The moral aspects of trust in business are best dealt with by others. Here we shall explore the commercial applications, especially the potential upside and savings in time and money…
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, at a time when our trust in the banking and political systems has all but been destroyed, we are 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. In an age of uncertainty, we therefore 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…
Essentially, if we do not invest, build and maintain a minimum level of ‘trading trust’ in the early stages of a supplier-retailer relationship then the extra work involved in second-guessing our trading partner’s intentions comes straight off the bottom line. In other words, like networking in these unprecedented times, the current business climate does not allow for the gradual, instinctive building up of the necessary levels of trust. Instead, taking trust as a desirable and essential outcome, we need to methodically accelerate the process, upfront.
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’.
Pragmatic trust in a supplier-retailer relationship establishes an environment within which we can optimise business opportunity. Moreover, working within a trust-based partnership can even be enjoyable, encouraging each party to collaborate for mutual gain. If we can rely upon the fact that each party can be trusted to seek an equitable sharing of the proceeds, negotiated deals can result in enthusiastic compliance because the participants realise that personal gain from open collaboration is usually greater than that which can be achieved from attempting to take advantage of the other party. It follows that ‘enthusiastic compliance’ requires less monitoring, another cost saving…
In effect the process is a bit like networking, where an upfront investment eventually creates its own momentum. In other words, we build a reservoir of mutual trust and goodwill from which we can draw sparingly, when times are tough…
In terms of brand application, shoppers use price as the final ‘decider’, but we should remember that this is on the assumption that all other things are equal. Expressing the shelf-price per 100g/100ml along with the SKU price would surely add clarity to the (deliberate?) confusion caused by random use of Kg/g in shelf-label unit pricing, BOGOFs, extra-value packs, and especially the use of shrinking-packs to disguise price-rises…
In other words, by making it clear what the shopper is getting for the money, the ‘per 100’ comparison forces the brand to rely upon Performance, Presentation and Place in a like-with-like Price evaluation with the available competition, which causes the shopper-consumer to fall back on the brand equity we have taken so much trouble to build and sustain over the years.
As the relationship between a supplier and customer develops, the retailer’s interest changes from a focus on facts and proof, to an interest in the NAM’s integrity, as the buyer increasingly relies upon NAM-recommendation in evaluating supplier output. In effect, the buyer outsources part of the purchase-decision process. In fact, as trust builds, so too the NAM is put under increasing pressure to contribute strategically to the retailer’s business, with the downside consequences associated with any breach of trust keeping pace accordingly…
Thus, from a position where trust started as a means of avoiding wastage of time and money in the early stages of the relationship, mutual trust becomes an increasingly important, indeed vital ingredient over the lifetime productivity of the supplier-retailer partnership…
The resulting overall Return on Investment in trust provides a real payoff for all stakeholders. Trust me, it works….
