Carmakers that need to recall defective vehicles lose credibility. Multinational banks busted for bribing foreign officials lose credibility. And brand name designers busted for running sweatshops in third world countries lose credibility. People thinking of buying that product or using that service prefer to look elsewhere.
There is nothing more damaging to a company than loss of credibility. It’s more than a loss of face from bad press, it also loss of valuable market share. For large companies, it could mean millions in loss. For small to medium companies, it could mean struggling to stay in business. And for startups, it’s often the kiss of death.
A Customer’s Perspective
Think about credibility from a personal point of view as a customer. How willing are you to sign up for a business seminar known for offering antiquated advice? How willing are you to join a mega church if the charismatic preacher was recently on the news apologizing for philandering? How willing are you to buy from a salesman whose company has a national reputation for overpromising and underdelivering?
So, if establishing and maintaining credibility is almost synonymous with business success, how does your business build credibility?
3 Ways to Build Credibility
Credibility has to be earned. It’s never given freely by a cynical public raised on a diet of media-fed scandals. It also takes patience, consistency, and time. Three ways to develop credibility are through demonstrated expertise, effective communication, and excellent reputation management.
1. Demonstrated Expertise
For a company to be credible, reliable, trustworthy, it has to deliver excellence over and over again and never rest on its laurels.
There is a reason why people think of BMW cars when ready to buy luxury cars. BMW consistently develops some of the best engineered cars in the world.
There is a reason why people think of Sony electronics when shopping for a television or speaker system. Sony spent $4.78 billion in R&D costs in 2014 for a sixth year in a row because it is always looking to improve its product line. Top executives are so conscientious that they even turned in their bonuses this fiscal year.
This expertise was not developed overnight. It came by putting systems in place–from total quality management to hiring highly educated and skilled employees to ensuring first-rate factory standards.
Time, money, thought and effort goes into developing high levels of trust in a highly competitive consumer market.
How does a company create a culture based on expertise?
- Expertise is created by developing knowledge through research and development.
- Expertise is created through professionalism in every aspect of business.
- Expertise is created doing the right things at the right time for the right reasons.
2. Effective Communication
Expertise alone is not enough. It has to be communicated to be effective. There are two elements to the communication piece: marketing and technology.
With so many excellent car manufacturers, from Mercedes to Tesla Motors, it’s actually impossible to prove that BMW makes better cars than anyone else. However, BMW’s marketing clearly communicates that they make “the ultimate driving machine.” Since they backup this hyperbole with highly attractive cars and superb engineering, it’s considered a credible assertion.
The better a company’s use of telecommunications, the more it will be able to communicate. How likely are you to do business whose technology is buggy? Do you frequent websites that trigger your antivirus alert for malware? Do you often do business with a telephone line that intermittently cuts out? While technology, for the most part, is an invisible side of communication, consumers notice it when it’s either inadequate or unreliable. Many IT reviews for data providers suggest that to stay ahead of the curve, businesses need a consistent combination of voice, data, networking, cloud, and security services.
3. Excellent Reputation Management
Reputation can be best managed by staying honest and transparent.
Reputation management, then, is all about inspiring trust, talking openly about values, and showing a willingness to take full responsibilities for blunders. Ironically, admitting to blunders can actually improved reputation. When Warren Buffett publicly admitted that his investment in Tesco was “a huge mistake” it actually improved his reputation as an honest and transparent investor.
What irks the general public are not mistakes per se, but not admitting to errors and a reluctance to fix them.
Credibility determines business success. The word itself is derived from ‘credo’ in Latin, which means, ‘I believe.’ If people do not believe in the quality of your products and services, they will not buy from you. Eventually, when you lose enough sales, you go out of business–overheads exceed revenue. Conversely, if a company builds enough credibility, people will buy that product or service for years without a second thought.