When Domino’s Pizza (DPZ) introduced a new pizza recipe in late 2009, Chief Executive Officer Patrick Doyle took the unusual step of appearing in TV commercials to offer customers his humble apologies that Domino’s old recipe hadn’t been very good. In the first quarter of 2010, Doyle’s heartfelt requests for a second chance earned Domino’s the largest single-quarter revenue boost in the history of the fast-food industry. The pizza chain has enjoyed industry-leading growth ever since.
The appeal of Domino’s “Pizza Turnaround” campaign offers some insights into the essence of being human. Research tells us that, thanks to the struggle for survival among our early ancestors, we all rely on a primal, unconscious ability to quickly size up others according to two specific categories of perception: warmth and competence.
Social psychologists believe as much as 82 percent of our everyday social judgments can be predicted by our instant assessments of these two questions: What are the intentions of this other person toward me? How capable is this person of carrying out those intentions? Without realizing it, we apply such appraisals of warmth and competence in all our relationships, including those involving companies and brands. Warmth and competence defines what might be called “The Human Brand,” and in that respect, Domino’s provided a compelling message by apologizing for its past while offering a new, improved product.
We have studied (PDF) customer warmth and competence perceptions of more than 45 well-known companies and brands over the past three years. Our research shows that warmth and competence are major factors explaining why Johnson & Johnson (JNJ) has been able to restore its brand reputation following disastrous product failures, while BP (BP) and others have not.
The research also reveals that many major companies and brands are perceived as lacking in both warmth and competence. It offers striking evidence for why people hate banks, oil companies, and cable companies so much. In general, companies are commonly seen as selfish, greedy, and concerned only with their own immediate gain.
Mass production, mass distribution, and mass media are all largely responsible for this state of affairs. For decades, companies and brands believed that mass communication of features, benefits, and a compelling value proposition would be enough to yield lasting customer loyalty—without actually having to know or care much about individual customers.
But now the Internet, social networks, and mobile devices offer customers near-instantaneous power to pass judgment on how companies and brands conduct themselves. This has brought back the kind of social accountability in business that hasn’t been seen since before the Industrial Revolution. Smaller companies such as Honest Tea (KO), Panera Bread (PNRA), Lululemon (LULU), and Chobani yogurt are thriving by demonstrating warmth and competence through direct interactions with their customers and largely eschewing mass media.
The trouble is that we all tend to be terrible judges of how others perceive us. While companies and brands typically believe they are both warm and competent, they’re often shocked by how their customers perceive them on these dimensions. They learn that many of their business practices are inadvertently driving away their most valuable customers 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 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.
As a result, lasting prosperity requires a fundamental shift in business priorities, a shift in which individual customer 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.