In the United States, public trust in institutions, businesses, and brands has been low for at least the past decade. So it may come as no surprise that as Gen Zers come of age, they’ve got trust issues of their own. Recent surveys point to a broad distrust among Gen Zers in most big corporate, cultural, and governmental institutions in America.
This matters for a bunch of reasons. For brands, there’s a clear business case for developing stronger trust with consumers: businesses that are considered “digital trust leaders” are 1.6 times more likely than the average business to see revenue and EBIT growth rates of at least 10 percent. And brands that foster trust with consumers are more likely than others to see higher loyalty rates—a real feat considering how fickle consumers are becoming. Consumers are also more willing to pay for enhanced experiences and higher-quality products from trusted brands, notes McKinsey senior partner Sajal Kohli on a recent episode of The McKinsey Podcast.
Given the stakes, businesses across sectors would be wise to prioritize building trust with Gen Z consumers.
To get started, business leaders should first recalibrate their approach to corporate communications, adapting for the “profound value shift among younger generations,” Alison Taylor, clinical associate professor at NYU’s Stern School of Business, explains in a McKinsey Author Talks interview. Rather than always sharing “sunny stories about all the wonderful things companies are doing,” businesses might instead be “honest and focused about the challenges and the limitations of what you can do with your own internal decisions … counterintuitively, that can help build more trust.”
To be sure, building trust through authentic communication and marketing is important to Gen Z consumers. But none of that matters if businesses aren’t nailing the fundamentals of digital trust, which McKinsey senior partners Alex Singla and Katie Smaje and coauthors say few companies are putting themselves in a position to do. Prioritizing digital trust means, for instance, putting in place policies for data storage and access, conducting thorough assessments of privacy risks when the business uses external data, adopting clear standards and thresholds for AI risk, and using automated tools to prevent cyber risks.
Businesses that play fast and loose in the realm of digital trust run the risk of alienating their Gen Z customers, since digitally savvy generations are more likely than others to consider digital trust issues “on par with typical buying factors, such as price, when making (or discontinuing) purchases,” McKinsey partner Liz Grennan says in the research on digital trust.
(BTW: this focus on digital trust extends to a range of consumer products and experiences.) In another McKinsey survey, 61 percent of all Internet of Things (IoT) buyers rank digital trust as a critical element of their purchase decisions, while only 31 percent of IoT providers rank it as a critical element in their system design.
Finally, the building blocks of brand trust must originate from within. “It’s almost impossible to imagine a company being … trusted by its customers if it’s not trusted by its employees,” Sandra Sucher, professor of management practice at Harvard Business School, says in this McKinsey Author Talks interview. Gen Zers expect the companies they work for to reflect their values—and if they don’t, they’ll look elsewhere for work. Caveat, employer.
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