Warmth and Competence
Whether we recognize it or not, humans judge things and other people as soon as we come into contact with them. Immediate judgments, inaccurate as they may be, set the tone for how we interact with others throughout the course of our relationships.
When we survived as hunter-gatherers, this judgmental attitude allowed us to gauge threats and the intentions of others. Lions, tigers, and bears look menacing, and we immediately judge them as a threat, sending us into a fight or flight response. Rabbits and other fluffy woodland creatures do not invoke such feelings because they are cute and appear to be harmless. These animals seem like they can be trusted.
Those same judgments affect how we view other people. A baby-faced individual with a smile will be less threatening than a slim-faced stranger with a scar across their face. Humans are predisposed to trust people who convey warmth and good intentions, and it has served us well (as a species) over time.
Without the ability to accurately judge outside agents, including other people, animals, plants and miscellaneous threats, early humans would not have survived long enough to pass on their genes. The ability to make accurate judgments is a survival tool. Understanding the intentions of others allowed early humans to surround themselves with people they could trust, mostly based off of first impressions.
So, how do first impressions affect how consumers view businesses? Dramatically. There are two main characteristics that are most impactful on their perceptions: warmth and competence. These characteristics are the same ones that people use to judge outside agents and their intentions. For all intents and purposes, when discussing warmth and competence, other people are treated the same as businesses.
Competence and warmth are such fundamental judgments that even babies are able to recognize the warmth and competence of animated characters.
Warmth refers to how trustworthy one seems. People immediately judge warmth based on a person’s facial features and how they carry themselves. It is one of the first criteria that people judge you on. Soft facial features, slightly surprised or happy expressions, and baby-faced individuals tend to quickly gain trust. People also associate members of their particular ingroup with warmth. They are much more likely to view someone similar to them as having warm intentions.
In business, warmth reflects a company’s intentions. Warmer companies are seen as caring about the social consequences of their actions and are more trusted by the public. Hospitals, charities and most public services (such as the postal service) are seen as having warm intentions. Consumers are willing to give businesses that project warmth a chance to earn their business, but they must also show competence.
Competence is more difficult to judge than warmth, yet humans still make judgments on competence in around one second. Judging competence is based off a variety of factors.
Those with strong, dominant faces are immediately seen as competent, while those who appear weak and submissive are seen as incompetent. Other factors such as size, gender and ethnicity are also considered when judging for competence. It is important to note that these judgments are often wrong because they are made instinctively in a very short period of time and are based on stereotypes.
In business, you will be judged for competence based on how you have performed in the past. Any previous experiences a customer has with your business will be considered when judging your competence. Online reviews and ratings will also affect how competent your business is perceived.
The combination of warmth and competence has a dramatic effect on how others view you or your business. Different combinations elicit different responses, fitting together in something called “the warmth-competence matrix. It is important to note that judgments are made from stereotypes, and while the judgment may be wrong, they still affect how individuals see those around them.
One’s place on this matrix has very little to do with how warm and competent they actually are. Your placement on the warmth-competence matrix focuses entirely on how you are perceived by those around you. You may be the single most competent person on the planet, but if you do not project that to others, then for all intents and purposes, your competence does not matter.
If an individual is seen as warm and competent, they are often admired. They are seen as trustworthy, carrying good intentions and able to achieve their desired results. Individuals in this segment of the matrix often become leaders, as they are both liked and trusted by others.
People will stereotype others as warm and competent if they are part of their particular ingroup, or are seen as close allies of the person who is doing the judging. People who fall in this group are often admired because they have positive (warm) intentions, and seem competent enough to execute on those intentions.
A warm-competent business is one that has trustworthy intentions and has proven in the past that they have the ability to perform. Companies that fall within this sector of the matrix are extremely successful, usually growing to capture a large share of their market. Companies viewed as warm and competent include Campbell’s, Johnson & Johnson and Coca-Cola. They have shown that they have respectable intentions and have the ability to deliver a positive customer experience.
If an individual is seen as warm and incompetent, they will be pitied. These are individuals who, while trustworthy, are seen as completely incapable of actually accomplishing anything of note.
The elderly, people with disabilities and women have historically been stereotyped as warm, yet incompetent. As a result, they have been treated with paternalistic behavior. Warm-incompetent individuals will be accepted as part of the ingroup, but not given any responsibility due to their perceived lack of competence.
Companies seen as warm yet incompetent have good intentions, but for some reason cannot deliver to their customers. Often these businesses are government funded, provide some sort of public service, and suffer from a lack of resources. Businesses in this sector include postal services, public transport and, veterans hospitals. People view these businesses as trustworthy, but unable to meet their goals.
People in this segment are looked at with envy because while they seem very capable, their intentions are viewed as cold. This elicits a negative response in people because they are jealous of the competence, but would use it to accomplish warmer goals.
People viewed as cold yet competent are usually associated with high-status, competitive outgroups perceived as high on competence but low on warmth. This leads to feelings of admiration and resentment.
Luxury brands are the most stereotypical cold yet competent brands. People see them as competent because they provide a high-quality product that people clamor for. They are seen as having less-than-positive intentions, but very capable of seeing out their goals.
Individuals in this segment are not well liked, and often held in contempt. Their intentions are seen as less than honorable and they are completely incapable of achieving their desired results. This is the worst segment of the matrix to grouped in with because people will not respect or trust you.
Immigrants, homeless people and poor people are often stereotyped as cold and incompetent because they are part of the outgroup and seen as having low competence. People seen as belonging to this group are often easily dismissed because the person judging believes they are wholly inferior.
Brands that are viewed as cold and incompetent should be concerned. It means that consumers don’t trust them in any capacity. Usually, it takes a colossal failure to end up in this section. After the 2008 recession, many consumers lost a great deal of trust for investment banks. The BP oil spill caused the company to lose consumer trust (especially because of the fallout from the spill). Brands also make appearances in this sector include well-known, profit chasing drug companies and tobacco producers. You do not want your brand to fall into this sector.
Applications for Financial Services Professionals
The way that people judge individuals is the same way that people judge businesses. Your brand has human characteristics to your clients, with warmth and competence being two of the most impactful characteristics your business has. Businesses are judged on the same matrix that humans are judged on. However, there are differences between how businesses and people are judged, especially when it comes to financial service providers.
You are the face of the brand
While some financial institutions such as large banks and insurance agencies are seen as “faceless monoliths”, smaller, boutique institutions (such as advisory firms and credit unions), have a very tangible, human connection.
An investment advisor, for example, is the main point of contact for their clients. People usually know their financial advisor on a first name basis. If you are a financial advisor, people will judge your warmth and competence and assign those values to your practice. Since you are the human face, you will need to project warmth and competence to your clients every time you meet them.
Actions speak louder than words
Projecting warmth is done by softening your facial features, smiling more and generally being amenable towards your clients. It is fairly simple but requires emotional intelligence to control what emotions you project outwards. Competence is far more difficult to project.
Actions speak much louder than words. Don’t tell your clients what you will do with their finances, show them. Use case studies and projections to explain your abilities to clients. Be mindful of your actions, as they will be the ultimate indicator of both your warmth and your competence.
By offering personalized content and communications you can show your client that you care about them, demonstrating your warmth. People prefer personal communications, so a handwritten note will garner more goodwill than a letter addressed to “Homeowner”. By pushing personal communications financial service providers can become part of their client’s ingroup, which we know will increase your perceived warmth.
By focusing on providing genuine experiences and solving client problems, your business can show clients that they are genuinely cared for. Respecting client’s time and providing tangible solutions to their problems are ways that financial service providers can show warmth and competence.
The Human Brand
The Human Brand, a book by Chris Malone and Susan T. Fiske. Chris is a managing partner at a professional services firm with a focus on sustainable business growth and performance. Susan is a psychologist, focusing on how groups are perceived and the emotions they create at cultural, interpersonal and neuroscientific levels.
In the book, the authors explore a variety of topics, including how perceived warmth and competence impact how consumers view a business, how consumers view actions and intentions, and how brands can take actions to influence how they are perceived by the public.
The Human Brand is a must read for business owners and, C-level executives who want to take advantage of human nature to improve the perception of their brand. If you want to discuss the book, let us know on Twitter @VeridayHQ.