1. kno wle dge .whart o n.upe nn.e du
http://kno wledge.wharto n.upenn.edu/article/human-brand-relatio nships-co mpanies/
‘The Human Brand’: Our Relationships with Companies
Oct 24, 2013 Bo o ks No rth America
Market ing
Customers describe how they feel about companies and brands in profoundly personal ways. We hate our banks;
we love our yoga pants. We can’t stand the cable company, but we consider our smartphone one of our very best
friends.
How are we making these judgments? According to a new book titled, T he Human Brand: How We Relate to
People, Products, and Companies, by Chris Malone, an expert in customer loyalty, and Susan T. Fiske, a
professor of psychology at Princeton University, our perceptions are the result of spontaneous judgments on
warmth and competence – precisely the same elements that drive our impressions of other people. As a result,
customers evaluate, judge and form relationships with companies in ways that are remarkably similar to how they
evaluate and behave toward people.
Malone recently talked to Knowledge@Wharton about his book. To achieve success in the future, companies must
build more genuine relationships with customers that display warmth, competence and worthy intentions, says
Malone, who got his MBA at Wharton and has held senior marketing positions at companies such as Coca-Cola,
ARAMARK and Choice Hotels.
An edited transcript of the conversation follows.
Knowledge@ Wharton: Your book’s hypothesis is that we relate with companies in much the same way that
we do with people. Explain.

2. Chris Malone: In their struggle f or survival, primitive humans were f orced to develop a genius f or making two
specif ic kinds of judgments quickly and accurately. One: What are the intentions of other people toward me?
And two: How capable are they of carrying out those intentions? In the academic world, these dimensions of
perception are called warmth and competence. Warmth involves whether we view others to be honest,
trustworthy, kind or f riendly, while competence relates to whether they seem capable, intelligent or skilled.
T hese spontaneous perceptions drive most of our emotions and behavior toward other people.
Whether we realize it or not, the way we judge companies and brands happens in much the same way. Our
research showed that more than 50% of all purchase intent and customer loyalty can be explained by these
two basic human perceptions, bef ore any f eatures or benef its are considered. As a customer, we are
acknowledging, “I get who you are and what you’re about.”
Knowledge@ Wharton: So Mitt Romney was right? Corporations are people, too.
“As a customer, we are acknowledging, “I get who you are and what you’re about.”
Malone: He was sort of right, but not in the way he intended. We do perceive and judge corporations as if they
are people, even if we never have any direct contact with the people in them. Psychologists classif y
relationships as either “exchange” or “communal.” Exchange relationships are very transactional. We get what
we pay f or – nothing more, nothing less. Communal relationships, however, are based on genuine concern f or
others, without an immediate expectation of reciprocal benef it. We tend to think that our relationships with
companies and brands are strictly transactional. But to a much greater degree than we realize, we are more
wired f or, and desiring of , communal relationships.
Knowledge@ Wharton: A “communal relationship” with a company? Really?
Malone: It’s really surprising and counter to conventional business wisdom, but our research on more than 45
major companies over the past three years has conf irmed that warmth perceptions and communal relationships
are the dominant drivers of customer loyalty. Here’s a personal example to illustrate. I never went looking f or a
communal relationship with my drycleaner, but ended up in one nonetheless. I’m not a chatty guy. I keep to
myself on airplanes and elevators. But my drycleaner – a woman named Grace Kim, who emigrated f rom South
Korea in the 1970s and now runs Jean’s Custom Cleaners – gradually won me over without me even realizing it.
Her drycleaner is not the most modern, sophisticated or impressive I’ve ever seen, and her English remains
heavily accented. But Grace greets most customers by name as soon as they walk in. She knows their kids’
names, what activities they are involved in and where they go on vacation. She really cares about the people
she does business with and they have come to care about her in return. T here are f aster and more convenient
drycleaners in my town, but at this point, I couldn’t imagine switching.
Knowledge@ Wharton: What about the companies we don’t have good relationships with? What causes this
deep sense of disgust on our part?

3. Malone: One thing that causes us to dislike big banks, cable providers and telecoms is the imbalance of power
we have with them and how that is of ten used against us. T hey take actions in their own interest to generate
revenue and prof its – things like closing branches, cutting service and raising prices. Frequently, our ability to
respond to these changes is limited by contracts or switching costs. In the business world, this kind of
behavior is perf ectly reasonable and rational. In f act, it’s what business schools taught us and f inancial
markets expect f rom us. However, most people don’t live in the business world; they live in a civil society that
relies on trust and communal relationships to f unction and grow. Prior to the industrial revolution, if a merchant
did wrong by you, everyone in town knew about it by the weekend and the merchant would be under pressure
to make it right or risk damaging his relationships with other customers. Today, social networks and digital
communication are bringing back that same social accountability, and companies of all kinds will need to change
the way they do business, or their customers will spend time actively plotting their escape and revenge.
Knowledge@ Wharton: And what might that revenge be?
Malone: It could be as simple as never doing business with that company again, but more likely these days, it’s
launching a social media campaign to let the world know how they have been wronged and what the true
intentions of that company or brand are in their opinion. We have seen lots of examples of this in the past f ew
years, f rom Bank of America’s attempt to introduce debit card f ees or Verizon’s f ailed “convenience” f ee f or
credit or debit card payments. Social networks have rebalanced the power in relationships between large
companies and their customers.
“Today, social networks and digital communication are bringing back … social accountability, and
companies of all kinds will need to change the way they do business.”
Knowledge@ Wharton: What happens when a company disappoints us?
Malone: Netf lix is a great example of how a betrayal of trust can be especially damaging. It was once a Wall
Street darling and customer f avorite. In 2011, the company shocked customers with a major price hike and
customers were outraged. T he reason was that Netf lix seemed to be one of the good guys that enabled
people to get around the unreasonable f ees charged by cable companies and video rental chains. T here was
this f eeling of : “I can’t believe I trusted you and then you turned on me.” T he company [consequently] lost
800,000 subscribers and its stock price dropped dramatically. More recently, Netf lix has been regaining
customer trust and momentum, but has had to climb out of a deep, self -made hole that could have been
avoided if it had handled its pricing changes in a warmer and more competent way.
Knowledge@ Wharton: Do we f orgive companies that make mistakes?
Malone: It depends on how they handle the mistake. If Netf lix had come out right away and said: “We messed
up – we are going to rethink this, and we are going to make this right,” it would have unf olded dif f erently. But
Netf lix waited over two months to of f er a half -hearted apology that did not include a rollback of the price hike.
Netf lix customers were not impressed and expressed even more outrage. In contrast, the Tylenol brand has
been remarkably resilient in weathering an embarrassing spate of production problems and product recalls.
Despite having their primary production f acility shut down by the FDA, resulting in product shortages that have
lasted f or over two years, our research f ound that Tylenol purchase intent and brand loyalty remained slightly
higher than that of Advil. In f act, 87% of consumers told us that they are likely to remain more loyal to a
company that handles a product recall honorably and responsibly, even though it clearly made a mistake. It
turns out that short-term lapses of competence are highly f orgivable and can make companies seem more
“human” and approachable, while intentional acts of ill will toward customers are of ten really poisonous.

4. Knowledge@ Wharton: What kinds of things can companies do to make them appear warmer and more
competent?
Malone: In our book, we prof ile Chris Z ane, a bike shop owner in Connecticut, who back in the early 1990s was
struggling to compete with the Walmarts of the world. One simple way he has built a f anatically loyal customer
base is by giving away the tiny little parts that cost him nearly nothing, like nuts, bolts and ball bearings. He
realized that the need f or these parts typically comes during painf ul times f or customers. A parent who enters
his shop with a crying child and broken chain has enough problems without being nickel-and-dimed f or a master
link, so Z ane started giving away these parts f or f ree. It’s a little thing that doesn’t cost him a lot, but leaves
his customers surprised and impressed by his loyalty to them.
Overall, the simplest and most reliable way to convey warmth and competence is what we call T he Principle of
Worthy Intentions. Sometimes in business, we make things much more complicated than they need to be. When
companies simply think and act in the best interests of their customers – especially in the short term – the
warmth and competence perceptions usually take care of themselves. Of course, good intentions alone will not
be enough. T he product or service needs to be decent as well, but our research shows that most companies
are perceived to be lacking warmth more so than competence.
“There are some who believe that Big Data will be a kind of panacea for driving business growth in
the future, but I am not among them.”
Knowledge@ Wharton: What ef f ect does Big Data have on our perceptions of a company’s warmth and
competence?
Malone: T here are some who believe that Big Data will be a kind of panacea f or driving business growth in the
f uture, but I am not among them. In my view, it really depends on how it is used. To the extent that it’s used to
enable more one-to-one dialogue between companies and their customers, and demonstrate that they know
and care who their customers are — like Grace the drycleaner — then I think it can have a very positive impact
on those relationships. However, if it’s used primarily to track browser cookies and purchase habits as a
means to serve up dynamic banner ads and targeted product pitches, then I think it will be a big disappointment.
If companies want to develop stronger and more prof itable relationships with their customers, they need to
actually talk to them and pay attention to their interests, not just rummage through their digital trash.
Knowledge@ Wharton: Is there a danger that companies will overstep?
Malone: Yes, absolutely. Last year The New York Times ran a story about Target using its data mining
capabilities to f igure out how to predict its customers’ pregnancies. T he company had identif ied 25 items that
could be analyzed along with individual customer data to produce a pregnancy prediction score with surprising
accuracy. T hen the company would send out motherhood-related coupons. T he problem is that by trying to
engage with customers on something that is deeply personal without getting to know them f irst just comes of f
as creepy. Target was chastened f or overreaching. Companies need to use the data to get to know their
customers by name and have interactions with them that are not just automated, machine-driven campaigns.
Otherwise, it seems invasive and voyeuristic.
Knowledge@ Wharton: What are the most important lessons f or companies?

5. Malone: We have identif ied three imperatives that companies and brands should strongly consider if they seek
sustained growth and prof itability. First, they need to become more self -aware of how their actions are
perceived by customers f rom a warmth and competence standpoint. Many longstanding business practices are
f ar more of f -putting now than they were just a decade ago. T here’s a much higher standard of goodwill and
transparency expected now.
Second, companies need to embrace signif icant change in the way they do business with customers, better
aligning their policies, practices and processes to ref lect warmth and competence.
And f inally, companies need to rebalance their priorities to better serve the interests of multiple stakeholders.
T he stagnant, transactional nature of many businesses today can be traced to an excessive f ocus on shortterm shareholder returns, of ten at the expense of customers, employees and other stakeholders. Until this
root cause is addressed, the customer churn epidemic will continue, sapping growth and increasing the costs
of doing business.
The Human Brand: How We Relate to People, Products, and Companies