Introduction--Back to the Future
The author mentions the overwhelming popularity of reality television, particularly the show "Survivor" that places people in a remote location and challenges them to live together and overcome difficulties. The show is fascinating to many because it's about human relationships and the way in which we perceive and judge other people, forming mutually supportive relationships in order to survive. This is fundamental to every human relationship, and has been so back to our prehistoric past.
Anthropologists consider the functional benefits of cooperative activities - man is more effective and efficient when people work together. Economists study the efficiencies gained by the division and specialization of labor. But social psychologists recognize that "cooperation" is not always egalitarian: some people seek to benefit by exploiting and taking advantage of others, and as such people size each other up: we seek to understand the intentions of others, and the degree to which what is presented as mutually beneficial is actually in our own interests. We are distrustful by default and develop trust slowly.
The intelligence of others that gives them the ability to determine a course of action that will have the greatest benefits for the least effort and minimize risk. But this does not mean we grant trust to intelligent people, because we are always suspicious that they may be acting to deceive us into agreeing to activities that cause us to sacrifice for their benefit rather than our own. It is for that reason that we are not attracted to intelligent people, but instead are drawn to those who exude a sense of warmth and concern for others, regardless of their intelligence, because we have the sense we can trust in them to consider our needs and our rights as individuals.
Survival for our ancient ancestors, and success in the modern world, depends on our ability to quickly judge others according to these criteria. In survival situations, making a mistake has immediate and often drastic effects, such that trusting in others without reservation is a threat to our survival. In the more modern world, misplaced trust is seldom fatal, but merely counterproductive.
But essentially, it is the same thing since the beginning of human society: assessing whether someone is trustworthy before engaging with them is essential to success and survival. And this is just as true of companies and brands as it is of individual people.
Warmth and Competence
The authors speak of themselves in the third person for a bit, indicating when they began collaborating on this book. One of them first stumbled upon the notion that warmth and competence might explain the phenomenon of brand loyalty, wrote a paper on the topic, and emailed it to the other, who was already a professor in the area of social psychology, who was largely involved in research in group dynamics and prejudice (prejudice being pre-judging others, assessing their trustworthiness based on superficial factors such as gender, race, or age) who had stumbled on the notion that people seek warmth and competence in deciding to interact with others. They saw reason to cooperate.
In 2010, they evaluated more than 45 brands in ten separate studies, which largely indicated that the brands to which people are most loyal do indeed give the impression of warmth and competence, and those that have little loyalty are seen as being selfish, greedy, and concerned only with their own profit. It is also seen that firms who have established this impression are faster to recover from missteps - the public and customers, it seems, are more forgiving of their mistakes and are likely to assume or accept claims that their intentions were good.
Customer attraction and loyalty to brands is of increased importance in the modern competitive environment. Given that products are largely commoditized in terms of their features, and are similar in price, the competition for customers has become a competition for trust. Old, established firms that once dominated the market by virtue of near-monopolistic control now find that customers are put off by the cold and disdainful attitudes and flock to smaller firms that serve the same needs, but exude friendliness, warmth, and gratitude for their business.
The preference for established and traditional brands, which was strongly influential to the Silent and Boomer generations, is entirely absent in Generation X and the Millennial generation, who are distrustful of established firms and who are more likely to make an independent assessment based on their own experience rather than assume that "bigger is better" (in an age in which "big" anything - big government, big business. big oil, etc. - is presumed to be inhuman and untrustworthy). And in fairness, the manner in which businesses project an austere image was effective in gaining the compliance of older generations - but it utterly fails with those generations that are now the majority of the marketplace, who respond to more intimate and transparent appeals.
Some of the issues of traditional companies are:
- They are aloof and speak to the public through advertising, but refuse to listen
- They offer a standardized product and expect people to buy it
- Their prices are presented as a take-it-or-leave-it proposition
- They make it difficult to do business with them and require the customer to sacrifice
- They speak and behave as if doing business with them is a privilege for the customer
(EN: This reminds me of a separate article in which "chain" versus "local" businesses were contrasted, and much the same list of complaints was tendered about national chains, who attempt to standardize service and products rather than listening to the customer and attempting to adapt to serve their needs. There's some argument to be made over how much a company must be willing to flex in order to gain trust and loyalty - it's largely an economic trade-off because efficiencies of scale are lost. Also, there are ways other than changing the product that a company can be more supportive of customers.)
The Middle Ages of Mass Marketing
The authors recognize that the age of "mass" represents a dark period in the history of business. That is, mass-production, mass-communications, mass-marketing, and mass-everything represent only about a century or so of the history of business. Prior to industrialization, all businesses were local, had direct contact with their consumers, and were often quite concerned with serving the needs of the customer rather than their own production and distribution efficiencies. This century is likened to the "middle ages" of Europe, and the present shift toward customer-centricity is a return to the previous age rather than something entirely new and revolutionary.
The industrial revolution was not without resistance. People distrusted in "goods made by unknown hands" and were suspicious of their quality (EN: in the present day, there is the perception that machine-made goods are better quality because most hand-made goods are rather imperfect and amateurish - but this is because most goods are machine-made and it is rare to see the work of a master artisan or master craftsman, which is indeed far superior to mass-produced goods). But over time, particularly in the early twentieth century depression, economic concerns won out and people came to accept inferior quality for the sake of a cheaper price.
It's also mentioned that "mass" marketing and the use of currency has also impersonalized merchant relationships. Prior to the industrial revolution, few people used money and transactions were done by bartering, which is a longer and more involved process requiring a closer relationship between traders to strike a bargain. Using money means stating a price and expecting customers to pay it with little or in most cases no haggling - which means no conversation or personal interactions. (EN: it can even be seen that with self-service checkouts, a customer can complete transactions without ever having to speak to another human being.)
There's a brief foray into the problems faced by brands attempting to replace the local businesses with which people had developed relationships - and it was during this era that mass-producers attempted to show a human face, whether the president of the firm or a character, to enable people to identify the brand with something less abstract. Guarantees and warranties attesting to quality were needed to overcome the perception that mass-manufactured goods were cheap. Testimonials suggested that real people liked the brands.
The efficiencies of mass-produced standardized goods were carried to service aspects of certain brands, with salesmen, clerks, and service staff trained to deliver a commoditized experience in customer interactions: a standardized greeting, memorized replies to product questions, and "procedures" to which customers had to adhere to get the service they needed.
The author suggests that it is a myth that mass communication was the beginning of a "golden age" of brand marketing and customer loyalty. Quite the opposite: it systematically eliminated meaningful customer relationships and diluted brand loyalty. Buyers and sellers who once knew and greeted one another by name became faceless "customers" and "staff" who kept their conversations limited to only what was necessary for the transaction - and the retail experience was reduced to purchasing stock goods (manufactured elsewhere by people the customer would never meet).
For many years, customers meekly accepted their role as a component in the supply chain. It is only in recent decades that customers have dared to demand value for their shopping dollar, exercise choice among retailers, require manufacturers to tailor products to their needs, and otherwise act in ways that companies acted before the "middle ages of mass marketing."
The Relationship Renaissance
Having compared mass-marketing to the middle ages, the authors then consider the focus on customer relationships to be a sort of renaissance, or rebirth, of customer service. In this era, smaller companies are toppling some of the traditional industry leaders, particularly in the services sector where relationships matter most. Customers, meanwhile, find themselves empowered (primarily by communication technology such as the Internet) to more easily select among vendors, communicate with other customers, and speak directly to brands about what they expect.
(EN: After this, there is a quick abstract of the chapters - I'm not preserving notes.)
Instant Karma
The author refers to former ages, in which merchants were not well trusted and there were rigorous laws governing quality, weights, and measures. A merchant who short-changed customers could be fined or pilloried in the town square for cheating customers. It's noted that the "bakers dozen" originated not as a gift, but a bit of insurance on the part of a baker to toss in an extra roll to make sure that he didn't come up short on weight.
While the medieval punishments were largely banished by the nineteenth century, local merchants always had to be careful of their reputations because they recognized that trust is what kept customers coming back. If a customer got a raw deal, it would be in everyone's ears quickly. And where there were alternative ways to meet a need, a merchant might find himself out of customers in very short order.
(EN: What the author fails to mention, and which is more germane to the modern time, is that there was also the common practice of cheating people when there was no standing relationship. Gypsy caravans would regularly cheat locals, locals would regularly cheat migrant workers and travelers, and merchants would mistreat people who were shunned by the community.)
The author suggests that a relationship orientation "survives today in small pockets" and largely in small proprietorships in which the owner provides direct service to customers. However, national brands provide standardized service delivered by employees who are not at liberty to do anything additional or unusual to serve the needs of a specific customer - and are often discouraged from doing so for the sake of "fairness" to all customers.
It's also suggested that people who work for national brands lack social accountability. If a person who owns a business provides bad service, he is held personally accountable. But an employee of a national brand is "just doing his job" and is not held personally responsible for providing poor service. Given that most people have had the experience of being prevented by company policies from satisfying customers, many are sympathetic to the situation of an employee who wants to do the right thing but is prevented from doing so. For the merchant, having a global brand can also be detrimental. If a person gets bad service at a franchise in a different town, the entire chain gets a bad reputation.
Switching channels, the author considers the impact of social media on brands. That bad service received at one franchise might have resulted in the shop getting a bad reputation in one town, but it would not be known outside the community. Now, a disgruntled customer can denigrate the brand to a broad audience. The small-town concern that "everyone in town might know by the weekend" has turned into "everyone on earth might know by this afternoon." (EN: A good example of that is movies that tank on opening weekend because the people who saw the first showing panned it, and even those standing in line for the next showing decided to see something else that very day.)
Social networks coupled with mobile computing offer the promise, and the threat, of instant karma - your good and bad deeds are made public right away. There is no time to recover and make amends with one customer before he tells everyone about the bad experience he just had - and no guarantee that he will retract his public complaint or, even if he does, that people who saw the complain will also see the retraction.
Changing Times, Unchanging Values
Presently, the middle ages of mass marketing are waning. It is still possible to advertise, but yours will not be the only voice the customer hears, nor the most credible. Businesses of every size must now contend with the public directly, and develop personal relationships with customers in order to retain them.
Whereas previous generations were impressed by the size of a company, current generations are suspicious of it: anything "big" is likely bad, and they are more willing to purchase a small and friendly brand rather than an impersonal national brand.
It's also mentioned that people are especially sensitive to false claims. Where it was once possible to use crafty language to disguise some undesirable fact about a product, people are quick to blow the whistle when they discover the truth. Honesty and transparency are of the utmost importance.
It should be noted that the need to provide good service is not new, nor is the need to be cautious about one's reputation. They both hail from a time before the middle ages of mass marketing, and they have been valued all along. Customers have been willing to accept compromises, and have always wanted to be treated fairly, but for lack of a better alternative in the same price range have tolerated a great deal of bad behavior from their merchants. The present age of rampant competition provides them with alternatives they did not have before - ones that they would likely have flocked to all along had they been available.
Thus considered "the compass to our success in the future lies buried deep in the past" and this revolution in customer service likely reflects not a step in a new direction, but a step back to regain some of what had been lost during the middle ages of mass marketing.