Customer Investor Trust

Quick Summary: Customers invest in a company by making purchases based on trust which offsets risk.


Any investment in a company is predicated on the belief that the investment will generate a favorable return in the future.  That return will vary from one investor category to another.  Since no one can know the future, the decision to invest is a gamble.  To tip the odds in your favor, a relationship based on trust must be established between the company and each potential investor.  This is especially true for customers who, by working with you, have decided not to work with others and may be risking their own business or personal reputation.

There is a fundamental requirement that is common to all four investor categories (Employees, Business Partners, Customers, and Financial Investors) that must be met before they will make an investment in the company.  It is trust.  Trust is a feeling that is developed through person-to-person interactions.  Past experience and reputation often allow a trusted relationship to be established prior to any demonstrable activities that would lead to trust.  Trust is fragile and can easily be lost, especially in the early stages of a relationship.

As discussed in the “Customer Investors Introduction” article, in this series, company-customer relationships evolve long before a customer begins to view themselves as an investor in the company that is focused on helping the company being successful.  To begin this evolutionary cycle, a company must make commitments to a prospect and then meet those commitments to continue to build the commit-perform-trust building cycle.  Also, as discussed in the introduction article, relationships are between individuals.  Over time, the individual, positive feelings that are developed through direct interaction can be extended through reputation to the entire organization.  Terms like “trusted supplier” or “trusted partner” can eventually emanate throughout an organization.  In building trust, the actions must remove a customer’s fear of doing business with the company.  People within the company simply will not take a chance with a new supplier in an area that is critical to their company’s core business.  Risk tolerance will start out very low.  One must appeal to feelings and not just facts or reason to overcome this natural and warranted reluctance.  Relying on features and benefits, price, and other facts will not be enough to reduce a customer’s fear.

Before trust can be built, it is important to minimize, or totally eliminate, the perceived downside that could occur in selecting the company’s product or service.  The consequences of failure or of being viewed as the wrong choice in hindsight need to be addressed upfront.  Customers will be thinking about these issues but will typically not speak about them.  Often, they are manifested by delays in the decisions or overly stringent contract requirements and guarantees.   Creatively developing a method of transferring risk away from the customer to you, their supplier, will allow the customer to focus on what will go right instead of what could do wrong.  It may sound obvious or even trite but being open and honest about understanding potential fears that the customer may have and asking them to brainstorm on what you, jointly can do to eliminate them can show a company (really a person) that you are focused on them as an investor, and their investment will provide them with a positive return.


Article Number : 2.040503   

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