Trust reduces costs

Service providers may have the confidence to deliver performance and affordance for a certain price, but they also need trust. Confidence is the belief service providers have in themselves in promising a set of outcomes and experience based on their resources and capabilities. Trust is the belief customers have in such promises. Without confidence, promises may not be bold and attractive enough. Without trust they may not be believable enough. The more trust, the more effortless and less costly or painful the engagement can be, and lower the transaction costs. That means greater potential for value to be created, greater possibility of the need being fulfilled, and greater payoff from fulfillment. That’s the compelling force of attraction. If the experience has high transaction costs, it becomes a repelling force. Success depends on the differential between these two forces. If the bond is strong, there is greater flexibility and tolerance when it comes to fulfillment. The bond will not easily break, and contracts will be stronger. The difference will be reflected in the price customers are willing to pay, and the margins service providers are able to make.