The Family-Business Trust Factor
By Jeremy Miller
If you have an opportunity to call your company a family business, do it. Customers trust family businesses more.
Being a family business may not be the reason why your customer buys your products and services, but that kind of labeling can enhance the brand loyalty and affinity your company experiences. According to the Institute for Family Business, a family-business brand enhances perceptions of trustworthiness, social responsibility, quality orientation and customer orientation.
As markets become more competitive and commoditize, customers are looking for ways to differentiate one option from the next. Sharing your family story and ownership provides an opportunity for you to rise above the competition and form stronger relationships with your customers, employees and partners. This humanizes your brand and makes your company more likeable.
Family Business: Competitive Advantage
Recent research reports validate one of my long-held beliefs that being a family business is a competitive advantage.
The belief was first seeded while working in my family’s business. When I joined the company, my parents had taken deliberate steps to disguise that we were a family business. My mom, for example, used her maiden name at work. The fear was that “family business” might not signal the same level of professionalism.
I disagreed with my parent’s approach. I saw the family business story as a source of competitive advantage. My parents had created a successful company; we had a great working relationship; and we were building a business that was a great source of pride. These were ingredients that not only benefited us, they benefited our customers and employees.
I reversed my parents’ approach to marketing. I made it obvious in our web site, public relations efforts and communications that we were a family business. It was a source of pride, and I thought it helped to differentiate us from the giants of our sector.
At the time, I couldn’t validate the benefits of marketing our brand as a family business, but I saw the benefits anecdotally. It was a conversation starter, and it led customers to be inquisitive about our heritage. It also signaled trust, because people knew who they were dealing with; literally, “the buck stopped with the Millers.”
My belief that a family business brand was a competitive advantage was reinforced further as I worked with other family businesses. Again and again, I came across families that were building remarkable brands that were highly recognizable and transitioning through the generations. In fact, 50 percent of the companies featured in my book, Sticky Branding, are family businesses.
Pride in Your Heritage
The data backs up my anecdotal experiences. A 2016 report by Ernst & Young and Kennesaw State University’s Cox Family Enterprise Center studied 2,400 of the world’s largest family businesses. The report highlights a few key insights:
- 76 percent of the companies studied refer to their enterprise as a “family business” in corporate communications.
- 64 percent of the respondents said that being a family business helps to differentiate them from competitors.
- 64 percent said being a family business improved the reputation of the company with customers.
The researchers also discovered that the business was a source of pride for the family; 68 percent of respondents said the family strongly identifies with the company, essentially being “part of who we are.”
Being a family business is a point of pride, and it can be a source of meaning for your family, your employees and even your customers.
Challenge the Industry Giants
Promoting your business as a family business is a sound marketing strategy. The family business brand humanizes your business and helps customers, employees and partners form a personal relationship with it.
The family business brand adds credibility and enhances your operations in three key areas:
- Heritage: Your company has roots. You can share the history of your business and family and your family’s legacy in the community.
- Innovation: In a world of rapid change, only the innovators grow through the generations. You can demonstrate your spirit of change and innovation, and share how your company and family has evolved and grown through the years.
- Values: Compared to faceless-multinational companies, a family business is perceived as more socially responsible. Your family’s beliefs provide a personal connection with customers, employees and the community at large.
These three elements all point towards longevity. Family businesses are in it for the long haul, and that creates a legacy of trust.
Publicly-owned companies, on the other hand, are under ever-increasing public scrutiny for these reasons:
- Excessive executive compensation and bonuses.
- Revelations that corporations are paying low to no taxes.
- Short-term thinking and quarter-to-quarter decision-making.
Big corporations are losing trust, while family businesses are gaining it. The family’s legacy elevates the brand and signals that your business is more committed to its customers, employees and the community.
If You’ve Got It, Flaunt It!
Use every advantage at your disposal. The family business brand is a mark of trust. If you’ve got it, flaunt it.
Public companies are often called “faceless” and “soulless.” This isn’t exactly fair, but it highlights how the family story can enhance your brand. It creates a point of distinction that makes your business more likeable.
As competition increases, human connections are so valuable. When the buying options all look very similar, customers will default to one of two positions:
- They’ll go with what they know, or
- They’ll go with what’s cheapest.
Selling on price is no way to grow a brand. As a family business, lean on the first option. Build strong bonds between your customers, employees and partners. Form a relationship with them so they know you, like you and trust you. As so many of you in the gases and welding distribution industry know, the family business brand may not be the reason a customer buys, but the relationships you form can be the reason your customers come back again and again.