Why the growth of Web3 shows the importance of trust

Even if you're not utilizing blockchain tech, Edelman's Matt Collette says it still illustrates something that is key to customer retention today.

By Matt Collette

Over the last few weeks, Edelman Canada’s head of digital Matt Collette dove into the tactics brands can use to build an arsenal of zero & first party data, compete in a new era of privacy, as well as forecast the changing relationship between brands and consumers. Today, he looks at why trust is the critical foundation to retention and loyalty for brands.

Last week marked a momentous occasion for the Web3 ecosystem. After many years of development, the Ethereum blockchain implemented a software update shifting from a proof-of-work model to a proof-of-stake consensus model.

Explaining what has actually happened would require getting deep into how a blockchain secures and validates data (but, to simplify, the old way did so based on “mining,” and the new one based on validation from others with a stake in the blockchain). But the main thing you need to know about the “Ethereum merge” is its biggest outcome: moving away from a model that rewarded computational power is expected to reduce the energy consumed by the blockchain by 99%.

This is a major change in the impact that Web3 will have on the environment. But one thing that hasn’t changed is how illuminating Web3’s growth is for the mindset of today’s consumer. Since the introduction of Ethereum in 2014, the network has grown significantly: there are now more than 1.45 million smart contracts (aka programs) with an average of 400,000 daily active digital wallets (aka users). Blockchain tech has spurred the introduction of a number of innovations that marketers are embracing, including – as we outlined in our primer – the Metaverse, NFTs, digital identity, decentralized apps, domains and decentralized autonomous organizations.

But central to all of this innovation is the autonomy individuals have and the trust-less nature of the blockchain. In a Web3 world, a customer owns their data and grants you, the brand, access to it depending on the value they perceive they will get in exchange. The user can also revoke access to that data anytime they wish – severing the relationship in the click of a button.

From a user experience perspective, having the power and ability to do so is very fulfilling. And this more discerning consumer mindset when it comes to brand relationships and data exchange isn’t limited to Web3 – it’s permeating the Web2 world where, the majority of us marketers still operate today.

This psychological shift is making the commodity of trust more critical than ever to the commercial success and growth of brands.

Years of Edelman Trust Barometer reports have demonstrated how important trust is. In 2020, we found that 56% of consumers mentioned their experience with a brand is important to creating trust. This year, in our Edelman Trust Barometer Report on the new cascade of influence among Gen Z and millennials, we found that if they don’t trust the company behind the brand, 59% will stop buying it.

With the death of the media flywheel, the shift from media driven acquisition to retention acquisition, and importance of community building, trust directly impacts whether we, as people, will choose to share information about ourselves with brands.

But as brands and marketers, most of us are failing to build and nurture trust with our customers. We use retention and loyalty tactics without thinking of the implications. While consumers cannot sever their relationship with us in one click, they can lower the fidelity of that relationship and stop purchasing products from us.

In Canada, for example, email is an extremely effective retention channel with open rates above 20% and click-through rates averaging close to 6%.

The use of SMS and smartphone push notifications has also skyrocketed post pandemic, with SMS achieving open rates over 90%. Why? Studies have shown that people trust email, SMS and push notifications as mediums more than they do other traditional touchpoints.

But email, SMS and push notifications also suffer from high unsubscribe rates. When faced with too many alerts, 39% of users in North America turn off notifications completely and another 8% delete the offending apps[4] all together.

The key drivers of unsubscribe behaviors are because emails, SMS, push notification come too often or are too spammy and sales orientated.

When someone shares zero and first party data with us, they enter into a social contract with a brand. That contract effectively breaks down as follows: I’m giving you my information because I want to hear from you and I want a good experience with your brand. I’m willing to spend more money with you. But don’t use that data to exploit me and spam sales messages that aren’t relevant to me.

Consumers trust brands to handle their information with a duty of care and will revoke brand access to us should we violate that trust.

So what do brands need to do in this context?

Think holistically about retention strategies and how they augment the Customer & Multi-Experience. How is trust being built through that journey and how is it reinforced with every email and message we send to a customer? How are we making it easy for consumers to engage with us and build a relationship with us? Too often, silos within organizations lead to inefficiencies in marketing programs which erode trust.

In a world with strong privacy and regulatory policies, and where long-term relationships are critical to growth and the monetization of data, we can’t be losing those hard-won battles to gain customer information by driving high opt-out rates. We can and should, however, focus on delivering on that social contract and value exchange in a way that augments trust over time.

Matt Collette is head of digital at Edelman Canada, as well as the agency’s global managing director of digital growth.