I was at a meeting of small businesses last night.  As usual, each of us in turn stood up and introduced ourselves.  One of the business owners present stood up and began a short diatribe on competitors who displayed ISO standards and trade association membership.  They argued that such promotional activity was all a con and an excuse to bump up the price paid by consumers.  They also complained that in a lot of cases, the membership or standard was covering for service failings and contractors taking short cuts.

This is an argument I have heard before, on many occasions, and to be honest, its nonsense and an attitude which may be harming that particular business owners profitability.

There will always be businesses who falsely claim trade association membership.  There are also companies who will plaster vans with ISO 9000 signage in an attempt to persuade the public that this means they offer a higher level of service than competitors.

Such activities may be  a criminal offence under the Protection of Consumers from Unfair Trading Regulations but this article is not about illegality, it is about the benefits of applying industry codes and standards in your business.

So what marketing benefits come from being a member of a trade association or stating that your work complies to a particular agreed standard.  Well the answer is that these measures help reduce cognitive dissonance amongst your customers..

Cognitive Dissonance is the discomfort felt when you are presented with and hold two or more contradictory beliefs or when you are presented with information which contradicts with your beliefs. It is the alarm bells which ring when your subconscious tells you that something doesn’t quite ring true.  For example, many people have very disparaging views about estate agents.  So, when an estate agent makes ‘cast iron’ promises about the services they will provide, the client may suffer severe cognitive dissonance if they hold those disparaging views.

Ignoring the fact that Estate Agents must now comply with an approved code of practice which is monitored by the Office of Fair Trading, an Estate Agent who can show they are a member of their trade association may win contracts over a competitor who is not a member.

Cognitive dissonance doesn’t just exist between a business and its customers.  It can happen within an organisation.

If a company board wants to enter a new market, their decision to do so will be coloured by their beliefs about that sector.  the organisation’s middle management may hold conflicting beliefs about that sector and as a result may suffer cognitive dissonance.  Further down the company hierarchy, the staff asked to deliver that service may hold another set of beliefs and they may suffer cognitive dissonance if their beliefs, the beliefs of middle management and the beliefs of the board are in conflict.

There is a marketing and sales theory called SERVQUAL.  This system targets those stages of the provision of a service where cognitive dissonance may occur and gets organisations to put in place systems and procedures to reduce that cognitive dissonance.

One tactic for reducing cognitive dissonance would be the application of quality assurance standards, such as ISO 9000, to ensure that policies and procedures are clearly understood and clearly communicated to those responsible for their development.

So there are many benefits for a firm applying agreed standards and publicising that they meet the requirements of a trade association.  One is that it helps reduce the cognitive dissonance of potential customers.  Another is that it allows for the application of psychological pricing helping to ensure that contract profitability can be maximised.