Author: Rob Docters

Do your customers trust you? How do you find out? If they don’t, how do you build that trust and understand what your customers expect from you? In this article, the author outlines clear steps you can take to develop your customers’ trust in both your organization and your pricing. Author Rob Docters has been Lecturer in Management at Yale School of Management, teaching pricing. Before that he led BCG’s Asia/Pacific pricing practice, based in Singapore. He has also been a Senior Partner at Ernst & Young Canada. He is now Partner Emeritus at Abbey Road, LLP, and can be reached at

The Journal of Professional Pricing, June 2020

“The essence of trust building is to emphasize the similarities between you and the customer.”
–Thomas J. Watson

Is your company seeking to develop the trust of its customers? If so, there are clear steps you can take to help you to attain that goal.

We have discovered that trust comes in two forms and focusing on the right flavor of trust is essential for success. Motivation, logic, decision-process, and customer verification points are quite different between the two flavors of trust.

Customers use only a very limited number of ways to verify trust, and relying on the “usual suspects” to build trust will likely fail. Senior management, pricers and product managers must guide the execution of selecting trust drivers.

Many companies, perhaps most, believe that building customer trust is rewarded in the market. Evidence for this includes LEGO—ranked in the top-five for trust—who was able to raise prices substantially to cover the added costs of eco-friendly materials because buyers believed the company.[1] Some commentators go so far as to say that trust is “essential” for any transaction.[2]

“Trust” Has Two Bases

Trust comes in two forms. Looking at a range of some 175+ transactions types, customer trust can be “broad” and “narrow.”[3] In the former case, there is a general belief that the other party is “good, honest, sincere.”[4] In other cases, there is a narrow belief that “…they will do what you expect of them.”[5] While these two forms of trust have some aspects in common, managers should understand the distinction and the different requirements to build trust with each kind of audience.

Take a fairly extreme form of narrow trust: in the past few years several cities and companies have had their computer systems hacked and frozen by cyber bandits, who demanded six or seven digit ransoms. Without any means of ensuring compliance, cities had to trust that the hackers (paid in cyber cash) would actually make good and release the systems.[6] Note that this requires trusting someone of which little is known beyond the fact that they are criminals. In some cases, apparently, this was a good bet.[7]

A well-known example of broad trust is Nordstrom. Among the stories which have verified by journalists is that a customer brought in automobile tires to the Fairbanks, Alaska store and succeeded in “returning” them even though Nordstrom does not sell tires. Another story is how an employee found a customer handbag in the store, learned the customer was leaving on a flight, and drove the bag to the airport to return it to the customer.[8] This speaks to a broad trustworthiness, where customers can rely on Nordstrom to help them with their needs (and failures).

Many companies fall in between the two extremes. For instance: Apple is among the most respected companies in the world.[9] Yet, two courts and numerous commentators have been incensed that the company slowed down older iPhones, without informing users, perhaps to prompt those users to upgrade to newer phone.[10] A glittering reputation did not mean trustworthy behavior, and indeed Apple ranks outside the top-50 in some lists of most trustworthy companies.[11] We suspect customers admire Apple’s engineering but not necessarily its customer orientation.

If the market orientation towards trust is not homogenous, then your company may need a strategy for building trust. A rough estimate from survey suggests that more than half of companies operate in markets where the broad view prevails.[12] This means that customers, in effect, say ‘I admire company X for attributes A, B and C. Don’t know much about attributes D – Z, but will trust them based on A, B and C.’ This is “associative logic.” In these markets, companies need to disappoint a customer before they lose confidence. That is good news for established companies, but bad news for newer ones in that it takes a lot of time and effort to build this kind of trust.

In contrast, perhaps 40% of markets look specifically to factors like alignment of goals, transactional profitability, and consistency of the offer to determine whether they trust the offer. This is good news in that newcomers can establish beach-heads in the market, and the bad news is that it takes more effort to retain share.

The market orientation to trust has powerful implications for business models. Broad associative logic suggests building an overall relationship, e.g. a subscription with opt-out — like telephone services and Google. Narrow means more transactional goods or services like the USPS or Chick-fil-A. Some companies have successfully become hybrids, like Amazon with the Prime program and Costco with its membership subscription.

Both forms of trust can offer high loyalty and trustworthiness. They just need to be developed and used differently. Both appear in the top-ten trustworthy company list. Table 1 highlights some of the differences:

Table 1:

Trust and Pricing

Applicable to both kinds of trust is the basis on which buyers and parties to a transaction make their decision. Both types have a set of specific tests for trustworthiness. Even the broad decision makers have a limited set of tests for trustworthiness, and this means your company must address the right factors. Both narrow and broad require you to be “market oriented.” This means focused on what customers want, not the tools of marketing outreach[13]. Because customer decision makers have a limited set of “litmus tests” for trustworthiness, your company must address those factors correctly. It’s like typing in a computer password: you only need one wrong digit and the password will fail.

Limited Information

The decision to trust the municipal cyber bandits was made in the narrow context of potential loss vs. gain, but ultimately had to depend on an assessment, based on limited information, that the hackers could be trusted to do what was wanted. Decisions, it appears, are generally based on a small fraction of available information.

Even where there happens to be plentiful information, most judgements make remarkably little use of the available information. As a benchmark, one famous behavioral scientist found that humans use only 20% of the visual information available to them.[14] This estimate was based on counting the neurons associated with sensory receptors of “the outside world.” Even if information is placed front and center, it may be ignored. In the “Invisible Gorilla Experiment” researchers had an audience watch a basketball game in which a man in a gorilla suit played through the game. Most of the audience did not notice the gorilla.[15]

For many decisions, the information used is possibly different from the 20% absorption for visuals, but in a world of compressed timeframes and focus on summaries, partial information is clearly the norm. Many managers do not expect to get all the information they need.

What does this mean for pricers? It means that buyers will use only part of the information they have available to make a buying decision. So, a seller may offer a lot of information, but much of that will be ignored. Instead, the decision maker will rely on pre-existing beliefs and heuristics to make a decision.[16] One implication is that, for anything but commodities, changes in the current price tag or terms are missed and may not have the expected impact.

Ideally, your company will know what elements of price customers are using as purchase criteria. Note that there are many elements to price. Buyers may be focusing on an initial ticket price, total package price, total cost of ownership, discount percentages, warranties and operational costs, quality, residual value and ratios of productivity and price, etc. For instance, in the legal research field, for many years, the focus did not include the purchase price of research topics. Buyers only cared about the net cost of research after deducting the “chargeback” (the residual for which the client will not reimburse them).

This behavior suggests pricing strategies. For instance, if you do know what price elements are key to consumers, then reduce or hold price on key pricing elements but possibly compensate through raising other elements of price.

For example, one leading oil company found that, with a downturn, motorists changed oil less frequently but migrated to better quality lubricants. Further, they used their lower grade oils as the price benchmark. So, this company raised the prices of its lower grade oils and kept its premium synthetic constant despite increased demand, knowing that the increase in demand was not driven by consumer re-evaluation of the premium oil’s benefits. This way, it rapidly migrated customers to more expensive oil.

This is the essence of trust for pricers: knowing what customers use as a litmus and knowing what buyers do not notice. Companies that lack this knowledge often find that building trust takes great time and effort.[17] Sadly, most companies do not know what their different customer segments use as a reference.

Sometimes this insight can be gleaned through simply asking the customer, but that has its limits. For instance: a top-5 U.S. bank was surprised to find out that their online customers were least interested in fraud guarantees on their accounts. Turns out these customers were confident in their online transacting, so did not value that feature.

In surveys, the online users reported liking the guarantee because it seemed like a free bonus. (Why not?) Statistical examination of their behaviors (online usage and availing themselves of added security and guarantees) showed the truth: this segment did not value optional security features and it would not change their choice of bank. Similarly, another segment was found to abhor digital banking, and wanted physical cash, tellers and safety deposit boxes. One interviewee described this as a desire to “fly below the radar.” This was contrary to simple survey data but proven true in practice, so the bank moved to better accommodate this reclusive segment.

Typically a “map” can be drawn of your market, and what customers know and care about as the basis for trust. Such a map is illustrated in Figure 1.

Figure 1: Map of Buyer Trust

Pricing and Trust

The information chosen for decision-making can be surprising. For instance, a British investment house in London said it had refused to invest in a past scam because the delinquent firm’s representatives wore two-tone shoes – a fashion faux pas that was a signal of untrustworthiness.

Corporate managers, consumers and CIA analysts build up a focus for determining the trustworthiness of potential interactions based on history. This can work well if they use the right criteria. For instance, financial reports, consumer ratings and organizational assessments can be the basis for buyer decisions. Best of all are ongoing themes in building trust, such as messaging like Walmart’s long term “Always low prices.”

However, the CIA has found one major pitfall if information is partial. This is that it is very difficult for people to change their criteria – part of a human reluctance to change.[18] This can be overcome by the right teaming of management and periodic shifts in coverage. Companies do this well with their advertising agencies, but perhaps less well with those with pricing decision making authority. Often, the management story of improved trust building in pricing is the story of the battle between truth and (self) deception, or the battle between complicated and simple.

Its Complex!

To manage trust, management needs to know the criteria which customers use to build trust. Unfortunately, that can be very complex.

Consider the numbers. There are at least four dimensions to a commercial transaction:

  • What is being offered?
  • What are the buyer priorities?
  • What terms (price structure) frame the offer?
  • What is the context for the sale?

For a typical market offer, there are many components. For instance, for one residential telecom service there are a dozen product/service choices: product, options, services, warranty, delivery, timing, bundles, upgrades, etc. There are many possible buyer priorities: mission critical, routine, agency, cost reduction, etc. There are also many price structures and possible price levels. There are infinite contexts, with dramatic impact on price. As an example of context, the acceptable price of Coca Cola depends on whether it is on the beverage aisle or in another part of the store. As another example, a leading college textbook publisher found that optimum text purchase price depends on the academic discipline, tier of school, etc.[19]

Context is an often-neglected factor but also one that matters for everything in life. A study of hospital patients showed that the color of plates affected the perceived sweetness of strawberry ice cream served on those plates.[20] Pricers need to consider context in building trust.

Thus, if a fair price is one which meets customer expectations, the offer must embody the right components (i.e. focus on one or a few of the 12+ components), address the right buyer priority (perhaps 5 choices/segments), and the right price structure (simple sale, rent/lease, guaranteed, “as is”, turn-key or DIY, etc.)[21] Even more, it must reflect the right context (12+ contexts are not uncommon). This suggests that there might be (12 x 5 x 6 x 12) over 4,000 candidate prices to meet price expectations for an unremarkable product, and only a few of those candidates might constitute the right way to gain trust through offer and price.

This is likely beyond most company’s analytic capabilities. A sophisticated modeler or statistician might work with a dozen relevant inputs, giving him/her a less than 1% (12 / 4,000) chance of hitting their marks. Failure to do so makes trust unlikely.

Make it Simple!!

But even before that, you need to address whether your company has any control over customer trust. If you have no control, then don’t bother!

Great. So what to do with pricing? Three steps:

  • Does the customer decide for themselves what is trustworthy? Often, companies have little influence on their customer thinking.
  • Are you able to influence customer thinking? (Be realistic! Few companies have the resources to transform distrust.) [22]
  • Use the right levers – this is where narrow vs. broad applies.

If the customer will decide trustworthiness for themselves, then your company is wasting limited resources to try and change it. So, the objective is to observe customer behavior to see what they want.

If you cannot influence customers, accommodate their preferences. Don’t lose credibility by making up unappealing arguments. For instance, GM found (again) that gasoline efficiency matters. Since some of their cars were not efficient, they promoted “range.” This meant that huge gas tanks did not empty rapidly in the face of guzzling engines. That makes engineering sense, but did not fly with buyers who faced a big charge at the gasoline pump.

If you can influence your customers, then you should do so in order to better educate them as to what they need to know about your product or service or to lift that burden from their shoulders. An upscale hair salon in New York City had the sign in its window that read “Trust us with your fashion.”[23] They clearly made decisions for their clientele.

Unsure if your company has this influence? Here are three means for assessing your influence on how customers view the price and the offer:

  • Look at the last negotiation. What did the other side want to focus on? Apart from price level, what was the focus? If your negotiator/salesperson is adept at deflecting the customer focus on other issues, you still need to listen to the original customer inquiry. They will come back to it in most cases.
  • Offer choices in payment approach. The choices may all be the same Net Present Value to your company, but they may be quite different to the customer. For instance, one data package vendor offered an initial high purchase price with a lower annual maintenance fee, and made another offer with lower initial price and higher annual maintenance fees. They were surprised at the preferences: many buyers wanted the higher initial price/lower fees.
  • Split the package of services up over time. One major diagnostic imaging manufacturer found that its more cash strapped customers (seeking broad trust in vendors) would forego a warranty for a lower price even if that meant higher total cost of ownership.

Again, understanding trust plays a major role, and so does shaping the offer. In the case of the diagnostic imaging equipment, sales complained that separating out the warranty for (e.g.) the display/CRT would violate buyers’ trust. As it turned out, this was because the same salespeople had failed to point out the limited lifespan and vulnerabilities of the CRT, so less sophisticated buyers were chagrined at a failure. Given the salesforce’s omission, sales liked a warranty which patched over the problem and avoided customer anger. With better training and documentation however, there was no failure of trust, better initial sales, and improved later replacement part sales.

In conclusion, trust is something which resides with the buyer. Know what kind of trust they are willing to extend. Is it narrow or broad? Creating trust through pricing or other tools available to management is difficult as there are many factors to consider. The one research tool you can trust is careful observation of the customer and his/her/their behavior.

Isolating the right trust factor requires the right analysis. Generally, statistical observation is trustworthy, but only if broad enough to capture most of the possible drivers of customer behavior. Test many hundreds, not dozens, of relevant factors and then you will see what propels markets. This testing will also propel customer trust as well as revenue success.

  1. See “How LEGO Customer Service Winds Back Upset Customers: A Simple Recovery Approach Works Wonders,”, April 13, 2018; T. Espiner, “Why is Lego not clicking with customers?” BBC News, March 6, 2018, last paragraph; V. Valet “The World’s Most Reputable Companies 2019, Forbes, March 7, 2019.
  2. For instance, The Young Entrepreneurs Council has written articles extolling the value of trust. S. Porat, “Why Trust is a Critical Success Factor for Business Today”, July 7, 2017.
  3. Client assignments 2009 – 2018 at five consulting firms (Booz, Allen & Hamilton, Ernst & Young, Abbey, LLP, McKinsey & Company and BCG)
  4. “Trust,” Oxford Advanced Learners Dictionary, Oxford University Press, 2020
  5. Ibid
  6. R. Siegel, “Florida city will pay hackers $600,000 to get its computer systems back,” The Washington Post, June 20, 2019. Clearly, the city trusted the hackers to the extent that it did not see the chance of recovery as zero. See also A. Isaac, C. Ostroff and B. Hope, “Travelex Paid Hackers Ransom of $2Million Before Financial Scandal,” New York Times, April 10, 2020, p. B1
  7. Some readers may wonder if this is an example of trust, rather than simple optimization. Note that the value of paying the ransom is an expected value: [(Value of recovered systems x probability of recovery) ­­– Cost of payment = Expected Value of Payment] The probability is purely a function of trust. If there is no trust, then the probability is zero, and there is no benefit to paying.
  8. C. Conte, “Nordstrom customer service tales are not just legend” Jacksonville Business Journal, Sept. 7, 2012, Food and Lifestyle section.
  9. C. Cutter, “Apple takes top honors,” The Wall Street Journal, December 3, 2019. P. R1
  10. J. Stempel “Apple to pay up to $500 million to settle US lawsuit over slow iPhones, Reuters, March 2, 2020, 10:59am. In re Apple Inc. Device Performance Litigation, U. S. District Court, N. District of California, No. 18-md-02827. See also \-down-older-phones reporting a French decision, based on Apple not warning customers.
  11. V.Valet, “The World’s Most Reputable Companies,” Forbes, March 7, 2019
  12. Estimate based on inference in Morning Consult, “Most Trusted Brands 2020”, survey, p. 15.
  13. B. Shapiro, “What the Hell is ‘Market Oriented?’” Harvard Business Review, November 1988.
  14. D. Yaniv, “Trust the Process: a new scientific outlook of psychodramic spontaneity training” Frontiers in Phychology, Nov. 14, 2018. Francisco Varela cited.
  15.  Christopher Chabris and Daniel Simons in their Invisible Gorilla experiment. See gorilla for a rendition of this experiment.
  16. M. Connors and P. Hamilton, A Cognitive Account of Belief: A Tentative Road Map, Frontiers in Psychology, 2014, 5: 1588, p. 1599.
  17. Detroit Free Press, October 27, 2019, p. B1. Regarding cover-up of water contamination; also Morning Consult suvey, Ibid.
  18. R.J. Heuer, Jr. Psychology of Intelligence Analysis, Center for the Study of Intelligence, Central Intelligence Agency, 1999, p. 9
  19. R. Docters, Contextual Pricing, (McGraw-Hill, 2012), p. 8
  20. D. Oakley, “The cook, the fly, the neuroscientist and the food lover,” The MRC London Institute of Medical Sciences, December 20, 2016.
  21. R. Docters “Price is a “language” to customers”, Journal of Business Strategy, Vol. 24 No. 3, pp. 31-35.
  22. H. Gieskes, Lecture at Yale School of Management, November 2017.
  23. Aveda Salon, TimeWarner Center, New York, NY September 23, 2019.

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