Marketers have never had better tools for connecting with consumers as individuals than they do today. So why, then, is customer loyalty to brands at an all-time low?
The answer is simpler than most people think, according to iMedia Brand Summit keynoter Chris Malone, author of "The Human Brand" and managing partner at Fidelum Partners. "The real key to customer loyalty is not a moving target," he told attendees. "It doesn't change. It's hard-wired into us."
Since the dawn of mankind, humans have been capable of quickly making two judgments about other people: What are their intentions? And how likely are they to be able to carry out those intentions? The answers to these questions determine how we feel about other people and, thus, how we behave toward them. Malone broke down the possible perception equations quite simply:
- Warmth + competence = admiration and loyalty (e.g., Oprah)
- Warmth + incompetence = sympathy and neglect (e.g., Joe Biden)
- Cold + competence = envy and distrust (e.g., Tiger Woods)
- Cold + incompetence = contempt and rejection (e.g., Fidel Castro)
Humans use this filter for much more than other people, Malone pointed out. We use it when assessing animals and -- yes -- even brands.
Groundbreaking research by Malone and renowned social psychologist Dr. Susan Fiske at Princeton University has yielded a deceptively simple but important finding: As customers, we engage with and become loyal to companies and brands in precisely the same way we do with other humans -- on the basis of their warmth and competence. In fact, his research demonstrates that more than 50 percent of purchase intent can be explained by a person's feelings of warmth and competence about a brand.
Examples of the above warmth-competence equations are as follows:
- Warmth + competence = Zappos, Amazon.com, Johnson & Johnson, charitable organizations
- Warmth + incompetence = public transportation, USPS
- Cold + competence = Luxury brands such as Mercedes and Gucci
- Cold + incompetence = Banks and insurance companies
Malone demonstrated the warmth and compassion of a brand with a simple case study: A Facebook post by a customer who thanked a local Panera Bread location for going out of its way to provide his dying grandmother with her favorite food, clam chowder in a bread bowl, in the final days of her life received more than 812,000 "likes" and more than 30,000 comments expressing love and loyalty for the brand. "That's a genuine act of warmth and compassion for another person," Malone said. "It's not the quality of the food or the location of the restaurant."
Every human is a brand, and every brand is human, Malone said. "People were the first brands, and faces were the first logos," he said.
Once upon a time, all commerce was face to face. Purchases were based on trust, and that trust was determined based on perceptions of warmth and competency. That trust was spread via word of mouth within the local community.
And then the Industrial Revolution changed all that. Products were mass produced. Relationships with goods providers disappeared. "You could say that, along the way, it's been the mass dehumanization of commerce," Malone said.
But now, something has changed again. Consider it the Relationship Renaissance. "For the first time in 150 years, the world is wired in the way that our brains are wired to work," Malone said. Now, not just everyone in town knows how someone (or some brand) treated you. Everyone in the world does. And it's the stories of warmth and compassion, like that of Panera, that are driving customer loyalty in the digital age.
Malone closed by delivering three imperatives for achieving sustained customer loyalty and profitable growth:
1. Become more self-aware of how your company's practices come across in terms of warmth and competence.
2. Embrace significant change.
3. Rebalance your priorities. If you're willing to maximize your profits at the expense of your customers, those profits will not be sustainable.
"Don't let your brand become another faceless monolith," Malone urged. You can make a lasting difference in the lives of customers."
Lori Luechtefeld is publisher at iMedia Communications.
"The word loyalty in cut out" image via Shutterstock.