Transform to build trust with customers

This article is the first in a series of deep dives into the findings from PwC’s East Africa Family Business Survey, each focusing on one of three key stakeholder groups: customers, employees and family members.

Customer trust is essential for business success. Research using data from PwC’s Global CEO Survey shows that after industry conditions, the biggest contributing factor to profitability is levels of customer trust. Although family business owners value the trust of customers, only 56% of respondents in our East Africa Family Business Survey said that they believe they are fully trusted by their customers. This is a singularly honest assessment and speaks of the self-awareness of family business owners, who acknowledge that there’s a trust gap. While family businesses have long relied on the trust premium they’ve built for ensuring strong relationships with key stakeholders like their customers, it’s evident that they have been slow to adapt to the evolving nature of trust today. 

So, given the importance of customer trust and the fact that family businesses know they need to earn it, what should they be doing differently?

They have to come to grips with the new, expanded formula for building trust highlighted in the East Africa Family Business Survey 2023. Certainly, great products, top-class service and brand value are still ingredients for building trust, as evidenced by the fact that family businesses scored 20 points higher than non-family businesses on the Edelman Trust Barometer a decade ago. But today, those attributes are table stakes.

More than half the world’s population are millennials and gen Z—people born after 1980—and they have new priorities in this fast-changing world. They want the businesses they support not only to deliver great goods and services but also to demonstrate their commitment to environmental, social and governance (ESG) issues and diversity, equity and inclusion (DEI)—all along the supply chain. And they want companies to take a stand on the issues that matter most to them. 

Here, we’ll look at how this new formula affects the relationship between family businesses and their customers, and we’ll consider three no-regrets actions that businesses can take to transform their operations and bridge the trust gap.

Although family businesses say they listen to their customers, they are not demonstrating, beyond a baseline focus on quality products and services, that they share their customers’ concerns. And this is a problem. In the latest Edelman Trust Barometer, family businesses’ trust score is now just six percentage points above the average for all businesses.

Playing catch-up on trust

Family businesses want the trust of their customers, but they are not getting it.

That’s because they are not prioritising what customers value.

Today, customers want to know how the companies they do business with operate, what their values are and how they demonstrate those values. To assess where family businesses stand in relation to trust, our survey used a trust measurement model developed by Sandra Sucher, a Harvard Business School professor of management and the author, with Shalene Gupta, of The Power of Trust. The model is based on four pillars for building trust: competence (is the company good at what it does?), motive (whose interests is the company serving?), means (is the company using fair means to achieve its goals?) and impact (what is the tangible impact the company has, as opposed to the impact it claims to have?). 

Three ways to build customer trust

Addressing the widening trust deficit will require family businesses to focus on three key actions:

Family businesses pride themselves on a reputation for quality products and services. They have also traditionally relied on philanthropy as a way to give back to society—and to build trust with communities. Going forward, their reputation will not be linked so much to their charitable giving as to how they address the issues that concern the public directly: the way they do business in a world challenged by climate change; who they select as their business partners; how they control their levels of pollution; what they do about diversity and inclusion; whether they speak up and take a stand on social issues.