Why Care What People Think?

A company’s reputation is one of its most important strategic assets. What people think of you has a great deal to do with how they feel about you, which in turn has a great deal to do with whether or not they’ll do business with you. Reputation is a critical drivers of sales and business success (there’s a widely accepted correlation between reputation and share price) and as such it should be of strategic concern to any business’s top management starting with the Chairman and his Board.

In the past a Chairman could learn pretty well all he ever needed to know about how his company was perceived by those with influence over his share price by talking to a few like-minded chaps at the club. Nowadays, in a world where one guy with a laptop in his bedroom can cause reputational havoc, and impact the company’s financial performance both directly and quickly, life is a tad more complicated.

‘Reputation’ is a much misunderstood word. It certainly isn’t synonymous with ‘like’ or even ‘admire’. Both liking and admiring may form a part of most reputations, but reputation itself is more multi-dimensional, and is influenced by more people than those dimensions suggest.

All of which makes it very peculiar that more attention isn’t paid to an organisation’s reputation by those ultimately charged with its health – the Chairman and his Board of Directors.

Take a shining example of a business that understands what reputation can do – Apple. Certainly Apple makes great products – but so do others. Certainly they have loyal followers – so do others. Certainly they are consistent in every channel, from ads to stores, from packaging to the clothing, behaviour and knowledge of front-line staff. So do…oh hang on, maybe not!

And the architect of Apple’s reputation; and its guardian protector for so many years? The guy at the top, the late Steve Jobs.

Those without Steve Jobs’ intuition need metrics. Of course there are many research companies offering to measure your organisation’s reputation. Most use a tried and tested approach, which in far too many cases hasn’t really been reviewed or fundamentally changed for many years. Yet the manner in which an organisation’s reputation can be impacted by channels like Twitter, or discussion forums has changed fundamentally.

Most organisations would claim to measure reputation. I’m sure most ask customers what they think from time to time. Maybe they ask their staff what they think of the operation they work for. Maybe they question journalists, analysts, and other stakeholder groups who affect reputation. Maybe they subscribe to a social media monitoring service.

But who joins the dots? Consumer research stays with the MR department; analysts’ opinions with corporate communications; staff research with HR; social media monitoring with the PR department.

And top management and the Board? Market research has a poor reputation at the top of so many organisations that I suspect the Board might at best see a dashboard containing metrics that have remained the same for years, presented infrequently and duly ignored. How many times do you see reputation metrics featuring in Company reports – despite the link to share price and financial performance?

The truth is that most companies don’t really measure reputation, as reputation is multi-dimensional and research isn’t organised like that.

We (correctly) hear a lot about the value of integrated communications, and communications planning. The same principles apply to measurement and evaluation, yet few apply them.

As the US consultant Leslie Kossoff put it: “There are three primary currencies that organisations work with all the time, yet only two are actively measured – particularly on a real-time, strategic and operational basis. The currencies are: time, money and reputation.”

  1. very good- consider sending it toIOD

  2. Perceptions are reality because people believe them to be true. Managing reputation is about managing people’s perceptions of what you do and how you do it. But that doesn’t mean that all you have to do is persuade people that you are a reputable organisation. You actually have to be one as well! So to build a good reputation you must actually do the right things, for the right reasons and with the right outcomes. Then you have a story to tell. If you do the wrong things but pretend that you are doing the right things you will be found out!

  3. Good comment Paddy. I think that many organisations simply don’t understand that point – they seem to think that if you advertise a nice shiny service, and then deliver a nasty inefficient service then that’s OK (think of the banks in particular). In fact, as you say it’s very far from OK.

  4. But isn’t the problem that it is so hard to measure reputation? Social media listening will only pick up those who can be bothered saying anything – hardly representative. Traditional market research methods are better, but rely on respondents accurately reporting their feelings, which we all know has flaws. Surely the best measure of reputation is through buyer behaviour and customer retention: which doubtless form a big part of those annual reports?

  5. Thanks for the comment Alasdair.
    We believe that it is possible to monitor and evaluate reputation using multiple data sources – and multiple techniques – to cover off all appropriate stakeholders. This evaluation takes place within an over-arching framework of what make up the key drivers of reputation. This is the point of ‘joining up the dots’ made in the post. If you are interested to learn more you can check out http://www.optisca.com or mail me directly on this address.

  6. Hi Brian. Uou got me thinking this morning;)

    I think of reputation more as a system…asnin a systems dynamic model and that at its heart is something to do with “expectation management”

    It is not a thing to be measured directly. It is dynamic and rhere is a need for a model to explain how it it created and destroyed.

    You have inflows and outflows and intermediate elements that create lags in the system explaining why it takes long time to develop and short time to destroy.

  7. Hi Martin and thanks for the comment. We agree – reputation is a complex topic as it is built by numerous stakeholder groups, all of whom are influenced in different ways by different channels. We have developed a number of key drivers that between them define reputation, but what’s needed is a series of measures, using different techniques and data sets all pulled together in an integrated fashion. For more see http://www.optisca.com or mail me directly.

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