Welcome to the Reputation Age
Corporate reputation is one of, if not, the most important assets to a company. Recent research estimates it accounts for around 60 percent of a corporation’s market cap and it plays a crucial role in determining things like customer loyalty and brand recognition. Yet, it now plays a more prominent role than ever before — reputation losses have increased by 460% over the past 5 years, thanks in part to social media amplifying crises like the United Airlines fiasco where a passenger was dragged off a plane in 2017. As Warren Buffett famously said, “it takes 20 years to build a reputation and five minutes to ruin it.” Companies now have to shape their brand around more than just their offerings or risk falling behind their competitors.
Just a couple of decades ago, companies had a lot more control over their reputations. Corporate reputations built upon the quality of products and services. This is no longer the case.With social media, peer reviews acting as a platform to voice opinions, corporations have less and less control over their brand reputation. What’s more, 75 percent of a corporation’s value is now intangible, shaped by factors like financial soundness, the quality of management and sustainability. To counter this, corporations are building brand pillars that represent the values of the company. For example, Southwest defines the “Southwest Way” as safety and reliability, friendly customer service and low costs. When done well, companies incorporate these values into their messages whenever possible create a cohesive brand.
One of the challenges in creating a strong brand is many different entities can affect a corporation’s reputation, ranging from investors to policymakers to employees and consumers. Each of these sectors has a different set of influencers to reach who require messaging to fit their persona. The tricky part is ensuring each of these messages maintains the same brand voice that’s informed by the company’s brand traits.
Despite all the internal efforts to build and promote a particular brand reputation, outside influencers are the major players in shaping a company’s perception. Thanks to social media, any individual’s (or bot’s) opinion of your brand can reach a mainstream audience. All brands can do in these instances is capitalize on the good and react appropriately to the bad and hope that goodwill built up over time can reduce the damage of a crisis.
A new component of reputation has also emerged. In the United States, trust in politicians is at an all-time low. Because of this, the public has sought out a new type of leader for guidance on complex and controversial issues — the CEO. This is new territory for executives. Corporations have been active in shaping policy around business issues like trade and taxes for decades, but leaders have traditionally stayed quiet. Now tough, corporate leaders are expected to voice opinions publicly on key issues and their views are seen as an extension of the company they lead. We’ve seen Apple CEO Tim Cook speak out against Indiana’s religious freedom law for being discriminatory against the LGBT community and, in 2015, the CEOs of 14 major food companies cosigned an open letter calling on leaders to create legislation to curb climate change. These companies all saw an increase in brand reputation after these statements.
Modern brands live and die by their reputations. Companies must understand everything that is said about their brand — the landscape, influencers and detractors, sentiment and bot traffic. The best way to do this is by creating dashboards showing essential metrics like message impact and creating alerts for any unusual activity.
Learn more about brand reputation in our white paper: Building and Protecting the Health of Today’s Purpose-driven Brands.