It is almost always cheaper to maintain a collaborative relationship built on trust. For a service provider, this could mean:
- you have no one tasked to hide things
- you have no one assigned to defend your organisation from rounds of questions from your customers
- your contracts are less onerous and demand less of you
These are a few examples which results in freedom for the supplier to run a lean operation. Additionally, in an ideal “trust-based” world, suppliers will share the benefits with their Customers, recognising that the Customer’s trust was a significant contributor for the savings.
Whether you are a service provider or a buyer, I would ask you to list the five most time/labour intensive non-core activities involved in your relationship with the other party. For each of those – ask yourself why that activity needs doing. Keep probing with further “whys” and soon enough you will find yourself dealing with questions around trust.
From our experience, trust comes from the following factors:
Reasonable expectations from the relationship
It is disconcerting that many private enterprises use “maximising shareholder returns” as the excuse for giving their customers audacious demands. The impact of doing so could include:
- A price rise at several times the rate of inflation.
- Having rude customer services staff reachable on 0845 numbers whilst their sales teams woo potential customers phoning in 0800.
- Offering warranties that sound great in advertisement but mean nothing when you come to claim against them.
Organisations use this ploy as they speculate it will entice more customers whilst having minimal loss of custom. On the other hand, trustworthy companies will set prudent profit expectations, which will be made clear to all parties.
Transparency and Trust
Transparency in dealing is key to sustaining trust. In the absence of transparency, the instinctive action of the other party is to raise its guard. This leads to more scrutiny, more demand for evidence, and generally less desire to continue the relationship. Unlike personal relationships where lack of transparency can have immediate repercussions, business relationships usually have a lag effect. Organisations make big decisions on corporate relationships at tactically opportune moments.
If you haven’t been transparent in the past with your buyer / supplier, you haven’t necessarily gotten away with it. I will illustrate this with my own experience. I was once phoned by a high street letting agent posing as a prospective tenant in response to my Rightmove advertisement through an online agency. A viewing was scheduled but the fictional tenant didn’t show up. A few days later, a letter turned up to my door from the letting agent soliciting my business.
By this time I had discovered what had happened. Although its been over a year since the incident, whenever I am asked for my recommendations on lettings agencies, I name them as one to avoid.
Consistency and Trust
Consistency between your actions and the previously declared principles, is a great virtue. It appeals to the other party in many ways. It tells them they can trust you to act in a certain way. This could have unexpected yet important benefits. For example, if you are a supplier, imagine your counterpart in the buyer organisation is stuck in an elevator conversation with his or her boss.
The dreaded question “what’s going on” is asked, with regard to an activity doing rounds between the two of you. Now imagine, if at that moment, the ball has been in the other party’s court and you both haven’t been in touch recently. If your counterpart trusted you to be consistent as before, it will mean that he / she intuitively know what’s likely to happen next and when. What a great face-saver?
Vulnerability and Trust
No one’s perfect and we all know it. Moreover, the business of looking good is expensive and psychologically taxing. However, do you know where your most strategic suppliers are vulnerable? Vulnerability is seen as a sign of weakness and both sides in a buyer supplier relationship often take great efforts to cover up. The problem with a cover-up is that it runs the risk of the flaw showing up in unforeseen ways, leading to loss of trust by the other party.
In a trusted relationship, there is less discomfort in disclosing your vulnerabilities. On the contrary, vulnerability offers opportunities to strengthen the relationship further. As the other party may seek to support you through your issue, rather than capitalise on it.
Trusted organisations tend to have the bearings to scale up to huge levels. My best example of a trusted organisation is the Vanguard Group. Founded by John Bogle in 1975, in an active management industry, Vanguard set out to offer investors a low cost way of investing in the whole of the market. Its expectation from the customers was a much lower fee compared to what active managers charged.
It was transparent about its business model and was very vulnerable to industry criticism being a lone voice of passive investing at the time. The group has meant that is now has $3tn of client money with 20 million investors in over 120 countries. The group has consistently brought its fee levels down as it scaled up: now at 0.11%.
Final thoughts
At Mindful, collaboration with our clients and our subcontractors is at the heart of what we do. We measure our performance by how we are able to balance the objectives of both parties and ours, in a sustainable way.
Without trust, we doubt we would be able to achieve our ambition of building a shared service of choice by creating a healthy ecosystem of buyers and subcontractors.
Learn more about how we work, and stay in touch with us by following us on LinkedIn and Twitter!