I’ve finally dribbled through “Buffet: The Marketing of an American Capitalist”, and ironically, the most thought-altering thing I’ve learned has not been directly about investing. It was the value proposition in trust.
Warren Buffet made a mistake investing in a well known firm, Salomon Partners. The firm had had a great run, becoming the one of the exclusive Treasury trading partners and competing with the likes of Meryl Lynch, when one bad apple spoiled the barrel. The trader in charge of bidding on Treasury bonds successfully cornered the market by making illegal bids, some in the names of Salomon’s customers. John Gutfriend, the much feared CEO at the time, had neglected to disclose the illegal activity to the Fed.
Once discovered, the case blew up, and as trust in Salomon disappeared down a sink hole, and customers dried up. Investment banking is an industry built almost entirely in trust. Companies trusted Salomon to pull together investors and provide capital. Clients trusted Salomon to obtain the securities they desired at the best price. Salomon would have gone under right away if Warren Buffet hadn’t stepped in to infuse the firm with what it had lost: Trust.
Trust is stronger than faith: It’s built from experience. Trust is knowing your doubles partner will hit that perfect serve in the lefthand corner every time. Trust is knowing the phonecall to your mom or dad will always reveal the answer. Trust is opening the fridge knowing your roommate didn’t finish off your beer. Trust in China is knowing those Korean noodles are clean and safe to eat. Trust is that brilliant coworker that always solves the problem.
A brand is an insurance seal on your favorite product, the Brooks Brother’s shirts that don’t shrink, the bottle of Tide that never fades your sundresses, the Teflon coated pans that eggs fall smoothly off of. In the Four Ps of marketing, branding falls both in product and promotion. Tony the Tiger promised the same sugary goodness every morning, in the same way Batman promised the same daring rescue at the end of each 30 minutes – with commercials – program.
Building trust for a brand means can mean providing awesome customer service, every time, like Zappos. It can be a slow process, taking years like the bakery next door. Trust can come from a base of brand advocates, as Salesforce used at nationwide conferences. You can build off trust in another brand, as Facebook built its user base off college brands. A brand can also be inextricably tied to a trust in a single person, as Apple was with Jobs or Berkshire is with Buffet.
For social media, your followers trust your personal brand to deliver similar content, in a consistent voice. It’s said to gain followers 90% of your tweets should not defer from your “brand”. Different networks offer consistent types of content: Pinterest has beautiful travel photos and recipes; Instagram offers angles on views you missed and styles that will make you cooler; Spotify always has different bands and playlists with artists you forgot about. Even Google Plus has found a following with gamers and other subsets that want to talk all day, every day about some obscure topic.
So what’s the value of trust? Procter and Gamble once calculated a lifelong Kleenex customer as being worth $600. Today P&G deals with Tide thieves who retail stolen bottles for half the price, so coveted is the brand that promises to make Kmart jumpers smell as special as Crewcuts. Trust lost can destroy a politician’s career, a marriage, a brokerage firm, an imported brand, a livestock industry.
Maybe the true value of trust can be measured in time: the seconds, minutes, hours, days, years, decades you spent experiencing the same mouthfuls of frosted flakes, loads of laundry, fried eggs, crisp shirts and restful nights knowing your money was safe in the bank.