Ignore Relationships at Your Own Peril

Bob Cramblitt reports on Jennifer Aaker’s talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

What’s your favorite product at Trader Joe’s?  If you are a Trader Joe’s customer, you can no doubt name more than a few.  What’s your favorite product at Safeway? You probably have trouble naming one.

What would your reaction be to torn packaging at Trader Joe’s vs. the same thing at Safeway?

The companies are in the same industry, and offer the same basic products.  But, your reactions to and perceptions of the two are quite different, because you have different relationships and social contracts with the two stores.

Relationships — formed immediately and changing over time — define brands and your perception of the companies behind them, according to Jennifer Aaker (http://gsbapps.stanford.edu/facultybios/biomain.asp?id=04071874) of the Haas School of Business and Stanford Graduate School of Business.  Good companies know this and make decisions based on the impact of relationships.

In her presentation at the Business of Software conference, Aaker defined four basic points:

(1) Rethink your concept of brand. Reputations color all interactions.
(2) Reactions to brands depend on implicit contracts — the do’s and don’ts of the relationship.
(3) Rethink transgressions: Letdowns aren’t always bad; they can serve as an opportunity to re-engage.
(4) Engagement is multi-dimensional — essentially about memories of the time spent.

Many companies tend to see relationships with customers as an optional thing, without a solid impact on the bottom line.  Studies and business results show otherwise.  Ignore the relationship with your customers at your own peril.