Managing Brand Credibility for Small Businesses

What is brand credibility? Or, in a simpler sense, what is credibility for businesses?  According to a series of studies by consumer psychologists, credibility can be largely defined by two sub-constructs, namely reliability and competence. 

In general, we can think of reliability as a measure of a brand’s trustworthiness, the extent to which customers expect the company to follow through its promises.  For example, a restaurant that receives a “C” for a hygiene check will have serious damages to its reliability, while a microbrewer that has delivered products of consistent quality can also be very dependable. 

On the other hand, competence is a measure of “expertise”- the brand’s ability to generate competent, high quality outputs.  Both concepts are highly correlated and ultimately represent a brand’s credibility.  Why is this important?

Robust and large scale research by top academics have shown that brand credibility strongly predicts a consumer’s choice and consideration of brands.  A highly reliable brand is significantly more likely to be included in a customer’s consideration set, and a competent one is purchased more frequently.  One thing to note is that we are talking about “perception,” which is built from various marketing mix variables.  Especially knowing that small businesses have relatively smaller advertising budgets, it will be extremely important for owners to safeguard and promote their brands through various business activities.

Although credibility cannot be easily quantified (since it’s a perception), its importance cannot be emphasized enough.  For small businesses, which are more prone to local gossip, credibility can be damaged even when its owner is under financial pressure or is unable to maintain positive cash flow to pay its stakeholders. Indeed, financial instability is directly related to credibility (hence, we call it “credit scores”).  Finding the best alternative loan company or online financial service can be one management strategy.  Avoiding credibility pitfalls while encouraging marketing activities to bolster trustworthiness can be the best way toward sustainable growth.