The 2021 Guide to Building Customer Trust


6 ways to increase brand loyalty and create customers for life

2021 Guide to Building Customer Trust Header Image

Executive Summary


Retention. 

Everyone knows it’s easier to keep a customer than replace one. But how do companies achieve that elusive goal?

Khoros surveyed over one thousand digitally-active consumers in the US to discover what drives lasting brand loyalty. Customers equate brand loyalty with consistent purchases from a brand — driven by rational, transaction-related factors. But many customers feel little connection or loyalty to the brands they interact with or buy from. Even though many customers note a lack of connection with brands, the appetite for connection exists.

This gap is where customer trust makes all the difference in building lasting brand loyalty. 

Customers want to feel emotional connections to brands. And, when brands are more personable, feel more human and are approachable, customers have an easier time forming those desired connections. Another important way to fill the loyalty and connection void that customers experience is for brands to be more relationship-oriented, as opposed to transaction-oriented.

In this definitive guide to building customer trust, you’ll learn the 6 ways brands can build customer trust to create brand loyalty:

  1. Authentically connect with customers

  2. Focus on relationship building

  3. Use AI as a supplement to human agents

  4. Nurture a strong digital presence

  5. Use digital touchpoints to create human connection

  6. Guard against a negative customer experience




Introduction

Customers are looking for brand connection 

Each year we conduct more of our lives online, from dating and entertainment to healthcare and shopping. The events of 2020 only hastened what was already occurring: we fundamentally changed to the way we interact with one another and we took many relationships — personal and professional — completely online. 

Our expectations have begun to blend together, too. Customers now expect brands to behave like regular people and not stodgy corporations with canned responses. More specifically, customers expect authenticity from brands and they want to be able to trust them.

A recent study by Edelman found that only 46% of customers trust the brands they use. And in our survey, we found that the majority of customers (66%) feel little to no loyalty to brands they interact with, and even more customers (75%) say they have little to no emotional connection to brands. But there’s hope: 58% of customers say they’d make multiple purchases from a brand and recommend the brand to friends and family, and 56% reported that they’d be long-time customers, if only they felt more connected.

But customers aren’t often finding the qualities they’re looking for from brands: in fact, as consumer appetite for brand trust has increased, consumer trust in brands has decreased. According to Edelman, brands are trusted for their ability, integrity, dependability, purpose, and connection to consumers’ self. To earn that trust, brands must live at the intersection of personal & societal needs, and words & actions.

Brands face a challenging paradox: building consumer trust is critical to building brand loyalty, yet consumer sentiment around brand trust is at an all-time low. Though customers don’t have a lot of confidence that they can trust brands, customers still crave emotional connections with brands. And trust, writes Forrester, is hardwired within us. Humans trust instinctively. To reach their customers, brands can develop relationships with them which will, over time, build consumer trust, and ultimately drive consumer loyalty. And it’s crucial: 81% of customers say trusting a brand to do what’s right is a prerequisite for their purchase, according to Edelman, and Gartner writes that 89% of customers will leave a brand that breaks their trust. 


How to deliver what customers crave

Customers are looking for brands to offer them an emotional connection and to present a set of values that resembles what they'd find in a human relationship. No small feat, to be sure, but with the right information and support, it can be done.

Khoros recently surveyed over one thousand US consumers on the topic of brand trust, and the answers they uncovered offer a road map for brands hoping to truly connect with customers. We discovered how customers define brand loyalty and its influence on driving certain consumer behaviors and outcomes, as well as what customers want from brands and how brands can best offer it to them.

The questions we asked were designed to measure the interplay and relative weight of rational versus emotional considerations in customer decisions.

We wondered, do good prices (a rational consideration) draw in customers and inspire loyalty, or do shared values (an emotional consideration) hold greater sway, and under what circumstances? Our findings uncovered some surprising answers, including that customers want brands that offer them both rational benefits and emotional ones, and a deficit in either can lead to lost business for brands.

As for what inspires brand loyalty, customers placed nearly identical importance on a good value for the money and their ability to trust the brand. While brands can quantify rational factors and make the necessary adjustments to create value, the emotional factors can be more challenging.



Based on our research, we developed six lessons that brands can use to build trust and loyalty with customers that will help to future-proof your brand and create customers for life.

6 Ways to Build Customer Trust to Create Brand Loyalty


1. Authentically connect with customers

Customers want to feel emotionally connected to brands they use; and these connections are driven by the customer experience when interacting with them. When customers feel connected to a brand, their sense of loyalty increases. A brand who acts like a real human is a key driver of connection between customers and brands: according to our survey, 38% of customers say that if a brand is authentic or genuine in their interactions, they’re more likely to feel personally or emotionally connected to the brand. And one in four customers state they’re more likely to connect with a brand if their interactions feel personalized. 

The vast majority of customers also said that they’re more invested in brands who feel human rather than corporate or robotic. In fact, the top 5 factors driving deep connection and loyalty with brands are emotional. 


This is because emotions are at the core of the human experience — when we relate through emotions like empathy, joy or kindness, we feel connected.

Conversely, customers will leave a brand behind for a variety of reasons, both rational and emotional. While rational factors like a deterioration in the quality of the product or service and high prices round out the top five reasons customers break with brands, emotional factors still hold a lot of influence.


Most brands understand that there’s a good chance customers will leave them over product or service deterioration — that’s an old story. But we discovered that 36% of customers — a full one third — will leave a brand if they feel the company is fake or inauthentic in their interactions.

As the graphic above illustrates, other emotional factors are quite important to customers as well: about one-quarter of customers will depart a brand they feel is inconsistent in their messaging and doesn’t offer a personalized customer service experience. Brands of course must pay attention to rational factors like quality, price, and service options, but brands risk losing a large percentage of their otherwise loyal customers by not prioritizing emotional factors as well.

2. Focus on relationship building

Just 26% of customers prefer brands that are more transactional, while nearly half of customers (46%) state a clear preference for brands that focus on relationship building. This data offers brands an important peek inside the minds of their customers. Excellent products and services are still crucial, but the vast majority of customers don’t want their customer experience to end with a satisfying transaction. To truly build loyalty, brands must go another step and work towards forming emotional connections and relationships with their customers. Brand loyalty, therefore, is no longer just about purchases.

Which of the following best describes the types of brands or companies you prefer to buy from?

Traditionally, brand loyalty is associated with repeat buyers — and in fact, 76% of customers do equate brand loyalty with repeat purchases. But many customers also consider themselves loyal to a brand based on non-purchase related factors. 41% of customers say that brand loyalty means they have a deep, emotional connection to the brand. Demonstrated by how customers are seeking personal connections with the brands they use. This means that three in four customers define loyalty as an action — repeat purchases — while just under one in two define it as a feeling — a deep emotional connection.


Ultimately, brands need to focus on the things that they can control, and it all starts with selecting and investing in a solution partner that can provide a digital customer engagement tool that empowers brands to be more human, authentic, and relationship-focused.

3. Use AI as a supplement to human agents

We found that even in digital settings, customers prefer personable interactions with brands that feel human and authentic, which can make them skeptical of AI. 

As many brands have begun to understand, a strong, thoughtful digital presence matters to today’s customers. Incorporating innovative technologies like AI can make the difference between a quick, helpful answer or a long wait on hold with a phone call. In fact, 71% of customers say they’re more likely to buy from brands whose digital interactions are human-led with some AI. 

But AI must be incorporated with care and thought for the customer experience: 65% of today’s customers worry that brands are overusing AI, making their life as a consumer more difficult. 

We asked customers how they prefer brands to interact with them and nearly nine in ten stated a preference for human-led or human-assisted interactions to occur alongside AI. Only a small minority (9%) of customers are comfortable with interactions that are mostly or entirely AI-led. The takeaway: customers are open to AI, but they want a healthy mix of human and AI interaction.

Context matters, too, regarding AI. In other words, customers are more open to the technology under certain conditions. Most customers prefer human or human-led interactions for more complex activities like calling customer service with questions (80%), filing a formal complaint (77%), or using web chat, messaging, or social media to resolve a complaint (74%) or inquire about a product or service before making a purchase (73%). If all else fails, at least an option to speak with a human when needed can provide a failsafe.

AI can help brands offer more consistent, round-the-clock service and it can help lean customer care teams do more with less, but it’s crucial that brands make intentional choices about when and how they employ AI.

These consumer preferences aren’t just based on speculation or what-ifs. Ninety-six percent of customers we surveyed said they had AI-led interactions with a brand in the past year — and the sentiment around those interactions isn’t great. Only 37% rated their AI interactions as positive experiences, 27% said the experiences were always or mostly negative, and about one in three (32%) said the experiences were a mix of negative and positive.

It’s true that customers are open to AI under the right conditions, but so far, they haven’t been overly impressed with how brands execute the technology. The good news is that brands have an opportunity to convince customers otherwise, and details about what, specifically, makes an AI experience positive in the minds of customers can assist those efforts.

The main drivers of a good AI experience are speed and efficiency and having the option to speak with a person. Customers like AI when it helps them move more quickly, but they do not like being forced into an AI-only interaction:


On the other hand, the biggest driver of a negative AI experience was an inability to resolve the issue — more than half of customers (56%) recalled this as a reason for a negative experience with AI. Certainly this outcome is expected: customers are never happy when their issue is left unresolved, and if AI is the culprit, they’re bound to be frustrated, having wasted time and energy on a fruitless interaction. But the second biggest driver of a negative AI interaction was not being given the option to speak with a person to resolve their issue (53%). And the third: the interaction felt robotic, not human (47%). Even with robots, customers want a human touch.

Personalization and empathy are important elements of AI interactions for customers. Brands should set similar standards for their AI technology as they do for their human care agents.

Despite all of their misgivings about AI, including a lack of trust that the technology can solve their issues, the majority of customers (59%) still see AI as the future of the digital customer experience. Furthermore, 44% of those surveyed say they expect brands to invest in AI and make it a core part of their customer experience. Already about one in three (38%) customers say they feel confident that AI can provide the same, if not better, level of customer service as a human agent.

Even more exciting: more than half of customers say that brands that prioritize innovative and cutting-edge technology will make them feel more loyal (56%) and connected (52%) to the brand and it’ll increase the likelihood of them making repeat purchases (59%).

Customers want to work with brands that are innovating with AI — they just want a thoughtful approach that takes their needs into account and offers avenues for human connection should the need arise.

4. Nurture a strong digital presence

A strong digital presence that encompasses a diversity of channels — web chat, mobile messaging, brand communities, SMS, and social — keeps brands more relationship-focused which will, in turn, foster a greater emotional connection with their customers. 

Customers spend much of their social lives online — this was true before 2020 and will continue to be true as the COVID-19 crisis wanes. When brands can interact with customers in a way that closely resembles the way customers interact with their friends and family, relationships and trust are built. In fact, when we asked customers what factors help them feel connected to brands, the second most popular answer was being able to resolve a question or issue without having to make a phone call — 80% of customers say this is important to them. 

When we say “digital presence,” what exactly does that mean? A digital presence means offering digital-first communication channels like SMS, email, WhatsApp, Google’s Business Messages, and Facebook Messenger. All of these offer greater efficiency than session-based channels like voice and traditional live chat. Because conversations on these channels are asynchronous, customers can engage in real-time or any time — improving convenience, first contact resolution, satisfaction, and scalability.

Customers today want to be able to seamlessly switch between desktop and mobile, and they want to connect with brands on social media, messaging apps, branded communities, and brand websites, so it’s crucial that all branded sites work equally well on all devices and platforms. Nearly half (49%) of customers feel more connected to brands when they can reach them on multiple digital channels, including social media, messaging apps, and brand websites. 

Investing in a complete digital presence, especially in digital customer service, is investing in consumer connection and loyalty.


5. Use digital touchpoints to create human connection

A secret weapon many leading companies use to create richer connections “virtually” is online, owned communities. The impact on loyalty for online branded communities is high: when customers can ask questions and interact with brands in a community, 52% feel a deeper sense of loyalty and connection to the brand.

Customers can connect with peers to build relationships, learn from each other, solve problems without a phone call, and share expertise anytime, anywhere. And when brands connect customers with other customers with similar interests and expertise — like in an online community — 49% of customers reward the brand with their loyalty as a result. Another benefit of communities is the opportunity for brands to ask customers for their feedback about products and services that are under development. When brands elicit this type of input from their customers, an astonishing 68% feel more connected to the brand.

An active presence on social media that’s tailored to a brand’s audience is also key: half of customers say that seeing content they care about shared by brands deepens their connection to that brand. The right digital engagement partner can help you easily uncover your audience’s preferences so that you can more accurately offer the right content.


Even advertising, when done right, can help a brand build connection. Half of all customers surveyed (52%) say that when brands show them ads that are personalized to them and relevant to the things they want to buy, they feel more affinity for the brand. This is why personalization, at scale, has become a priority in so many business strategies and where incremental improvements can differentiate the customer experience from competition.

6. Guard against a negative customer experience

When brands can effectively create more authentic, personal relationships with their customers, they stand to reap important benefits. More than half of customers will buy more from brands they feel connected to and trust, recommend these brands to their friends and family, and stay loyal over the long term. 

But there's one thing customers have zero tolerance for: a bad service experience — it’s the third highest reason customers leave brands behind. Fewer than one in four customers said they'd forgive a poor customer service experience even if they previously felt emotionally connected to the brand, and half of customers (51%) said that after a negative customer service experience that failed to solve their issue they’d never want to interact with or make a purchase from the brand again.

An unsatisfactory AI experience can have a big impact on brand loyalty as well, and, most importantly, customers won’t keep it to themselves. Over one third of customers (36%) say they'd tell their peers about a negative AI interaction, a quarter (26%) say they would no longer recommend the brand to their peers, and 23% say they'd write a negative review about the brand.

A negative AI interaction also has the potential to skewer goodwill a brand has built up by other means. After an unsatisfactory AI experience, 33% say they'd consider the brand unreliable and inconsistent, 33% said they’d henceforth have a negative perception of the brand, 30% say they’d lose connection to the brand, and 27% say they would no longer trust the brand. And finally, one third also say they'd consider switching to a competing brand after a terrible AI interaction. If you see that this is happening to your customers who interact with your AI and don’t have a good experience, just remember the other tips here in this guide to customer trust.

An experienced technology partner can help you guard against AI pitfalls and negative customer care experiences to make sure your customers are satisfied and loyal.

Conclusion

Ultimately, the dynamics at play to build brand loyalty look pretty similar to the dynamics of any human relationship. Customers are begging brands: “treat me well, stay authentic and honest, and show me you’re trying to develop a deep, lasting connection.” The six concrete lessons outlined here will give brands the power to foster lasting loyalty among their customer base and even grow it with new customers. 

In 2021, building trust should be the main goal of any future-focused brand, and we’re here to help. Need a customer engagement partner to support your brand’s efforts to stay authentic and build trust with customers? Khoros offers software and services to create customers for life and we’d love to chat with you.