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THE ELUSIVE POWER OF CONSUMER TRUST AND RISK
Top Methods for Strengthening Your Business’s Credibility and Marketing
Over the past few decades, we’ve heard a lot of public outrage about companies betraying consumer trust. Whether they’re considering tobacco products or baby powder from Johnson & Johnson, Americans have become more proactive about placing their trust in the items they use. More than ever, establishing trust has become an incredibly important aspect of every business’s marketing strategy. You might be thinking, “How do we establish that trust in modern terms?”To answer that question, we need to look at how we got here. Marketing is a relatively new concept introduced during the Second Industrial Revolution. As mass production took over, companies needed to sell more and more products. So, they started asking the same question: How do you get people to buy? Products used to be made in small batches, and consumers relied on word of mouth, recommendations, and influencer marketing (a celebrity sponsorship, for example) to find and choose services and goods. Once the world discovered the power of marketing, mass production pushed companies to previously unimaginable scales. Then, rampant upscaling led to some companies cutting corners and outright lying about their practices. We know the rest of the story. Believe it or not, consumers haven’t lost track of word of mouth, recommendations, or influencer marketing tactics. In fact, they trust these forms of marketing more than ever. Whether you sell goods or services, there’s an online forum where you can read reviews about your business. Just look at the power of Yelp, TripAdvisor, and even Instagram. Endorsements from trusted locals (and celebrities) have become powerful tools to draw marketing attention. Ultimately, the trick to establishing trust isn’t your online rating — it’s risk. Hearing your best friend’s recommendation and reading Yelp reviews are just a couple ways to evaluate risk. If your business offers little to no risk to the consumer, it’s more attractive.
W hen Ross Perot was running for president, he was rumored to have said, “I make so much money (cash) each day, I can’t count it all.”What a marvelous problem to have. We certainly like the equity build in our projects, but there is nothing nicer than a regular monthly cash distribution. I understand that some projects today are not able to make current distributions. I’m sorry to hear that. However, the coronavirus situation is causing us to rethink many assumptions we’ve made. It’s difficult to currently spend our equity in real estate unless we can sell our properties or refinance them. However, in the current financial markets, both of those strategies are difficult to execute. This brings us back to our first question: “Why Cash Flow Is King.”We can spend cash flow whenever we need it without depleting or selling our asset. And when the time comes to sell, cash flow sells at a premium. In conclusion, the reason equity is pushed on investors, is that future equity is a best guess defendant on market conditions and is difficult to confirm today. In contrast, cash flow has value in any market.
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