Can blockchain restore consumer trust in brands?
For years, brands have built up trust -- or at least the perception of trust -- in the minds of their audiences through advertising, celebrity sponsorships, influencer marketing, and general brand awareness efforts. The thinking went, "If our customers see us a lot, in familiar places, and we are associated with people they already like, they will trust us and we will stand to benefit."
That worked for a long time. Today, however, trust is in a global freefall. "[T]rust is in crisis around the world. The general population’s trust in all four key institutions — business, government, NGOs, and media — has declined broadly, a phenomenon not reported since Edelman began tracking trust among this segment in 2012," per the 2017 Edelman Trust Barometer report.
As Bernadette Jiwa eloquently puts it, "Trust is also the foundation of every business. A business is not merely an organisation that creates value or exchanges goods and services for money. It is the promises we make to our customers in return for their trust.… The first and last goal of every business is to make promises and then to keep them."
Yet, time and time again, basic promises have been broken by the large institutions in our lives. There are almost too many to mention, but just a few include the promises of:
- "We will safeguard your money" — See the 2008 financial crisis.
- "We will safeguard your personal data" — See the hacks of Target, Yahoo, Anthem, Premera Blue Cross, and many more.
- "We will act in your best interest" — See Wells Fargo.
The Huffington Post once rounded up a list of company promises that went unfulfilled. Bottom line: Consumers are tired of trusting simply because some big brand or advertising agency tells them that they should.
So, what is a brand that lives its values to do? Blockchain technology, believe it or not, may play a role in restoring that trust.
Blockchain as guarantor of brand values
Chances are you have heard of bitcoin. Less likely, but possible, you’ve heard of blockchain technology, which, along with undergirding bitcoin, provides a censorship-proof, distributed, immutable set of software rules that govern the operation of the bitcoin network.
This technology is great for transferring value without an intermediary. It’s also open to anyone and can be inspected and verified by anyone. Anyone can see what code is written, how it is to be executed, and the fact that a transaction took place.
At its core, blockchain serves the function of "trusted intermediary" without the overhead, friction, or time associated with an actual company or organization.
The possible implementations and implications of blockchain technology are vast and immense. Hundreds of use cases in multiple industries are emerging and announcements are made almost daily. Beyond use cases in financial services, blockchain is being applied in innovative ways across industries: The DTCC plans to use blockchain to settle some of its $11 trillion in derivatives trades, federal agents are exploring the ability to track trades and people across borders using blockchain, Cisco, Bosch, and BNY are forming an IOT blockchain consortium, and the FDA is looking at blockchain to improve public health.
There are implications for marketers and brand managers, too. Blockchain technology doesn't just serve as a trusted intermediary in transferring value from one person to another. It can do the same in transferring brand values from an organization to a customer by encoding brand values into a corporate governance blockchain.
Imagine, for example, that you want to be like Nordstrom’s with a lenient return policy (at least until they changed it recently) and set up a brand rule that says, "Anytime a customer returns an item, we give them their money back, no questions asked." In a blockchain, you can do that and no one can override it. Alternatively, you could encode, "If a customer has been with us for more than one year, give them a full refund. Otherwise, issue a partial refund."
Let’s make it more concrete.
L.L. Bean has a core values statement that says, "Sell good merchandise at a reasonable profit, treat your customers like human beings, and they will always come back for more."
What if they hard-coded a rule into a corporate governance blockchain that said reasonable profit is 15% to 20%? Then, everyone would know the margins, including competition. But the benefits would outweigh that risk, because customers would always feel like they were being treated fairly. And that "always feel" is the essence of good branding.
It’s not about the specific policy or core values itself: It’s about the transparency, the verifiability, and the feeling that a consumer is being treated fairly.
Encoding brand values into a blockchain can provide brands with a customer-verifiable way to ensure that experiences are consistent, open, and transparent.
It removes human fallibility and the temptation to "bend the rules." A company that is so committed to a certain set of behaviors that it is willing to immutably code them into software will yield a competitive advantage.
I’ll be the first to admit that this change isn’t happening tomorrow or next week, but in an age where perception of fairness and trust are at a low, blockchain technology represents a new opportunity for companies to demonstrate that they can be trusted.
And that trust won't be based on words, but on math. No matter your opinion, 2+2 will always equal 4.
Jeremy Epstein, CEO of Never Stop Marketing, has 20 years of international marketing experience in helping to bring innovative technologies into the mainstream. Most recently, Jeremy was VP, Marketing at Sprinklr which grew from a $20 million valuation and 30 people to $1.3 billion valuation and 900 people in 3 years. Jeremy currently works with some of the leading and most innovative companies in the blockchain/decentralization space including OB1 and OpenBazaar. In December of 2016, he edited and published a collaborative eBook with 33 of the top influencers and thought-leaders called “Blockchains in the Mainstream: When Will Everyone Else Know?”