branding a business

By Chris Malone

If you’ve ever wondered how companies such as Zappos, Panera Bread, Lululemon and Honest Tea have managed to build large numbers of loyal followers and customer relationships, social science offers some important lessons.

These firms succeeding in building lasting customer relationships though word-of-mouth and community outreach efforts that triggered the primal human response to warmth and competence. Social psychologists have shown that as much as 82 percent of our everyday social judgments are based on our uncanny unconscious ability to size up others almost instantly according to whether we think they have worthy intentions towards us (warmth), and whether they are capable of acting on those intentions (competence).

We make such instant appraisals in all our relationships, including those involving companies and brands. Warmth and competence defines what might be called “The Human Brand,” and in the current age of social media and mobile communications, big companies are failing the Human Brand test while smaller, more trustworthy upstarts are running circles around them.

I’ve studied the warmth and competence perceptions of more than 45 well-known companies and brands over the past three years in collaboration with Princeton social psychologist Susan T. Fiske. Our research found that most major companies and brands are viewed by their customers as selfish, greedy, and concerned only with their own immediate gain.

The findings reveal some extraordinary opportunities for businesses willing to build their Human Brand. For example, grocers that place a strong emphasis on personal customer service, such as Trader Joe’s, enjoy high levels of profit and customer loyalty without ever needing to offer costly “loyalty card” discounts. When the CEO of Domino’s Pizza’s launched a new pizza recipe in 2009 by publicly apologizing for the old recipe, his candor earned Domino’s such high marks for warmth and competence that the company has enjoyed industry-leading revenue growth ever since.

The trouble is that we all tend to be terrible judges of how others perceive us. While larger companies typically believe they are both warm and competent, they are often shocked by how their customers and associates perceive them on these dimensions.  They learn that many of their business practices are inadvertently alienating and driving away their most valuable customers and employees by running afoul of their natural warmth and competence expectations.

In short, when the words and actions of companies and brands suggest that their primary focus is their own immediate gain, it becomes impossible for customers and employees to trust or become loyal to them.  Evolutionary psychology has hard-wired us all to think, feel and respond this way, whether we realize it or not.   This is where smaller companies can gain the upper hand on larger ones, by demonstrating a greater commitment to the best interests of their customers and employees.

For many, this requires a fundamental shift in business priorities, a shift in which long-term customer and employee relationships are every bit as important as short-term profit. Our success as humans has always depended on the cooperation and loyalty of others and in that regard, our capacity to express warmth and competence ranks among our most precious assets. Therefore, keeping the best interests of others in balance with our own is simply a form of highly enlightened self-interest.

Chris Malone is co-author with Susan T. Fiske of  The HUMAN Brand: How We Relate to People, Products, and Companies.