Brand reputation is a term that is thrown around a lot these days, but what does it actually mean?

Modern enterprises build companies around more than just a product — they invest in a plethora of initiatives to build and protect their brand reputation. Millennials, soon to be the generation with the most purchasing power, engage with brands that have a purpose. Brands now place a premium on displaying their purpose to audiences, be it through corporate responsibility initiatives, promoting financial success or CEO keynotes at large conferences.

Brand reputation accounts for 60 percent of a company’s market value. In a study by Reputation Dividend, the five brands with the strongest reputations on the S&P added $894 billion in shareholder value. On the other end, reputation destroyed $19 billion of shareholder reputation in the five brands with the worst reputations.

While every company builds their brand around a unique set of values, there are eight traits that companies use as the foundations to build their brand. Here they are:

Financial Soundness

The underlying motive of any business is profit. However, financial performance also acts as an indicator of success to audiences and stakeholders. This is why companies emphasize quarterly earnings reports. Modern earnings reports are a company-wide affair with communications teams measuring the media impact of the results and ensuring that any reporting is factually accurate. Raising awareness of strong financial performance creates a halo effect—Nike’s recent Q3 earnings announcement boosted the company’s share price by 6%. People see that your brand is successful want to associate themselves with it.

Long-Term Investment

A few years back, Pepsi made the bold decision to pivot its focus from their flagship soft drink to adopt a more health-conscious portfolio. The company identified that global sales of healthy foods would reach $1 trillion in 2017, while the sales of sugary foods and drinks would continue to decline. To meet shifting demands, the brand developed an investment strategy that involved investing R&D into manufacturing technologies to make products healthier and purchased producers of healthy products like probiotic drinks maker KeVita. This was initially met with ridicule, but the stock price has reached new heights since the decision. Markets and consumer tastes change over time—brands want to show that they are adapting to the times and thinking towards the future. Audiences like to see this forward thinking when associating themselves with a product.

Innovation

It’s no secret that innovation drives business. Research from Nielsen found that the top innovations launched in the U.S. generate more than $50 million in revenue in their first year and can build long-term brand loyalty, so raising awareness of these innovations is key for business. Innovation creates an air of excitement around companies, whether from a new product line, increase in sustainable or new technology.

Quality of Products/Services

This original driver of brand reputation still plays a significant part in shaping the perception of a company. The importance of this attribute spawned two entire industries—customer care and customer success—that exist solely to ensure that customers are satisfied with products they’ve purchased. Nordstrom’s return policy is so famous that it acts as a differentiator from competitors and is a big reason for customer loyalty. In the same vein, KitchenAid can charge almost double the amount of competitive products due to its reputation of being the best mixer on the market. The perception people have of a product or service shapes the overall reputation of a brand, so ensuring customers are happy with products still plays a crucial part in brand reputation.

Quality of Management

Today’s CEO has something of a celebrity status — when thinking of big brands like Tesla, Facebook and Amazon, the first thing we think of are Elon Musk, Mark Zuckerberg and Jeff Bezos. Perceptions of these high-level executives extend past their personal reputation and impacts the brand health of their companies. In fact, 49 percent of a brand’s reputation is attributable to the CEO. Because of this, companies are ensuring that executives are in good standing through planned public appearances and quelling any news that says otherwise.

People Management

Your internal audience is crucial to your brand reputation as they can become some of the biggest proponents of your brand. Maintaining a healthy and inclusive workplace culture boosts your reputation online and acts as a recruiting tool that attracts top quality talent. Employees play a significant part in shaping brand reputation and act as ambassadors for the brand, which is why so many brands encourage social media participation from their workforce.

Use of Corporate Assets

How a company uses its assets has an impact on reputation too. This encompasses everything from factories to servers to the information companies collect. Consumers care about what corporations do with these—how do companies extend the lifespan of the resources they use? What do they do to protect your personal information? Apple is renowned for its privacy policy and was lauded back in 2016 for resisting the FBI’s demands for a master key to unlock technological devices that could potentially expose the personal information of customers. Since the court battle, the other tech giants have adopted encryption as an industry standard. Brands are conscious of how they handle their assets to ensure that consumers feel comfortable and safe using their products or services.

Corporate Responsibility and Sustainability

Consumers today care about more than just the product a brand produces — they look to associate themselves with brands that have a socially conscious agenda. In fact, consumers are 57% more likely to buy products or services from a company they know is mindful of the environment. The good news is that many brands are becoming altruistic; an added plus is social or sustainable initiatives have a substantial impact on brand reputation.

 

Brand reputation is vital for the performance of the modern enterprise. Measuring how a brand’s reputation for each of these traits changes over time can strengthen the overall health of a brand, increase market value and act as a key indicator of financial performance.

If you would like to learn more about the impact of brand reputation on the enterprise, download our white paper: Building and Protecting the Health of Today’s Purpose-Driven Brands