The value of trust in the digital age

More than sentiment, trust has economic value, which is especially relevant in today’s digital age. At the macro level, trust enables new disruptive products, services and strategic moves; at the micro level, it smooths the way for smaller transactions at scale among a vastly greater number of buyers and sellers who have no prior relationship, via the digital economy.

Trust is particularly valuable for companies in Asia given that the region now accounts for nearly 60 percent of the world’s online retail sales. E-commerce revenues grew by 40 to 50 percent in Vietnam, Indonesia and India in 2020, outpacing most of the world. Today, the growing youth population in Indonesia has rapidly adopted new technologies and become a sizable potential customer base for the digital economy, with revenue in Indonesia’s e-commerce market projected to reach US$52.93 billion in 2023.

Trust pays off for businesses. The Boston Consulting Group (BCG) report “What AI Reveals About Trust in the World’s Largest Companies” found that:

• The top 100 most trusted companies each year achieved above-average total shareholder return, faster recovery during the height of the pandemic and better post-crisis performance.
• The 100 most trusted companies generated 2.5 times as much value as comparable businesses at year-end 2021. They also had 47 percent higher price-to-earnings multiples.

These links between trust and value highlight the need to take trust seriously.

In addition to the monetary value outlined above, trust is also becoming increasingly important to a company's success in recruiting talent, to its net promoter score, to its environmental, social and governance (ESG) performance as well as to its very license to operate.

According to the 2022 Edelman Trust Barometer Special Reports, over six-in-10 people will buy or advocate for a brand that shares their beliefs and values, while nearly seven-in-10 employees, on average, say that having a societal impact is a strong determinant of whether they will accept or reject a job.

Moreover, the 2023 Edelman Trust Barometer showed that people want more business engagement in addressing societal issues like climate change, economic inequality and workforce reskilling.

Defining and measuring trust

The elements that generate, sustain and enhance trust among stakeholders are many and complex. BCG’s revolutionary Trust Index is able to distill them in order to understand their interrelationships and link them to business performance.

Utilizing artificial intelligence and natural language processing to scour the internet for articles and posts on each company, BCG can analyze the trust sentiment behind each mention to gauge whether the perception is positive, neutral or negative.

Keywords are categorized according to four dimensions of trust:

• Competence: Whether the company can effectively accomplish a specific task at hand, or deliver on its promise to stakeholders.
• Fairness: How equitable and empathetic the company is in delivering on its promise.
• Transparency: How open and unambiguous the company’s decision-making and actions are.
• Resilience: How effectively the company avoids or recovers from challenges and crises.

We have used our Trust Index to generate perceived trustworthiness scores for more than 1,000 of the world’s largest publicly traded companies (those with at least US$20 billion in market capitalization) from 2018 to 2021. What we found confirmed what we have known all along – that trust is never fixed or guaranteed.

It is dynamic, constantly in motion and dependent on the words and actions of a company. This makes it all the more important for businesses to continuously nurture it.

During the four-year period, year-to-year churn among members of the Top 100 list was at least 50 percent and as high as 64 percent (from 2020 to 2021, during the height of the pandemic). Turnover among companies at the bottom of the Index was even greater, peaking at 70 percent during the 2020–2021 period. Such volatility reflects the dynamic nature of trust and underscores the importance of tracking it closely.

With trust being so volatile and valuable, having a tool to effectively measure it can be extremely useful for businesses: both proactively, for informing strategic decisions and priorities; and retrospectively, in helping leaders understand how their prior decisions have impacted stakeholder perceptions.

How to strengthen trustworthiness

Trust is difficult to build, but easy to lose. So businesses should never be complacent about their own trustworthiness, needing to understand that to establish or enhance trust, proactive measures must be taken. We recommend that companies:  

• Think beyond the boundaries of your company. Expand your notion of your business to encompass a broader “business as a system” that considers all diverse external stakeholders. 
• Identify your promise to stakeholders. What promises are you making to different stakeholders? Is the company living up to them?
• Monitor your ability to deliver on your promises. Decode trust by developing insights into how your stakeholders perceive you and what characteristics influence your perceived trustworthiness.
• Set a direction. Articulate a clear vision of how you want to be perceived, vis-à-vis your explicit promise, and devise a strategy to get there – one that makes trust an integral part of how you manage your business as a system.
• Launch surgical interventions. Design orchestrated moves across three categories: trust destroyers, trust foundations and trust enhancers.
• Create an adaptive strategy. Recognize that trust is dynamic. How are stakeholders’ expectations shifting? What unmet stakeholder expectations are gaining prominence? Track external forces and anticipate trust’s defining moments. Measure, learn and adapt accordingly. 

Taking action to improve your company’s trust position will be a critical investment, given its significant business value in the post-pandemic digital age. Business leaders should prioritize trust in strategic considerations, utilize effective trust measurement tools and build trust by delivering on their promises to stakeholders.  

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The writer is managing director and partner at Boston Consulting Group.