How to build trust in a low trust country like India?
I am Aarihant Aaryan! Welcome to the Iron Sharpen Iron newsletter,
Every week I share my homework from my startup journey, learn about human behavior, and sometimes decode industries and business models for fun,
I can’t control my curiosity :)
In 2020 August, those were the early days of my being a founder, because I wanted to become a better operator, I started binge-watching all the startup-related content and founders speaking on my podcast
That’s when I heard Kunal Shah from CRED say this,
All low entities that operate in a low trust, will eventually become less prosperous.
India is a low-trust country, it’s because of the heavy diversity we have, that it’s challenging for us to trust.
we find it very easy to trust someone who has common traits but we find it massively difficult to trust someone who doesn’t have common traits.
Adding to that, he shared a bunch of consumer behaviors:
We check our fuel tank before we hand over our vehicle to the driver.
We calculate the entire bill in a restaurant before paying the bill.
Only allow the fuel guy to fill petrol in our vehicles after we see the number 0 on the fuel meter.
If something is missing, doubt our workers or maids immediately.
Counting cash after we withdraw money from the ATM.
Since then the topic of “Trust” has been extremely important to me, I have read a bunch of books, and articles, heard podcasts, and tried many experiments on the subject of trust ( I’ll share a few experiments today)
Today, I want to share how to build trust in a country like India, because if you fail to do that - you never build an institution in India.
What Trust does do to your business in India?
There are 3 important components in a business irrespective of its category or medium
Acquisition: How will you acquire your users or how will you sell your products or services to users? Medium of user acquisition could be ads, referrals, growth, viral marketing
Retention: Retention is a subset of the usage factor of the product or consumer behavior - if it is a high-frequency use case, retention is higher
Monetization: It means how much consumers are willing to pay for what they consume or if they intend to consume
When you don’t solve for trust when you are a newer brand your cost of acquiring a customer is going to be more expensive than the market or your category's average, and it will take years of delivering excellent service to get that done
Your monetization conversions will look a lot worse, worse than the market average → many might want your offerings, but they will be hesitant to take the bet.
Even if you have a great value proposition but your business doesn’t solve for trust, consumers will perceive you as a scam, the worst part is that you will have close to zero referrals or sales that are driven by word of mouth
Ways to build “Trust” in India:
Charity based approach:
When you position your business as if it is adding net value to society, people will start trusting your brand. You have to signal that the company and its promoters’ intent is to distribute their wealth to society. Then people will start recommending your brand to others as well.
A great example is TATA’s, consumers perceive tata = charity. you will rarely see someone call the “TATA brand a scam”
Today mostly all TATA businesses are 0 customer acquisition cost businesses, they are able to sell salt to air travel services
I recently tried an experiment on Facebook ads, I tried to sell a product there my cost per lead was 50rs/-, later I used the same ad but added a Ratan Tata picture and Tata logo my cost per lead was 8 to 10x less
A counterintuitive thought I have is Using pictures of people like Ratan Tata, for your business ads will make you more money than using influencers and celebrity pictures, It’s because using influencers and celebrity pictures is no longer a differentiator, it is very less likely to solve trust
On the other hand picture of Ratan Tata will work very well because their business is centered around charity, promoters are known for their charity toward society
Do ads or sponsorships on television:
Why do startups burn 100’s of millions on television ads and sponsorship, when it doesn’t even make them any money?
Many assume ads on television or sponsorships are to get more sales, but that’s not true - it’s to solve for trust. Since India is a low-trust country, It’s hard for consumers to trust new brands and purchase from them.
This makes the life of tech companies or digital products hard because there is no human interaction, But when new brand ads or sponsorships are seen on television, automatically the brand status in consumer's eyes increases.
Next time a consumer sees an ad for the product or comes across the product in any offline setting, he will immediately associate the product with the ad, which develops trust and makes consumers buy
Get trusted by someone with higher Influence:
Trust is decentralized in nature, it is one of the best ways to accelerate trust,
Let’s assume you were in a school and very underrated and not trusted but out of nowhere your school chairman started trusting you and declared that in school, you will be delegated every other work in school.
Senior Politicians use this method wonderfully to get their new candidates trusted, Religious institutions use this wonderfully when they want to open up their new institutions in new locations.
Even banks do this to fintech - that’s why neo banks are being well adopted in India.
If you have any thoughts share them in the comments :)
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