Many of the greatest challenges start-ups face involve trust. Earning it, growing it, rewarding it, avoiding the loss of it and recovering it when you fail. To succeed, we need to be trusted in key business relationships and ultimately, our users and investors will vote with their cash as to whether we are trust-worthy or not.
Our personal relationships show us that trust grows with time. Those we trust the most, we have known long enough to feel assured that our trust in them is not misplaced.
This is the start-up’s paradox:
To succeed, start-ups must build trust. Earning trust takes time and start-up businesses are operating from a standing start with no history of competence or credibility. Intriguingly, start-ups are constrained by the very resource they need to thrive.
From a user’s perspective, trust is inextricably linked to risk and motivation. More trust is required when there is a high perceived risk of using a service. Less trust is required when we are highly motivated by the benefits of that service.
A low risk, high value service, therefore, will win trust the quickest and, all else being equal (which it never is), will more likely succeed. The diagram below illustrates this.
Food for thought for anyone planning a start-up; your start-up’s chances of success are better if you are focused in the red or orange areas.
So how does a start-up build trust with so little trading time behind it? The good news is that risk and value are perceptions that can be influenced to some degree.
Case studies, customer service, advisory boards and employment interviews are useful mechanisms for reducing the perceived risk in new ventures. Testimonials, market research and employee stock options can also positively influence the perceived value of using, investing in and working for a new business.
However, communications issued directly from a start-up are not the most powerful trust-influencers. In the early days of a start-up, with very little reputation in the marketplace, it is not surprising that the Holy Grail is to achieve a highly viral propagation of the service. This is not solely because of the obvious economic efficiencies of ‘sneeze marketing‘ but also because we are more likely to trust an independent third party user of a service than we are to trust the provider of that service. After all, if you think about how you originally came to hear about Google, eBay, Amazon or Hotmail, it probably wasn’t from a carefully devised press release or TV ad.
So what can we do to influence trust? An interesting essay on Trust & Trust Building suggests that, ultimately, trust-worthiness is assessed, based on three characteristics:
- Ability – our competency to deliver on our promises
- Integrity – our credibility of communication and commitment to fairness
- Benevolence – the intentions and motives behind our actions
These are interesting because many of the initiatives that we see start-ups deploy to help grow a service, build trust in one or more of the above ways:
- Hiring experienced entrepreneurs
- Building an open service and releasing APIs
- Building partnerships
- Offering referral rewards
- Promoting case studies and demonstrating early traction
- Announcing an advisory board
- Generating and linking to press coverage
- Working with charities and not-for profits
How trust-worthy is your service? Is it low risk? Is it high value? Although the web offers many advantages in business, one of the drawbacks is reduced direct customer interaction. In the end, people like to trust people, which means Internet businesses need to work harder than most at building trust. Take a look at some of the initiatives listed above. What can you do to build a deeper level of trust in your service?
Whatever you do, remember the words of the Dutch statesman, Johan Thorbecke, "Trust comes on foot, but leaves on horseback".