Saul Klein: Demise of Greyhound leaves room for new competition

May 30, 2021 - Another week, another goodbye to a company shutting its doors for good due to the pandemic. It was announced recently that Greyhound Canada is ceasing all operations in Canada, leaving many Canadians stranded, and a gap in the market.

The departure of Greyhound from Canada should come as no surprise to many after they slashed their services in 2018, leaving western Canada for a final time. But insights into Greyhound’s brand trust over the years highlight an important relationship between consumer behaviour and brand trust.

At the Gustavson School of Business, we developed the Gustavson Brand Trust Index to examine what factors drive consumer loyalty. In Greyhound’s case, the organization saw a jump in brand trust scores in the last year, paradoxically at a time when they were not operating. Improving trust, however, did not save the bus operator from the effects of the pandemic, as it was not accompanied by increasing purchase intentions. For some companies, such as Greyhound Canada, the pandemic was the kiss of death exacerbating market pressures and accelerating market restructuring.

Why, however, would Canadians trust a company more during a time when it was unable to perform its main function?

The answer may lie in the perception of Greyhound Canada and the critical role it played in connecting remote communities, providing an essential service in those areas. The rise in trust during the pandemic may have reflected a hope among Canadians that Greyhound would be waiting to welcome travellers back when it became safe to do so.

Our research shows that, historically, Greyhound was more trusted than recommended. Trust derives from the fact that the bus company had provided a fairly reliable service in the past, while recommendations are based on available choices. We categorize brands such as Greyhound as “unsung brands.”

This insight was also mirrored in the trust levels of another transportation company, VIA Rail Canada Inc. Businesses without direct market competition in general tend to be less recommended, even when they are trusted for their functionality.

For seven years, the Gustavson Brand Trust Index has studied the relationship between brands and consumer trust. Apart from highlighting which brands are the most trusted in Canada, the report also examines what drives trust, notably a brand’s ability to perform its core functions, how it relates to its customers, and how it demonstrates its values.

Earlier this month, we released our annual report and found that consumer trust in brands is increasingly linked to authenticity — that consumers are more likely to trust brands that reflect their own values. During the pandemic it was clear that brands either won or lost consumer trust based on those values.

For example, Air Canada saw a steep increase in trust during the pandemic’s early days, when the airline quickly implemented protective travel measures and worked to minimize staff layoffs. The company saw a nosedive in trust, however, when they were unable to sustain those measures and laid off staff while encouraging travel against the advice of public health officers.

For new operators looking to fill the void in the market left by the departure of Greyhound Canada, such as the Coast to Coast Bus Coalition, there is an opportunity to assess what they can do differently and how they can improve service to remote communities. The path to success lies in becoming a beloved brand that is both trusted and recommended.

Understanding the relationship between brand advocacy and consumer trust on the one hand and customer loyalty on the other can act as a road map for companies coming out of the pandemic looking to capitalize on a recovering economy.

It may be the end of the road for Greyhound Canada, but the start of a new journey for competitors who bring innovative approaches along with good intentions.

Saul Klein, PhD
Dean of the Gustavson School of Business

Originally published in the The Province