believe you. Learn to use your tools like a surgeon does. Surgeons go to medical school to learn the anatomy of the body, and then they learn how to use tools to fix the body. Their learning never stops. It’s only in business that we think there is a quick fix – a magic formula. We think we can do heart surgery with a Swiss Army knife. Consumers go where they see the most value at the best price.”

Chris Malone’s take is similar: He believes the perfect business model is one that generates growth inexpensively by exceeding customer expectations to building strong customer relationships and loyalty that generate proactive new business referrals. Over the years, the marketing veteran for the likes of Choice Hotels, ARAMARK, Coca-Cola, the National Basketball Association (NBA) and Procter & Gamble has witnessed firsthand how successful business models beget trust.

“One of the most valuable aspects of trust-based customer relationships is that they can be expanded,” says Malone, who today is chief advisory officer of The Relational Capital Group and author of the “The Human Brand: How We Relate to People, Products, and Companies.”

Malone says businesses that operate with this model, such as Zappos and Lululemon, are able to charge healthy prices for their products and services, while spending little on marketing or advertising. “Their growth is more stable and profitable because it’s driven by customer trust, loyalty and advocacy.”

The key is taking the time to understand where your product or service falls in each customers’ priorities, and then focusing your efforts serving the needs of those with whom you can build a lasting relationship.

Chris Malone, Chief Advisory Officer, The Relational Capital Group

But can every customer be loyal to every brand’s product and/or services? “No,” Malone says, “but the vast majority have at least a few needs that are important enough that they’d prefer to have a single, trusted supplier. The key is taking the time to understand where your product or service falls in each customers’ priorities, and then focusing your efforts serving the needs of those with whom you can build a lasting relationship. Transactions can be generated with low prices, but lasting relationships require trust between two willing participants.”

Of course, Malone is quick to point out that the basic psychology of human trust and loyalty has not changed for thousands of years, nor will it anytime soon. “In this regard, we can consider the warmth and competence framework a compass in the sea of technology-driven change that surrounds us. By aligning your efforts with your customers’ warmth and competence expectations, you will always be able to generate trust and loyalty.”

Talking the talk

Marketing experts say the best business models are those designed to overcome the challenge of selling global brands across multiple channels to increasingly segmented audiences – audiences that have more brand messages, on more platforms, than ever before competing for their attention. The best businesses understand that it’s not about messages or changing the way people think, but driving true behavioral change.

Mitch Kanner doesn’t believe that influence is endorsement. Kanner, who once was voted No. 5 in advertising by AdAge magazine, has served as a connection point between entertainment, consumer brands, advertising agencies and creative talent for two decades. He says today’s consumers understand that just because a celebrity talks about a brand doesn’t mean there is a real relationship there.

“Creating influence is about demonstrating authenticity, and that comes from creating partnerships where collaboration tangibly demonstrates value for both parties, where both sides seem to have ‘skin in the game,’” says Kanner, who today is CEO of 2 Degrees, an influencer engagement firm in Hollywood, Calif. “What we focus on for our clients is connecting their value proposition with like-minded influencers, and then work with them to create new ideas, whether that be business opportunities, marketing initiatives or content ideas.

As an example, Kanner cites the partnership between pop icon Jay Z and Samsung. With a shared desire to create the “next big thing” in popular culture, they created a new approach to music distribution that celebrated Jay Z’s vision and Samsung’s innovation leadership as the platform. Samsung’s partnership with Jay Z focused on the fans getting free, unique and early access to his latest release, “Magna Carta Holy Grail.”

“Samsung enabled Jay Z to connect with his fans in an unprecedented way,” Kanner says. “It was authentic, and that’s the only way influence can really work.”

Kanner says that consumers’ influencers always change – it’s human nature. Today, more than ever they are exposed to new things and are inspired to explore the many new frames of reference they come in contact with.

If you understand who consumers’ influencers are and the trends they set, you’ll understand what consumers will ultimately desire.

Mitch Kanner, CEO, 2 Degrees

“For brands, it’s a constant learning journey to stay with the interests and explorations of their consumers,” Kanner says. “Active listening is paramount. Of course, this is with consumers, but it is about engaging the influencers of pop culture as a means of understanding and delivering on consumer needs. If you understand who consumers’ influencers are and the trends they set, you’ll understand what consumers will ultimately desire. It’s a forward-looking process, and the marketer that stays ahead of the trend will be best suited to anticipate when and why consumers might deviate from their current influencer or set of influencers.”

Branding and financial expert Ben Katz, CEO of prepaid Visa card company CARD.com, says if all fails, there is one formula that works best. “Over-deliver on your promises. Never, ever communicate in a non-transparent way. If you make a mistake, which you will, raise a hand and make amends immediately.”

Defining the perfect business model

When it comes to creating the perfect business model, the best is one that not only understands the changing needs of today’s customers, but continually provides goods and/or services that exceed their expectations.

Research shows that customers stay loyal to a brand when they are delighted with its offering – not just when they are satisfied. Customers are satisfied when brands deliver what’s promised. They are delighted when the brand delivers more than what’s promised and exceeds expectations.

“Final customers are those who find value in your proposition,” says Jay Mulki, associate professor of marketing at the D’Amore-McKim School of Business at Northeastern University in Boston. “Customers find value only when they are convinced that suppliers have their best interest in mind, and provide them with goods and services that are tailored to their needs now and in the long term.”

So, how does a brand create trust? Mulki says marketing is based on serving the mutual interest of the customer and the brand. “The shift to relationship-based marketing requires mutual trust between sellers and buyers. Trust-based relationships depend on understanding customers’ needs and wants, solving customer problems, providing opportunities and adding value to customers’ business over a long period.”

Mulki says trust consists of both cognitive and affective trust. Cognitive trust is based on a brand’s ability, skills, knowledgebase and expertise. This kind of trust can be developed quickly. Affective trust is based on dependability, reliability, candor and compatibility. This kind of trust takes time to develop after a series of interactions. In this set up, relationships are built on shared value and salespeople. Brands form partnerships with customers to provide the right solutions.

The best formula is to be “customercentric.” “This formula keeps customer interest at the center and develops strategies and actions to ensure customer satisfaction and growth,” Mulki says. “Customercentric organizations focus on long-term relationships that focus on mutual benefits and growth. Customer-oriented organizations are known for their laser-like focus on customer needs. This focus is organization-wide, and not just in sales or marketing.”

By Michael J. Pallerino