The RBS debacle: A Case Study in Big Trust (and a reminder about Small Business Competitiveness)

Trust, and the Banks
So here’s the thing about Trust; it relies on a combination of Intent, and Capability. You rely on someone not only being capable of delivering, but also having intent to do so… “Could you tell me the time Sir?" “Yes. I could."

But how do we behave when the trust equation isn’t complete? If forced to choose between intent and capability, which way do we lean?

Sorry to say, its generally towards capability. For example, take two recently troubled UK banks: Barclays and RBS.

  • Barclays were proven to have applied a lack of ethics and a malevolent intent with their longstanding role in the LIBOR rigging scandal.
  • RBS last year, and again this week, have demonstrated a fundamental lack of capability with IT failures hitting their ATM and Point of Sale networks.

But after all the negative PR, and their respective regulatory beatings, only one of them suffered any material exodus of customers: RBS. Why? Because their failures directly hit the day to day needs of on-the-ground customers. That’s Capability.

And that’s why we will often choose big corporations over (arguably) more ethical or well-intended smaller competitors; at the end of the day we want the job done, and we tend to perceive bigger businesses as having a greater weight of capability behind them. This is particularly so when the product/service is complex or non-homogenous, or is especially critical or valuable to us (e.g. day to day access to our money).

Why This is Bad News for Small Businesses
When push comes to shove, it tends to be Capability that we prioritise over Intent.

This is bad news for small businesses as their proposition is very often all about being closer to their customers, more locally minded, more customer-empathetic… and this sounds an awful lot like this Intent thing to me.

So, how do you compete if your customers don’t (just) value your good intentions?

  1. Don’t get me wrong. This Intent aspect is still important; you still have to demonstrate shared values and empathy with each customer.
  2. And you also still need to apply all the usual small business differentiators around flexibility, locality, low cost base… (see excellent article ‘Why Small Is Better Than Big’ by Jonah Berger covering this in more detail).
  3. But crucially, you have to big-up this whole Capability side. This means reminding your customers:
  • That you can do the job competently and very capably,
  • That you have the experience and flexibility to deal with any unexpected turns along the way,
  • That despite your lean size you have scalability and access to a wider network should the need arise for specialist expertise or more on-the-ground resources. 

Its Not (Just) What You Say…
And of course the more credence you can put to these claims the better. For example:

  • Evidence your experience of tackling similar or parallel customer needs, with case studies or customer testimonials.
  • Offering a no-quibbles guarantee will often provide wavering customers with an extra bit of confidence.
  • Find ways to leverage the scale of others – for example by linking yourself to a larger organisation, professional or trade body or guild. This adds weight and scale, and brings (or implies) the reassurance of a wider set of reputational standards, and a higher authority in the event of a dispute.
  • Don’t fall behind on your product innovation, and skills and knowledge. It’s surprising how many small and micro businesses in particular fail to keep up with progress in technology and techniques, and so end up being out of touch with their field and their customers.
  • And of course it’s all about delivery (see ‘Who’s ‘Getting’ Your Customers?‘), without which your strategy will be very short-lived.

At the end of the day, I do believe that people and businesses like dealing with businesses that have personality, local values and similar ethics. However, we small business owners cannot rely on this as the sole basis of our marketing strategies, and certainly cannot expect our customers to suffer worse service, or higher prices, simply for the privilege.

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