What SaaS ISVs can learn about trust from a 300-year-old Japanese sweet company

Akafuku was founded in 1707 and is Japan’s most famous sweet company. Their sweets are the traditional gift for visitors to the Ise Shrine, Japan’s holiest religious site. In autumn 2007 a story broke that shook Japan. Trust in the Akafuku brand built up over 300 years was not enough to protect them.

Akafuku makes bean-jam sweets (rice cakes wrapped in red-bean jam). They said they made their sweets fresh each day. Any sweets not sold that day were thrown out. This was not true. Akafuku had been lying for more than 30 years.

It was revealed that sweets not sold that day were not thrown out. They were frozen to be thawed and resold later. The labels of the frozen sweets were forged with future expiry dates.

Japan was appalled and the impact was immense. It was if Starbucks was exposed for selling instant coffee!

Akafuku’s massive mistake

While there was no risk to health in what Akafuku was doing, it totally destroyed trust. When bringing sweets back home or to the office as gifts, the expectation was that they were fresh. Frozen sweets did not match the story Akafuku was telling.

Even with a 300 year track record, the Japanese were not prepared to forgive what Akafuku had done. The local government stepped in and Akafuku was forced to suspend production indefinitely. The flagship store at the Ise Shrine was closed and products removed from shelves all over Japan.

The lesson for SaaS

As a B2B ISV selling via SaaS must meet user expectations each and every day. In the sales process trust, and your service level agreement, were big issues. Now there is a risk standards will slip. What would never have been allowed at the start of the user relationship somehow becomes acceptable.

You must ensure what you say is what you do—each and every day. If you say one thing but do another, your subscribers will not forgive you when they find out. And find out they will.

Akafuku built trust with Japan over 300 years. Even so, when the truth came out it did not protect them. They were not doing what they said. Expectations were not being met and the Japan was appalled and stopped buying.

Subscribers have more choice

A key difference between SaaS and licensing on-premise software is ability to swap. SaaS subscribers feel it is easier to change when things go wrong. If you do not live up to their expectations then they will leave. And they will tell others as well.

I do not know if the system at Akafuku was approved from the top. It was likely a local decision. An employee had a lot of sweets left over one day and did not want to waste them. A one-off decision slowly becomes accepted practice. When the truth was revealed it cost Akafuku 300 years of trust.

Building trust is hard, losing trust is easy

You face the same risk. Any of your people could make a choice that costs you user trust. And what is worse, you can never keep any problems secret. On-premise software customers were isolated. SaaS subscribers talk to each other. A small problem can become a wildfire of upset customers.

Building and maintaining user trust is the most critical part of SaaS. It takes a lot of time and money to grow trust. It can take one comment on the phone, or a hasty email, to destroy it.

You must make visible to all of your people how critical trust is. It does not matter if they are user facing or not. All staff must be aware of trust.

Appoint a Chief Trust Officer

Consider appointing a “Chief Trust Officer” to show how critical trust is for you!

Winning at SaaS needs more than having the right technology and the right marketing. If you lose the trust of your subscribers they will head for the door. A story reaching back 300 years did not help Akafuku when they lost trust. The length of the relationship with your SaaS subscribers will not help you either. Lose their trust and they are gone.

Do you have a “Chief Trust Officer”? Do you make your people aware of the trust impact of their day to day actions? How do you monitor trust levels?

PS: The local government lifted its ban on Akafuku at the end of January 2008. Regaining 300 years of lost trust will take a little longer.