The Sharing Economy: What’s Trust Got To Do With It?

By Max Pepe, CMO, Ogury 06 Nov 2019

Ogury Airbnb MAD//Fest London.

The economic thrust of the internet has evolved significantly in the last two decades. We’ve moved from the information economy, to the connection economy, to the sharing economy of today.

The sharing economy is an economic system that allows for the on-demand, peer-to-peer supply of products and services. From shopping and entertainment, to finance and transport, consumers are empowered by choice and convenience. Uber, AirBnB, and TaskRabbit act as poster-boy examples. 

Mobile, AI and big data play a part in the success of these disruptive organisations. But their ubiquitous adoption, and the back-bone of the sharing economy, is more fundamentally based on trust.

Old wisdom prevails: no trust, No business
The importance of trust in business is nothing new, of course. Trust has always been the cornerstone of any commercial relationship.

When the world of business was mainly physical, trust could be gained by seeing the business, touching the products, talking to the vendor. Organisations had more tangible control over the consumer experience, and direct the perception of trust. It was all that bit more tangible.

When banks first established themselves as the image of reliable, trustworthy institutions, they did so by constructing grand, impressive buildings in the middle of towns and cities. The very solidity of their structure was an ideal metaphor for their access to capital, as well as their reliability and endurance through generations of customers. 

However, in a complex mobile-first digital world, where advanced technology is part of everyday life, trust is harder to establish, and even more important.

Trust in a mobile-first digital world
Consumers today are obligated to place blind faith in the way companies use algorithms to deliver products and services. They can’t be expected to master all the deep technology on their devices, and business transactions are generally faceless. Consumers need to trust that organisations - and their technology - will do what they say and say what they do. 

Furthermore, with ratings and review sites for everything, online communities, word of mouth at scale and publicly transparent two-way dialogue between organisations and consumers; the power has shifted. Consumers are now in the driver's seat. They can direct, define, promote (or retract) the perception of trust - at scale. 

Organisations leading the way in the sharing economy understand this. They know that trust is the most important currency today. They build trust-mechanics into their products, their operations, their technology and their marketing.  

The wake of a trusted digital economy
Twenty years ago, it would have seemed unthinkable to stay in the home of a complete stranger instead of a hotel. Yet today, more than two million people stay in an Airbnb property every night

Similarly, a decade or two ago it would have seemed surreal to shop, bank, or hail a cab just by tapping a screen. However, mobile was responsible for over $1 trillion worth of retail sales in the US alone in 2018, two billion people now use apps for their personal banking, and 14 million Ubers are hailed every single day

The ultimate success of Uber and Airbnb is not based just on clever tech, lots of data, or consumer convenience. It’s more fundamentally based on trust. Consumers can rate and review drivers and hosts transparently. They feel safe getting into a cab and staying in a stranger’s home. And have faith that they will be charged a fair price for the journey or the stay.

Similarly for banking. If consumers don’t trust their money is safe as they transact from a mobile device, they wouldn’t do it, no matter how convenient it might be.

The digital economy is thriving because consumers understand, trust and value it. And building trust is not just the right thing to do, it’s also good for business. 95% of customers are more likely to be loyal to a company they trust, and 92% are more likely to purchase additional products and services from trusted businesses. So it makes very good business sense to put trust at the core of any business. 

Digital marketing is yet to catch up
In the wake of a trusted digital economy, digital marketing is trailing far behind. 

Its foundations have been built on opaque, deceptive business practices, and questionable data collection and usage. Marketers have been forced to rely on non-consented ‘toxic’ data for years, and inadvertently practice rogue marketing. And this is having a negative impact on consumers; 90% say that targeted mobile marketing messages are annoying, and 54% don’t believe that companies have their best interests in mind. Not the best way to build trust! Clever marketers know this, and are already responding. 

A necessary, vital transformation in digital marketing is occurring. In Part 2 of this blog, I’ll explore the far-reaching implications for both organisations and users.

 The rise of a trusted digital economy
There are few inconveniences in life that haven’t been addressed by modern technology.

And much of that is down to the inexorable, irresistible rise of the mobile phone.

As consumers, we are often spoilt for choice by our phones. Taxis, food delivery, banking, and entertainment (to name a few) are rarely more than a few taps of a screen away.

The disruptive companies behind these services have invested millions of dollars and countless developer hours into crafting the slick, frictionless mobile experiences we enjoy today.

But their success can only partially be put down to clever tech, mountains of data, and top engineers.

The bedrock foundation of their prosperity is harnessing the power of user trust.

An economy fuelled by trust
Twenty years ago, you might have struggled to find many people who would happily choose to stay in the home of a complete stranger over a hotel. Similarly, how many of us would have felt comfortable paying or receiving our hard earned money through a mobile phone?

Yet today, as mobile banking customers, we’re confident doing just that. Next year, the number of people using their phones for banking is predicted to exceed two billion

As holidaymakers, we are happy to spend our precious vacation days in the houses of people we’ve never met. There are now on average more than two million people staying in an Airbnb property every night

So what’s changed? 

Convenience is clearly a factor. But convenience alone cannot explain this level of mainstream user adoption. Never mind our willingness to hand over bank details to companies that are often barely a decade old. 

The difference is confidence born of trust. We have been empowered by the fact that these providers not only promise a great service. They deliver on it too. 

Through our devices, we can view and evaluate our choices at our leisure. Service providers are allocated star ratings and profiles for us to consider. And should something go wrong, refunds, complaints, and other disputes are just as straightforward to handle.

Uncertainty over where we choose to spend our time and money has been all but removed. 

And the big winners from this approach are the organisations that have put consumer trust front and centre of their business strategy.

An old principle re-imagined for the digital age
Today, consumers have come to expect transparency from the organisations they spend their time and money with. 

95% of consumers are more likely to be loyal to a company that they trust. And 92% are likely to buy more products and services from businesses that they consider trustworthy.

The importance of trust is nothing new, of course. Trust has been the cornerstone of commerce since its creation. 

When banks first established themselves as the image of reliable, trustworthy institutions, they did so by constructing grand, impressive buildings in the middle of towns and cities. 

The very solidity of their structure was an ideal metaphor not only for their access to capital, but for their reliability and endurance through generations of customers. 

But in the digital age, many online services often lack a human contact point in the way that ‘traditional’ businesses used to rely on. In a time where a physical, personal touch is often curtailed in favour of convenience and speed, the need for implicit trust is even more pressing.

And what’s more, consumers increasingly look to each other for validation of their choices online.

Word of mouth, at scale
There are ratings and review sites for everything today. A culture of ‘word of mouth at scale’ has allowed anyone with a mobile or keyboard to become a reviewer. 

TripAdvisor now hosts over 456m people every month, all looking to either plan or rate their travel experiences. Meanwhile, speculation around a $6bn acquisition of crowd-sourced review forum Yelp by Facebook underlines just how seriously consumer opinions are being taken.

And this is a trend that directly impacts e-commerce too. Looking to sell something on Amazon? Just one positive review from a happy customer boosts your chances of a sale by 65%.

Under this intense spotlight of user reviews and opinions, there are few places for bad businesses to hide.

Trust has become the most valuable currency in the digital economy. 

But unfortunately, not every corner of this economy has yet been brought up to speed.

Digital marketing - a long road ahead
In the wake of this new age of trust and transparency, digital marketing is trailing far behind.

Its foundations have been built on opaque, deceptive business practices, and questionable consent from users. As a result, marketers have more often than not been left with no choice but to rely on bad or ‘toxic data’, inevitably leading to rogue marketing. 

A necessary, vital transformation is coming. And in our next blog, we’ll explore its far-reaching implications for both organisations and users.

Max will be speaking on the main stage at MAD//Fest on 13 Nov at 1210 alongside leaders from Starling Bank, Tenzing + Burger King. Click here for the agenda.

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