How to rebuild confidence

Handing Over the Car Keys “Confidence may be one of the most valuable commodities of all in 2009,” says Jennifer Robison, Senior Editor for the Gallup Management Journal.

Valuable because it is scarce. The Consumer Confidence Index hit an all-time low in December. Given the hard realities of supply-and-demand economics, isn’t it odd that recovery hinges upon such a warm and fluffy intangible?

What is confidence and how do we grow it?

Confidence is essentially trust. And trust is knowing someone or something can hurt you and giving them the power to do it anyway.

Your 16-year-old son could die (god forbid) in an auto accident and break your heart forever. But you trust him with the car keys. You have confidence in his skills and good sense. You give him the power to hurt you. (You do not, however, trust the other drivers on the road. You don’t give them the power: they already have it.)

We trust our friends to pay back loans. We trust our partners not to cheat on us. We trust our employers and our clients to pay us for our work. When we stop trusting, it is because we’ve lost confidence. We believe we are going to get hurt. We are afraid to risk.

Dennis Jacobe, Ph.D., Gallup’s chief economist, says, “You can give money to consumers, but you can’t make them spend it. You can give money to businesses, but you can’t make them invest it. You can give money to banks, but you can’t make them loan it or force consumers and businesses to borrow it.”

President Carter, in his “Crisis of Confidence” speech in 1979, said, “(Confidence) is the idea which founded our nation and has guided our development as a people. We’ve always believed in something called progress. We’ve always had a faith that the days of our children would be better than our own.”

So how do we rebuild confidence?

It is both simple and difficult. By taking small risks everyday and encouraging others to do the same. By taking small chances that people and institutions will do what they say they will do. And when we don’t get hurt, we will eventually be willing to take larger risks.

Here’s a few ideas:

• Risk enhancing your service. Ask your customers what you can do to serve them better. Raise your standards. Review your service policies and procedures, and put better ones in place.

• Risk adding value. Discounting often increases cash flow in the short term, but can hurt loyalty in the long term. Instead, add value for the same price. Many online retailers did this by offering free shipping during the holidays.

• Risk treating your colleagues and suppliers as you wish to be treated. Be clear in your agreements. Be reasonable with your expectations. Pay them promptly.

What small risks will you take today? Share your ideas.