Why Your Customers Love--and Hate--Your Company
Some people would argue that companies are people too. Maybe. But here's the bad news: psychologically speaking, that means customers judge companies the same way they judge people.
Chris Malone, author and customer loyalty expert, co-wrote the book "The Human Brand: How We Relate to People, Products, and Companies" with Susan T. Fiske, a professor of psychology at Princeton University. During a recent interview with the business school blog Knowledge@Wharton, Malone said that customers make their judgements instantly about companies and their products through the "warmth and competence" they feel--or don't feel--towards a brand.
Malone, who has also worked in senior marketing roles at Coca-Cola and Choice Hotels, says in order to be successful, companies need to work on their personal relationships with their customers. Read on for three takeaways from Malone.
People judge companies like people.
Malone says that primitive humans developed a skill to make on-the-spot-judgements for basic survival. The first was to decipher another human's intentions, while the other was to judge how capable they were to carry out those intentions. People still look for these signals today but they're better described as "warmth and competence," Malone says. "Whether we realize it or not, the way we judge companies and brands happens in much the same way," Malone says. "Our research showed that more than 50 percent of all purchase intent and customer loyalty can be explained by these two basic human perceptions, before any features or benefits are considered. As a customer, we are acknowledging, 'I get who you are and what you're about.'"
Lack of power makes customers hate companies.
People start turning against a brand when they feel powerless against it. When banks rope in customers with low interest rates and jack them up a year later, we feel betrayed. When mobile service providers get you to sign a two-year contract and then raise the rate (making breaking a contract financially impractical), customers feel powerless. "In the business world, this kind of behavior is perfectly reasonable and rational. In fact, it's what business schools taught us and financial markets expect from us," he says. "However, most people don't live in the business world; they live in a civil society that relies on trust and communal relationships to function and grow."
Go out of your way to be competent.
In the book, Malone and Fiske write about a bike shop owner who created a loyal following by giving away inexpensive items for free, like nuts, bolts, and other small pieces of hardware. Through this small but helpful deed, the owner was able to compete with big box stores selling the same bikes for less. The easiest way to convey warmth and competence is through what the authors call, The Principle of Worthy Intentions. "When companies simply think and act in the best interests of their customers--especially in the short term," Malone says, "the warmth and competence perceptions usually take care of themselves."