When customers decide to buy from you, their decision is based on a simple equation: the perceived value of your product or service must exceed the perceived price. However, the story doesn’t end at the point of purchase. What happens after—the realization of actual price and value—can either solidify or erode trust, shaping both loyalty and your ability to attract future customers.
Chapter 3 of The Trust Premium delves into the dynamics of perceived versus actual value, the hidden costs customers encounter, and the vital role of trust in long-term success.
The Purchase Decision: Perceived Value vs. Price
At its core, a purchase decision is economic. Customers buy when they believe the value they’re getting exceeds the price they’re paying. Perceived value and price are crucial here. If your product or service is priced higher than a competitor’s for the same perceived value, customers will choose the cheaper option. Conversely, if you offer a higher perceived value at the same price—or the same value at a lower price—you’ll win the customer.
However, pricing psychology also comes into play. If your price is dramatically lower, customers might assume lower quality, operating under the belief that “you get what you pay for.” Perceived value and price are critical at the moment of purchase, but what happens after is just as important.
The Hidden Costs That Erode Trust
Total Cost of Ownership: Many customers initially focus only on the purchase price, overlooking the ongoing costs of ownership. For example, an inexpensive printer might seem like a bargain until the cost of replacement ink skyrockets the actual price. Failing to disclose these costs can leave customers feeling misled, undermining trust.
Switching Costs: Switching from one product or service to another often involves hidden expenses—time, effort, or money. Whether it’s retraining staff for new software or adapting to a different ecosystem of smart home devices, these costs can frustrate customers if they’re not transparent upfront. Businesses that acknowledge and minimize switching costs can build trust and loyalty.
Bait-and-Switch and Upselling: When advertised prices don’t match reality, customers feel deceived. Examples include cars advertised with low monthly payments only to reveal hidden fees or unattainable base models. Similarly, requiring a payment after a free trial or demanding extra purchases during an online course can erode trust. Short-term gains from these tactics often result in long-term reputational damage.
The Role of Actual Value and Price
Post-purchase, customers evaluate the actual price and value they’ve received. If the actual price is higher or the value lower than they perceived at the time of purchase, trust diminishes. For example, an internet service promising high speeds might deliver inconsistent performance due to hidden conditions in the fine print.
Conversely, exceeding expectations can strengthen trust. Imagine buying a jacket advertised at $120 and finding it discounted to $90 at checkout. These moments of unexpected savings or value enhance trust and loyalty, encouraging customers to return and recommend your business to others.
The Cycle of Trust
Trust doesn’t just maintain loyal customers—it drives new business. Here’s how:
1. Outbound Transferrable Trust: Satisfied customers become ambassadors for your business. They leave positive reviews, recommend you to others, and serve as references, creating a cycle of trust that amplifies your reputation.
2. Inbound Transferrable Trust: Future customers rely on the trust established by others. Online ratings, referrals, and word-of-mouth recommendations influence their decision to choose your product or service over competitors.
Even in transactional sales, where ongoing relationships aren’t expected, trust still plays a crucial role. A customer’s willingness to recommend you hinges on their perception of your honesty and reliability, creating a ripple effect that attracts new customers.
Why Trust is the Only Differentiator
The modern sales landscape is flooded with options. Customers can research, compare, and evaluate products or services in minutes. What sets you apart isn’t necessarily your price or features—it’s the trust customers have in you.
Consider this: trust influences both perceived and actual value. It allows customers to feel confident in their purchase decision and reassured after the sale. Companies that prioritize transparency, minimize hidden costs, and exceed customer expectations build lasting trust. This trust translates to loyalty, repeat business, and the inbound recommendations that fuel growth.
Trust is not just a competitive advantage—it’s the foundation of sustainable success. Customers will forgive higher prices or occasional mistakes if they believe in your integrity and commitment to delivering value. By understanding the dynamics of perceived versus actual value and prioritizing trust at every stage of the customer journey, you can build a business that thrives on loyalty and referrals.
Ultimately, trust isn’t just about keeping the customers you have—it’s the key to attracting the customers you want.
Want to hear the whole story? https://podcasts.apple.com/us/podcast/s16e2-the-trust-premium-chapters-1-and-2-the/id1569249060?i=1000683926395
Dr. Yoram Solomon is an expert in trust, employee engagement, teamwork, organizational culture, and leadership. He is the author of The Trust Premium, The Book of Trust, host of The Trust Show podcast, a three-time TEDx speaker, and facilitator of the Trust Habits workshop and masterclass.
The Book of Trust®, The Innovation Culture Institute®, and Trust Habits® are registered trademarks of Yoram Solomon. Trust Premium™, the Relative Trust Inventory™, and The Trust Show™ are trademarks of Yoram Solomon.
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