The Formula for Trust
How the formula for trust can help you design the right go-to-market strategy
Hey! It’s Andreas from Monetisation Matters, the home of in-depth articles and actionable insights on Strategy and Monetisation. Built for Founders, Product, and Product Marketing leaders as they navigate their $1m to $100m growth journeys. This article explores the formula for trust — what it is and why it is so useful as a mental model for designing your GTM strategy and addressing poor win rates.
The formula for trust
Transactions depend on trust. We only want to buy from suppliers we feel we can trust. If you believe that, then trust should sit at the heart of how you design and improve the way you go to market. Companies such as eBay, PayPal, and Alibaba, among others, exist explicitly because they provide the safety needed to do business where it was once absent.
I haven’t been able to find who originally came up with the formula below for trust, but I learned it from Patrick Hoverstadt, who ironically learned it from an Anderson Consulting partner just before Enron’s collapse.
Trust = (Credibility * Intimacy) / Risk
Trust is the result of credibility, intimacy, and risk. The greater your credibility in the market, the more people trust you. Assuming you are a credible supplier, the better a prospective customer knows you, the higher the level of trust. Credibility and intimacy are multiplied together, as their effect is double-edged: a credible supplier benefits as a prospective customer gets to know them, while a supplier lacking credibility will be exposed as intimacy increases.
Trust also needs to be put into the context of the risk of the transaction. Low risk, low cost purchases require a lower bar of trust for transactions to complete than high risk, high cost transactions.
Why and how it’s useful
Through this lens, Sales & Marketing is a trust building exercise with prospective customers. The formula reveals specific levers we need to understand, and can then manipulate to drive faster cycle times and increase win rates. We can:
Increase our credibility in the market, actual, perceived, or both
Increase our intimacy with prospective customers
Decrease actual or perceived risk of the transaction
What can we do to improve credibility?
Credibility has two aspects: there is “actual” credibility, and there is what is visible. Strictly speaking, this distinction isn’t explicit in the formula, but it is important. Intimacy uncovers what is true and what is bullshit, but given that prospective customers aren’t going to give every supplier the time of day, signalling credibility to the market becomes as important as having “actual” credibility.
A better formulation would be:
Trust = (Credibility(I) * Intimacy) / Risk
Credibility is a function of Intimacy:
If intimacy is low, then what you see is signaled credibility.
If intimacy is high, then what you see is actual credibility.
Intimacy doesn’t just amplify credibility, it reveals it.
Signalling is something Rory Sutherland talks about passionately in his book Alchemy. For him, presentation matters as much as if not more than the product itself. In fact, the way something is presented directly impacts people’s experience of it (for example, branded painkillers versus non-branded alternatives).
In an era of AI slop, costly signalling becomes more important and more powerful than ever. Which supplier are you going to trust more: the one that spams inboxes with automated SDR slop, or the one that invests in an in-person event? This is where the discourse on AI for GTM goes so wrong: a total obsession with efficiency, while remaining blind to the power of costly signalling.
Regarding “actual” credibility, mistakes generally show up on the right-hand side of the bowtie — customer success, or rather the absence of it. A fantastic product that does not get activated or solve customer problems does little for credibility. It may work for a while, until it doesn’t, inevitably revealing itself through high churn.
Price plays an important role here too. Over the long run, higher prices enable higher margins, greater investment, and increased credibility. When I advised in the sexy world of industrials, it wasn’t unheard of for customers to pay more, knowing that healthy upstream margins help secure their supply chain. As a customer, do you really want your value chain dependent on a supplier that is living hand to mouth?
There is also a common misconception that lower prices automatically lead to higher win rates (the downward-sloping demand curve), but this neglects the role of price in signalling credibility and building trust. If something is so cheap that it feels too good to be true, it probably is.
I have seen prospective customers, usually in enterprise deals, reject suppliers explicitly because they were too cheap, or because they didn’t charge for implementation or service. Low fees, or the absence of fees, signalled low credibility.
Stella Artois is a terrible beer, but it is “reassuringly expensive.” The funny thing is, it wasn’t even that expensive; they simply understood that positioning it as a premium product would help, not hinder, market share growth.
Finally, value selling is an area of growing importance and plays a key role in building credibility and trust during the sales process. It connects real pain to concrete use cases, showing how specific problems will be solved and what impact can be expected.
That said, the single most effective thing I would do as a supplier to build credibility is let current customers sell to prospective customers — nothing beats social proof.
What can we do to improve intimacy?
It’s useful to think about intimacy through the lens of RevOps and the qualification process. Intimacy isn’t a “thing”; it’s a relationship, which means there are two perspectives: sellers and buyers. Qualification happens along the bow tie as a give-and-take of information, helping both parties learn what they need to know about each other in order to proceed.
Well-functioning GTM processes encode both seller and buyer perspectives. The seller needs to ensure the deal is worth pursuing and understand how the buyer will make their decision. The buyer, meanwhile, wants to evaluate seller credibility and ensure there is a high degree of fit.
What do I need to know about the customer to proceed?
What does the customer need to know about us to proceed?
What evidence does the customer need to proceed?
Qualification codifies this into a process, ensuring sellers consistently capture and share the information required. There is a natural sequence to what information is needed first versus later, which also sets the pace. That sequencing helps indicate where the relationship truly stands: are we on a first date, or about to get married? Missed forecasts often stem from a seller’s belief that they’ve achieved a level of intimacy that simply doesn’t exist in the customer’s eyes. The seller has bought the ring, but hasn’t met the parents yet.
The greater the risk involved in a transaction, the greater the intimacy required. More time, steps, and rigour are needed in the qualification process. Buyers will also have their own bureaucracy, processes, and culture designed to protect them and regulate the pace of intimacy. As credibility is demonstrated, intimacy can deepen.
What can we do to decrease risk?
The Jolt Effect is an excellent book for understanding the role risk plays in win rates and how to mitigate it. For those who haven’t read it, the book sets out to explain what top sellers do differently from the rest. One of its key findings is that top performers have a far better appreciation of the role risk plays in the sales process, and they deploy a range of tactics to mitigate that risk for customers.
Mediocre sellers hammer the value side of the equation, emphasising the impact of the solution. They spend their time on the “credibility” variable but forget the denominator. The reality is that even if a seller has done a great job establishing credibility and intimacy, if perceived risk remains high, trust can still be low overall.
The best sellers actively reduce risk. They address customers’ fear of making the wrong decision by making opinionated recommendations, and they reduce the size and scope of transactions when necessary, preferring to close a land deal that they can later expand. Packaging can play an important role here as a startup matures. Typically, startups sell an all-inclusive product to which they progressively add features and functionality. Over time, these propositions become bloated and expensive; packaging then becomes a way to reduce the minimum sellable unit, lower the risk of shelfware, and improve win rates.
A mental model for design
I believe every seller, marketer, and CEO should have this mental model for trust imprinted in their skulls. In fast-growing startups in particular, leaders are constantly faced with novel situations they need to design for. Having mental models such as the trust formula at hand helps teams quickly diagnose what might be going wrong and focus on high-leverage design adjustments.
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Thank you.
Love this formula so much ! Restacked it Andreas - thanks for being so awesome and thanks for publishing your wisdom 🧡