The moral aspects of trust in business are best dealt with by others. Here we shall explore the commercial applications for NAMs, especially the potential upside and savings in time and money…
Given the political, social and economic upheaval of 2008 still affecting the supplier-retailer relationship, in a period of minimal, if any, shelf-price increases, a significant casualty has been eroded business trust. In practice, this means that time that could have been spent on joint business development is being devoted to second-guessing business partners’ every move and request… This wastage of energy can only increase as we move into the returning inflation of 2017.
It does not help nowadays that the supplier-retailer relationship has to be conducted in an environment where even hallowed trust-based institutions are increasingly subject to scrutiny and second-guessing by authorities and savvy consumers alike…
In fact, we have arrived at a place where the letter rather than the spirit of the law defines business relationships, with the ‘small print’ confirming for many that we are all now on our own. With consumers building trust in online purchasing, recent news that in the case of money paid to online retailers by credit card via a third party – say PayPal, or equivalent intermediaries – and resulting in non/faulty delivery, ‘a claim under Section 75 can’t be made.’ This means that companies and banks can use ‘letter of law’ compliance to avoid repayment, whilst PayPal can gain consumer-kudos by providing its own ‘spirit-of-law’ safety net to protect consumer rights.
In the same way, a brand struggling to contain ingredient costs, and using reduced contents to disguise a price rise is relying on ‘letter-of-law’ compliance via its weight declaration, but is apparently ignoring the fact that the consumer relies on ‘spirit-of-law’ compliance via the appearance of a package that ‘looks the same’ as the previous pack…
A company focused on ‘letter-of-law’ compliance also appears to ignore the increasing influence of product/price comparison tools that enable savvy consumers to check value in the aisle, while their access to social media can trigger the ‘tell-a-friend’ facility whereby if they like a product, they tell one friend, disappoint them and they tell ten friends, at least…
Couple this with the economics of brand building, whereby the cost of securing a consumer’s first trial of a new product is so high that money is lost on the purchase of the first pack. If the in-use experience has been satisfactory, then the reduced cost of securing the purchase of the second pack may (!) result in breakeven, with some profit resulting from the lower cost of securing a third purchase…providing the consumer’s expectation is always exceeded by the contents of the tin.
And yet we continue to risk jeopardising years of brand heritage by appearing to short-change our most valuable asset via a Brexit-induced currency move on pack contents…
In an era of uncertainty that will continue and build in 2017 – think Brexit, Trump, Italian Banks, Dutch, French and German elections – we have to prevent our ‘mistreatment’ of consumers infecting our supplier-retailer relationships as we try to internalise the costs of doing business.
In practice, we have to be mindful of both the letter and spirit of our agreements in formalising any initiatives. In other words, we need to establish basic business trust in an atmosphere of unprecedented suspicion and even fear…
It goes without saying that in order to observe the spirit of a supplier-retailer ‘fair-share’ agreement it is critical to have a robust written contract as a basis for monitoring any inadvertent straying from what each party thought they were buying into when the deal was struck…the ‘gentlemen’s agreement’ has perished not for want of gentlemen, but because business stakes and costs have now reached unprecedented heights…
Again, like networking, we have to build a reservoir of proof of our trustworthiness in advance by repeatedly following Seth Godin’s advice in ‘showing up when it wasn’t convenient, telling the truth when it was easier to lie and keeping a promise when we could have gotten away with breaking it’.
As we slip from a final deflationary Christmas into an inflationary New Year, many of us have ten days to reflect on the benefits using ‘spirit-of-law’ agreements as a basis for building business trust, while others continue as before in the hope of a better result…
