Trust becoming vital to surviving downturn

Coconuts fall fast

Findings demonstrate trust becoming vital to surviving downturn

BNI New Zealand – which has more than 2,300 small to medium business members throughout New Zealand – has noticed a close to 40 per cent increase in the number of business referrals being passed between members, a strong indicator that trust is becoming a vital factor as the downturn deepens.

National Director Graham Southwell says that a quote by Indian policy maker, Montek Ahluwalia (which was recently used to sum up the global financial crisis) goes to the heart of describing the new trend when he said: ‘Confidence grows at the rate a coconut tree grows and falls at the rate a coconut falls’.

“While the numbers still have to be finalised as more chapters update their statistics, a total of 3,424 business referrals were passed in January 2009 compared to 2,340 last year. In December 2008, a total of 3,735 referrals were passed compared to 2,819 in 2007. Clearly people are staying with the familiar and trusting what they can figuratively touch and feel, and that’s their networks.”

He said it was clear that a loss of trust – by consumers who don’t trust the financial sector and the financial sector which doesn’t trust business after being let down by some companies that were supposed to be solid – is one of the main drivers behind the current downturn, and small to medium companies looking to survive should take note of the trend towards a more people, trust and relationship focussed way of doing business.

“Even factoring in the growth of our organisation, this represents an extraordinary increase in the referrals based way of doing business.

“The number of visitors to our chapters – each chapter is composed of between 20 and 40 business owners who meet weekly to pass referrals to each other – is up by more than 16 per cent; another strong suggestion that business people are realising the importance of going back to the basic formula of building trusting relationships with their customers and networks.

“While people feel like they don’t know who to trust, that doesn’t mean they aren’t looking for people they can trust; they’re simply relying more than ever on recommendations from the people – friends, family and colleagues – they already know and trust.”

Mr Southwell says BNI is advising members to focus more on customer relationships and to find cheaper ways of marketing themselves, including networking and making better use of the internet.

He had five tips for companies who want to make the most of the growing trend:

Market locally. Neighbourhood marketing saves on expenses and people are more likely to trust their neighbours.

Develop a referral network. People who come recommended automatically enjoy higher trust and better conversion rates.

Establish credibility. Use third person endorsements from clients more frequently.

Increase visibility. When decisions to buy are few and far between, the business needs to make sure it is known far and wide.

Build strong relationships. The relationship between a customer and a business is like a marriage. It requires trust, work and regular communication.

“If SME businesses – and even the corporate sector – want to survive in this environment they have to go back to building relationships based on trust. If people don’t trust you (and it’s now harder than ever), they won’t give you their hard earned money.

ENDS

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