June 6, 2008

Calculating Trust

Math was never my favorite subject, but here's one equation that I find fascinating: The formula for trust.

Creating trust is an important part of selling. If we understand the components of trust, we can work that equation so that it comes out in our favor.

Most people prefer to buy from people they trust.

That sounds like common sense. Almost nobody would dispute it. But it leaves an important issue unresolved:

What is trust? And what are the behaviors that will contribute most directly to the creation of trust?

Here's a simple equation that expresses the essence of trust:

*****Trust = Rapport x Credibility / Risk*****

Rapport is based on a gut-level reaction. Do I like this person? Do I enjoy talking to him or her? Am I comfortable with this person's style?

The personal reactions that are the basis of rapport vary widely. A person who is very pragmatic and bottom-line oriented will become impatient with someone who is long-winded and detail oriented. Another person will be alienated by habitual tardiness, while someone else won't care. In general, it's safe to say that being respectful, behaving professionally, demonstrating sincere interest in the other person, not taking yourself too seriously, and being reliably truthful are all behaviors that consistently build rapport.

Credibility tends to be based on cognitive matters. Does this person seem to be an expert in his or her own field? Do they understand my business? Do they have the insights into my business that will help me achieve my goals?

To demonstrate your credibility, include case studies, references, testimonials, project plans, timelines, brief resumes of key team members, and similar forms of proof. The customer is looking for evidence that you know what you're talking about.

And then there's risk. Customers always perceive risk. Will I waste money? Will I waste time? Can the vendor really do what they claim? Are they too small to deliver? Too large to care about our business? Is their technology too old? Is their approach too new?

The best way to minimize risk is to offer some kind of guarantee. A service level agreement, a risk-sharing plan, a free trial period--these are all strategies for minimizing risk. You can't always do that, though. The other approach that will work is to provide good references to similar kinds of customers. Detailed case studies are also effective in overcoming the perception of risk.

Plus, you need to recognize that the sense of risk often comes from anxiety. By addressing the customer's business concerns and defining clear outcomes, you minimize concern about wasting money or time.

Finally, you can overcome risk by showing a big payoff from taking the chance. If the potential reward is big enough, even conservative decision makers will move forward. But the payoff has to be believable, and it has to deliver in an area that matters to the customer.

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