David Amerland
ASDA loses customer trust after charging pre-authorization fee

How Trust Disappears in a Modern Economy

Trust is not just an attribute that’s built amongst friends over time, nor is it the nature of familial bonds created amongst family members and elite combat groups that operate under extreme pressure. It is also the basic requirement for any relational exchange to take place.

This is a lesson that appears to be hard to learn. Each generation of executives, business people and politicians has to learn the hardest way possible the four basic truths about trust:

  • It has to be earned.
  • It is a critical requirement for doing business.
  • It is valuable because it is lost much more easily than it is gained.
  • Once lost it is really hard to regain.

The Edelman Trust Barometer for 2018 showed that trust globally appears to be on the wane.

 

All this is of great academic value. Some of it probably comes as no surprise to you; at gut level you’ve known things are not going great.

Let’s make all this painfully real now. ASDA a UK supermarket chain that was until recently owned by Walmart which has since agreed to sell it to rival chain Sainsbury’s for $10 billion believes the best way to deal with its customers is to treat them with zero level of trust.

In my book on the subject The Tribe That Discovered Trust: How Trust is Created, Propagated, Lost and Regained in Commercial Interactions in the chapter exploring Trust at Zero Acquaintance I wrote:

“Trust always implies a relationship of some sort. We experience trust in the bonds we form with the people we know and the companies we do business with. We have trust in the technology brands we use and food and beverages we buy. Trust underpins every transaction we enter into and every engagement we become part of. Yet trust, somehow, must start from somewhere. There has to be something that makes us trust at the zero moment of first acquaintance when even our complex trust mechanisms have zero data to crunch and cannot therefore calculate anything. The rational approach to trust implies that these zero moments are full of distrust. Yet, this is not the case.”

In the chapter I suggest that within normal social conditions trust is both pervasive and inevitable. I cite the example of Reinhard Bachmann, Professor of International Management, School of Oriental and African Studies (SOAS), University of London, UK and Akbar Zaheer, Curtis L. Carlson Chair in Strategic Management, Carlson School of Management, University of Minnesota, US who also suggest as much in their Handbook of Trust Research where after meticulously compiling research from across the spectrum and editing it all into a 400 page volume, they conclude that: “Trust exists, not only in special interpersonal, social relations, but also in business arrangements and economic transactions.”

These are lessons ASDA executives obviously never learnt. Otherwise it is hard to explain their decision to charge customers buying petrol in their supermarket and paying at the fuel pump £99 (approx. $134) as a “holding fee” irrespective of the amount of fuel they bought in order to “ensure that customers had sufficient funds in their account to pay for the petrol they were buying”.

ASDA says it’s something they apply after a suggestion by Mastercard and VISA, which is true. Tesco still only charges £1 in its “pre-authorization check” and reimburses it. It should be noted the charge from ASDA has been known to not be reimbursed for two days, at times.

The Customer Is Not The Enemy

Morton Deutsch, working on the psychology of trust for Bell Labs in the 70s, famously wrote “to be distrustful is morally far more flagrant than to be credulous. To sin is less virtuous than to be sinned against”. ASDA management would have done well to take this into account.

The Tribe That Discovered TrustTo understand exactly what ASDA did it’s important to see things from both sides of their argument. Mastercard and VISA (I hope) work from data. Some of their data showed that in some of these forecourt transactions people filled their tanks with more petrol than they could afford to pay for. Their solution to the problem was to issue the guideline they did (i.e. ringfence a full tank of petrol each time and refund the money once the charge goes through).

Their perspective is one of systems and transactions and within that, their suggestion makes sense. ASDA management however should have used a different lens. One that saw those who use its forecourt to buy petrol not as strangers who exist at a level of “trust at zero acquaintance” but as consumers who have already made a decision of preference of their brand over their competitors and have taken a significant step in building a relationship with the ASDA brand.

ASDA is a budget supermarket. So here's who they hurt with their decision:

  • Customers who use prepaid cards to do their shopping.
  • Customers who don't have overdrafts in their account and an authorization fee that exceeded the amount available would decline the card.
  • Anyone who relied on having access to their money over the next couple of days and didn't
  • Low-level income customers

That they failed to see it that way speaks volumes of the disconnect between ASDA values, corporate responsibility and their supposed affinity, as a brand, towards those they serve. I stress here that from a legal and even functional perspective ASDA did nothing wrong. But trust is not based on legal or functional requirements alone. In terms of building trust with its audience ASDA proved to be the party unwilling to extend any amount of trust or even the notion that its customers, on the whole, were mature enough and responsible enough to not try and buy more petrol than they could afford.

Sure enough there was a public outcry. As day follows night ASDA backtracked and suspended the implementation of the pre-authorization fee at the pump.

The moral of the story? The customer is not the enemy. Your own systems are if you decide to see those who shop with you as faceless units from which you are fully entitled to demand money of.

At a time when trust is key, personalization has become extremely important and brands are struggling to maintain the attention and goodwill of those they need to attract, missteps like this one can cause serious damage to a brand, erode trust between it and its customers and highlight how an overreliance on systems and the willingness to overlook the human factor are exactly the ingredients that lead to the disappearance of trust in a modern economy.

© 2018 David Amerland. All rights reserved