SPEAKER_00 0:16

Okay, today Mina and I would like to talk about trust, which we think is a probably one of the most important commodities that a business or value that a business can hold. And we believe that's even going to be even more important. If it wasn't more important in the last sort of 50 years, it'll be even more important over the next 50 years as access to information and advice and knowledge is no longer gatekeepered by businesses. Really, that knowledge and advice and AI and everything like that sort of commoditizes a lot of products. So therefore, trust will probably become, you know, the new frontier, if you like, and human to human trust in particular, I guess to varying degrees depending on what sector you're in. But if we think about trust from the customer's perspective, it all relies on will you deliver what I perceive you will deliver consistently and as I expect it, you know, within the time frame that I expect it. And the level of trust that you need to have really depends on the cost of your product or service and the type of product service you have. But the reality is that you can have the best product out there, the best pricing, the best service. But if I don't trust you're actually going to deliver on your brand promise, then I'm probably not going to do business with you. And I'm probably going to go to the second best option. So last week we spoke about pricing architecture. That's really important. But this week we're talking about what gives the confidence to customers to really trust that pricing or accept that pricing, and really the cornerstone here is trust. So, Mena, I think the obvious starting point here is the type of product and the cost of product because you know there's some products that require low trust and some a substantial amount of trust. So maybe that's a great starting point.

SPEAKER_01 2:07

Thanks, Stuart. You're definitely right. The more expensive an item is, or the more you're gonna sort of lay out or put money out for a certain item, the more a customer needs to sort of trust in the product, trust in the person providing the product and understand what they're actually buying and what sets you apart from the rest. So if you think about, for example, a diamond purchase, you know, if you when you go out and you know you're looking to get married and you're looking to buy a diamond, it's a pretty expensive endeavor. And you'd look, you'll try to find a supplier, whether it be a broker or a retailer or something like that, where you've got a lot of trust in that person because you're committing thousands of dollars in it. And that expensive purchase requires a lot of reassurance, it requires a lot of education. Conversely, if you're you're purchasing a smaller item, such as uh a cup of coffee, for example, it doesn't matter where you really purchase it from most of the time. If it's disappointing, you can just go somewhere else tomorrow. You haven't committed that much money and you can really learn quickly from that mistake. Whereas an expensive item or an infrequent purchase is really different. The customer may have a different experience judging the options, and a poor decision can be costly and difficult to reverse. So they think about it time and time again. You know, if you think about, for example, Guzman and Gomez or a McDonald's, for example, you know, a regular customer buying lunch, the decision's pretty straightforward. They know roughly what to expect, they know, you know, the rough quality of it, the cost is modest, and they can easily try something else the next time. And that familiarity and convenience do a lot of the work. But if you compare that, I know I used a diamond example, but let's use something sort of a bit smaller, but compare that with the cost of buying a mattress from a Quala Living, for example. You might not have bought a mattress in years, you know, people can go a decade without buying a mattress, and you can't know how comfortable it will be after several nights of sleep. So, what they did is they provided an in-home trial and a clear returns process that helps address that uncertainty. They give the customer a way to assess the product without feeling locked into a poor decision. The implication for business owners is pretty straightforward. Your sales process needs to reflect the risk the customer feels they are taking. If you're selling something that's expensive or unfamiliar, you need to provide enough information, you need to educate them on your product, on your service, your aftercare, and provide them with evidence and time for them to feel comfortable to proceed. Now, Stuart, once we understand how much trust that purchase requires, how do we actually build it?

SPEAKER_00 4:29

It's a good question, Mina. And the common sort of thought process is trust takes a long, not a long time to establish, and and that can be true in many situations, but I guess we can engineer establishing trust if we understand its components. And I lean on a book called The Trusted Advisor and the authors are David Maester and Charles Green. And they were consultants mainly to the legal profession, but don't let that distract you because the formula that they've come up with, uh what they call the trust equation, can be used in any sort of business. But as Mina says, you know, you're not going to overuse this trust equation if you're selling sandwiches at a at a cafe, for instance. It's a pretty low trust transaction. If I buy a bad sandwich from you, you know, it's there's plenty of risks in life, but buying a bad sandwich probably isn't in it isn't one of them. So of course you want to use this to in a way that's appropriate for the type of product that you're selling. But I think any any business can really engineer trust. And, you know, if you're able to push through and build that trust with your target audience, it does reduce the friction around sales. And before I get into the trusted equation, which is you know the sort of basis or core of this, is use McDonald's as an example. They're not the best burgers in town by a long margin. But if you go to McDonald's in Australia, in the US, in Europe, or really anywhere around the world, you sort of know what you're gonna get. I mean, they might have different menu options, but if you buy Big Mac anywhere around the world, you know exactly what you're going to get. And that's why they're so successful is because they're not the best, but you know it's not gonna be a terrible burger and it's not gonna be the best, it's gonna be middle of the road, and they just reduce the trust as a result of delivering something that's very predictable. Okay, so let's get into the trust equation. These are the four components that really go towards trust, and we're gonna talk about them and how you can kind of engineer them in your own business processes, your your REACH strategy, your engine strategy, and obviously, you know, building your team around it. So the trust equation is credibility. So there's three numerators, which are the three components on the top of the equation, divided by one denominator. So the three numerators are credibility plus reliability plus intimacy. Sounds a bit strange, but I'll come back to that one. Divided by self-orientation. So let me explain each of these components. So credibility is does the customer believe what you say? Do they believe that if you make a promise that you're actually gonna go through with it? If you promise to deliver a certain amount of value, do you go through with it? Reliability is a pretty obvious one as well. It's also doing what you say. So if you know you're gonna build a house and you're choosing a builder and one has very high reliability, you know, that goes a long way because you know everyone knows that these things get pushed out. Intimacy, which is the last numerator, is a really interesting one. It's will the customer or client be honest with you? So if they've got some concerns, and if we talk about for our business, for instance, if we're talking to a financial planning client and the customer, you know, is a little bit nervous about investing in the share market, but they don't want to seem silly, so they might not say it. They might not voice that concern, and therefore they don't really give us the opportunity to address it. Whereas if you've got a good relationship with that client and they're they're very they're they're happy to be completely honest with you, even if they might feel vulnerable doing so, that's the intimacy element. That will they actually say, Look, Stuart, I'm not interested in investing in the share market because I'm really scared that Trump's gonna do something silly, or I mean, he's almost certainly gonna do that. So that's intimacy. And there's one denominator, which is self-orientation, which really comes back to are you there to help the customer or are you only there to help yourself? And so it's no surprise that we've got three numerators and only one denominator. It means the denominator is three times more important than credibility, reliability, and intimacy. So building out a sales process, building out a reach process to really demonstrate low self-orientation and going out of your way to do that, particularly if you have a high trust product or service, it goes a very long way to sort of building trust. And you know yourself, if you've dealt with people in the past that have demonstrated low self-orientation, it does certainly build trust, particularly if they're coming from a sector that you might be relatively skeptical about. I hate to say it, but you let's talk about real estate agents, for example. So if you went to a real estate agent and said, look, I'm thinking about selling my home this spring, what do you think? And they can turn around and said, No, we don't think this year's the right time. It's a really soft market. Let's have a go at selling it next year, that would surprise most people and that would demonstrate really low self-orientation. And so having something in your processes to demonstrate that up front is ideal. You can use the law of reciprocity as well, you know, giving first. So if there's something that you can give to your potential customers to help them make their decision without any expectation of anything in return, that often can build low self-orientation as well. A really good example is Jack Bogle's Vanguard. So he started in 1975. Everyone's familiar with Vanguard, but it still is today a mutual company, which means that it doesn't have for-profit shareholders that essentially really the unit holders in all the managed funds essentially own Vanguard. And that means that, and that that's the reason why they have such low fees, because as they build scale and they're able to achieve scale because they've got so much money to manage, trillions of dollars of money, but they only need a small number of people to manage it. Actually, as a bit of a sidebar, if you look at some of the industry super funds in Australia, they might employ a thousand people that Vanguard would only employ like 100, 150 people to run. So it shows how much scale they've got, but also it shows low self-orientation, right? Because they're there to help and support the actual investors. So, of course, that's an extreme example around doing that. Another example is, and we don't want to blow our own horn here, but if we meet someone that wants to engage our financial advisory services and we don't think that there's enough scope to add value well in excess of our fees, we will say no. We will say, look, we can help you, we could practically help you, but we if we were in your shoes, we wouldn't do it. We'd find a cheaper way of trying to find a solution to your situation other than getting ongoing advice. So it look, there's that pretty crude saying that you can shear a sheep many times but skin them only once. And it's a good way to sort of run your life, not uh notwithstanding running your business, is you know, just look to always deliver more value than what you charge. The final thing that I want to talk about with respect to the trusted advisor equation is you don't necessarily need to be strong in all four components. It's in fact you can be really strong in one and weak in the others. So this is interesting. I mean, if for example, if you think about if you need some really specific surgery and it's so unique that there's only two or three people in the world that do it, and there's one person that really sticks out as the absolute gun, the specialist in that area. They're obviously gonna have very, very high credibility, but they could have a terrible bad side manner, they might not get back to you promptly, they could be all just about the money and charging for the surgery, but that probably doesn't matter to you because your life's on the line, you're still gonna probably use that surgeon. So you can have, you know, really high credibility, terrible reliability, terrible intimacy, terrible self-orientation, but it's still work. Anyway, it's a great framework as business owners to think about the concept of trust because trust is involved in every sort of sales process. So, Mina, maybe you can take us through some of the other ways that we can kind of engineer higher trust with our prospective clients.

SPEAKER_01 12:14

Yeah, definitely, sure. And I think what's good to establish from the onset is that credibility doesn't necessarily mean trust because you can borrow credibility. Credibility and in in the early stages of many businesses in the form of advertising, sponsorships, and endorsements can really help your business get noticed, but they provide an initial level of credibility. You really need to follow through with it. So, you know, we typically see with a lot of businesses starting out, or even businesses throughout their life cycle, they'll associate themselves with certain charities, sporting clubs, local communities, and so forth. And it's useful and it helps sort of get business through the door, but it has limits because if you're not following through on your product or service, then you the cost of the reach out there of getting your business out there to keep the revenue and the business turning is actually quite high. So to earn your customer or client's trust, it's actually built through the direct experience. You need you if you make a promise, you need to deliver on it and repeat that process time and time again. Eventually, as you continue to do that, they need less assurance, no matter what the price point is, because they have their own evidence that you are dependable. In a previous podcast, we spoke about ASOP as an example, about their product quality, their store experience, and the knowledge of their staff. And all those collectively reinforce their customers. Now, their packaging, their sense, and so forth might attract someone's attention, but it's how they deliver it. The product and service they get is why someone will pay $60 or $80 for one of their soaps rather than a two or three dollar uh moisturizer from Woolies or Coals. Trust compounds with each positive experience. And the best way to look at this is like a trust account. We probably joke around this as uh husbands in a relationship where we basically say sometimes we need to, you know, have some wins on the board so that if we want to go out and play some golf or something like that, we've looked after the kids, we've done the chores and so forth. It's a very similar sort of concept. A trust account, every interaction can add it or draw on it down. So if you keep a promise, you explain something clearly and resolve a problem fairly and it all and it all balances, then the customer's happy you've got one in the account for them. Whereas if there's unexpected fees or missed deadlines or poor communication, it reduces it. So one of the KPIs that we actually have in our business is around communication, for instance. We like to respond to our clients or at least acknowledge of their email within 24 hours, if not within the same day. And those deposits that we build are a serious consideration for a lot of our clients and it's always been commented upon that at least they know they're being heard, that they're being their communications are being responded to and attended to in a prompt manner. Whereas if you disappoint, if there's a serious disappointment, it can undo a lot of good work, particularly if the customer feels you concealed a problem or failed to take any sort of responsibility. So, Stuart, how can a business build that confidence faster, particularly with someone who hasn't really used it before?

SPEAKER_00 15:03

It's actually relatively easy to do, as I say, once you understand the components of the trust equation meaner, and that's why I like it so much, because it is really practical that you can break it down into a series of steps. So, you know, the first thing I think is play to your strengths. You've got to have a clear USP. How are you different to everyone else? And it can't be, you know, a lot of people have these value statements like we put customers first and these sorts of things. Very hard to verify, and it's something that everyone can say. So, what's unique about you? Why should I deal with you versus another business? Could be uniqueness about your product or service, or it could be uniqueness about your team or your process that you go through, whatever it might be. And during this part of the segment, I might just use our business's example. Of course, I know it, know it really well. So, as you should expect, uh so that from a wealth perspective, you know, our USP is that we've got deep experience in both property and shares and we're completely asset class agnostic. Not a lot of other financial planning practices can say that. Now, I know that is easy for me to say, but you're gonna have to trust me on my word with respect to that. So a lot of other financial planning practices don't really understand property, don't really deal with it very much. I mean, they might say they do, but certainly not to the same level of detail that they would with shares and super. Whereas we have the same level of detail, robustness, understandability, all those sorts of things. But we're not property people and we're asset class agnostic, which means we don't care about property versus shares. Whereas a traditional financial planning practice, they're all about super and shares, of course, as I as I've said. So that's our strength, and we play to our strengths right from the beginning. The second thing is show that you're willing to put the other person's interest before the sale. So we talk about the mum and dad test in internally in ProSolutions. So, you know, if the clients were your parents and you weren't a financial advisor, you weren't an accountant or mortgage broker, what would you tell them to do? And it can't be any different to what you're telling these clients to do. And it's a really good test because it removes your own vested interest and the business's vested interest from that. Sometimes the best answer is do not invest. Sometimes the best answer is go and do that home upgrade and come back in a couple of years' time when you have a hundred thousand dollars in your offset account as a buffer. Whatever it might be, but if it's say no today, say no today is the best option. And a lot of people don't expect it. So even if you're selling a low-level, you know, lower price product or service, still saying no can build that sort of low self-orientation. Also, if you can, if you can design something that you can give the customer initially, whether it's a quote, an assessment on their situation, you know, something that allows you you give first and use the law of reciprocity that can obviously demonstrate low self-orientation too. Number three is you've got to help the customer or the potential customer to assess something they can't actually assess themselves. And financial advice is a really good example here because I might go see a financial advisor. You know, the financial advisor might say, Okay, you've got this amount of income, you've got this amount of assets, you want to build a strategy, you want us to give you some investment advice on how to put that money to work, but you really don't know what the outcome is. You hope that the advisor is going to do much better than you, certainly to do much better to offset the cost of that advice, but you never really know. So it's very difficult then for customers to be able to choose that service. They go very much on gut feeling, on you know, whether the person seems like they're trustworthy, they know what they're talking about, these sorts of things. So, can you help them? Can you give them sort of testimonials, clients, videos of clients to talk about their experiences, past returns, for example? I mean, these are things that you know we talk about in our business, but you've got to think about what can the customer for if I'm buying engineering services, for example, I'm not an engineer, I have no idea. So, how do you help me make that assessment myself? And finally, only make promises that you can keep consistently. So, this is really important. I often say to the team members, you know, try and make a promise up front. Something that, you know, remember the saying, under promise, over deliver, something that you can keep, invent a promise. So, for example, if we meet a prospective client, we might say, Look, we wrote this article, you know, a year ago. I'm gonna share it with you, I'll send it across. Maybe give me a couple of days to find the article and send it across. And then as soon as we get out of the meeting, within an hour or so, send across the article. Very small promises, but it's a great opportunity then to make the promise and consistently deliver. And that's why, which we'll talk about in the future, the engine is so important because the engine, your business engine needs to be robust enough that you can deliver the same product and service without diminishing quality at scale. And that goes to trust, of course. So before you go about thinking about marketing, your REACH strategy, your value proposition, all these sorts of things, it's really about pulling apart the trust process and really working out what you can do that's unique to your business to try and build that trust process a little bit quicker. But as I said, Mina, it really comes down to being able to deliver that at scale, you know, because you could do a lot of work up front to build trust with a customer or client, but you know, it only takes a couple of bad experiences to ruin it. So, how do we go about doing that consistently?

SPEAKER_01 20:17

Well, it really comes down to your business system, Stuart, because if you're not reliable, if you don't have your systems and processes documented, then you're really going to have and run into some issues. You know, you typically experience this in businesses, for example, when a key team member is away, you get bottlenecks in a business, you get customers or clients flustered because that person's away and that person is the person that is that the actual problem solver of that business. Whereas if you have good business systems, you establish consistencies. That means you've got clear responsibilities, you've got documented processes, realistic workloads, and checks that catch problems before they actually even appear. So if you deliver 80% of the time, it might sound reasonable, it might sound like, hey, that's you know, we got some runs on the board, that's you know, a great result. But it's the other 20% that customers worry about. Because if they can't predict which experience they would actually get in your business, then they've got a valid reason to worry. Now, customers tend to remember the bad things before they remember the good things. And I always say, and even in our business, that a client's hard to win, but are very easy to lose. And that's because the customer doesn't remember whether you've done a good or average performance, but they'll remember a missed deadline at a critical moment. And they'll remember the time that they had couldn't get hold of you in a time where it was really important for a certain transaction or a product that's gone wrong. So it's really important that you establish that trust and have the business systems in place for that customer to actually lean on you or lean on your business when something does that go wrong. This is why trust connects directly with the business engine. Marketing establishes expectations, it gets people through the door, but it's borrowed, remember? So your systems and people really are what actually determine whether you can actually meet expectations and meet that trust. Now, expertise and strong relationships might help you recover from an occasional mistake, but if that problem keeps occurring, you are asking your customers to keep trusting you despite their experience. And that really becomes harder and harder to sustain as the business grows. So, sure, what's one practical thing an owner can do this week to apply this and to get trust in their business?

SPEAKER_00 22:18

I think it's ideal to review a few interactions, both positive and negative. So if a client sent you a referral asking them what made them refer that customer to you. If a customer decided to undertake some repeat business and repurchase from you the same product or service again, why do they make that decision? Or if you haven't heard from a customer for a long time, or you, you know, sent out a proposal, invoice, whatever the initial contact was, and the prospective customer didn't go ahead. Again, just trying to nail down how those experiences played out. And then really relate it to the trust equation, you know, credibility, reliability, intimacy divided by self-orientation. Try and identify what are the one or two things within your business that you think you could enhance the trust equation. Enhancing trust throughout the sales process initially will condense the sales process, make it quicker, more cost-effective, more reliable, better conversion rate. And so even just a small change just to enhance trust, make that occur a little bit quicker can have a really big impact. But similarly, trust on a reoccurring basis from you know existing customers and clients, because obviously they're the low-hanging fruit, really, you've got the relationship with them. Hopefully, you've done one transaction that's successful. So then to build that out and create further transactions down the track is obviously far more profitable. So thinking about how do you enhance trust longer term. So, how do you continue to build credibility with that existing client base? Ensure that you demonstrate reliability and also low self-orientation. You know, one of the ways that we do it now business is exactly what you're listening to. Creating a lot of content that, you know, we don't hold back on this content. We don't sort of say, well, we'll give you half the answer. And, you know, if you become a client, we'll give you the rest of the answer. It's all about, you know, what we can put out there in the pod on the podcast and in our blogs and so forth, if we can add a lot of value, we think only good things come of that. And so that's our way of demonstrating kind of low self-orientation. So you can do that obviously for new clients and also prospective clients. So again, just having a think about, you know, just five or so interactions with customers that have either been successful or unsuccessful, what can you learn around the trust equation? Which is a great segue into next week's episode, which is really about repeat and referred business. So, you know, why are your customers quietly leaving? And how can you obviously minimize those sort of situations happening? So, until then, bye for now.