It seems that everywhere you look these days, a great corporate icon’s reputation lays in ruin – General Motors, AIG, Citicorp — the list goes on and on. Yet many Marketers seem to be obsessed only with the latest Twitter app or new social media platform. To be sure, these are important and even epochal changes in the Marketing landscape, but where’s the sense of focus? Or, as I asked in a recent Forbes CMO Network Q&A column, is reputation management someone else’s responsibility?
Corporate Reputation — Not a Marketing Priority?
Company reputation often receives short shrift from Marketers and for good reason. It’s often seen as the purview of ”corporate communications” — the people who manage challenging stakeholders like the media, NGO’s, Wall Street analysts and the like—as well as regular consumers. Thus, it’s seen as an important, but not high priority for many Marketing organizations.
This is a dangerous and narrow point of view for Marketers–particularly for single brand companies. Why? Because corporate reputation is often correlated with business results: stronger reputations equal better financial results. And corporate reputation is often driven by factors that Marketing can and should influence. So, Marketing needs to play a leading role along with Corporate Communications to deliver integrated plans that build brand equity, corporate reputation — and even better business results.
Corporate Reputation Does Not Equal Brand Equity
Historically, the Marketing function focus has been on brand equity — the key functional and emotional benefits the brand wants to “own” in consumers minds to differentiate it versus competition and drive consideration and purchase. Corporate reputation is broader than brand equity. It’s the measure of company attributes that add up to overall corporate image. Brand equity and corporate reputation are not the same thing, but they often do overlap and reinforce each other. Hence, a good reason for Marketing to care about corporate reputation. Most importantly, strong brand equity and corporate reputation both lead to improved business outcomes.
Defining the Drivers of Corporate Reputation
Good marketers use “drivers” research to quantify how various brand attributes impact overall brand image, and focus their marketing efforts accordingly. This discipline can also be applied to corporate reputation management. Company reputation drivers and their impact are often ill-defined. So, the foundational work of rebuilding corporation reputation is defining the reputation drivers and then quantifying their impact on overall corporate reputation.
Corporate Reputation Drivers – An Example
Here’s an example of what one large multinational company facing corporate reputation issues learned. First, they identified 25 reputation drivers via qualitative interviews with stakeholder groups. Second, quantitative research was conducted to understand the single variable impact of each driver in each group. Not surprisingly, the analysis showed that just 3 reputation drivers were having, by far, the most impact on corporate reputation.
- Open & Transparent Communication – Research showed that this was a top factor driving corporate reputation—and had almost 10x the impact of most other factors. Stakeholders wanted the full picture—including what mistakes were made, why, what was learned, and most importantly what plans were in place to fix the problems so they would never happen again. For more on this topic, see my previous post: “Why Your Brand Needs to be Open & Transparent.“
- Providing Good Value For Money – The second most important driver was how stakeholders perceived the products and services of the firm relative to cost. Understanding the importance of this led to additional research to more clearly define “good value for money” and how to deliver and communicate it more effectively to stakeholders.
- Consistent & Stable Corporate Financial Performance – The company’s financial performance on average and over time was also a key driver. This is an “outcome” driver and one that only improves as the company actually turns words into deeds and delivers on its promised plans. But knowing its importance reinforced the need to communicate progress and results to stakeholders in a timely and comprehensive manner.
Equally important to identifying and selecting the key reputation drivers is the continuous understanding of your stakeholder groups:
- What are their most important issues and concerns?
- What do they want to hear from senior management?
Stakeholder research helps you focus your messaging on the right topics, and tracking data shows whether your messages have been understood and internalized. What portion of key stakeholders are aware of your message? And do they really understand? Research is a critical step to “close the loop” and help you understand progress and make adjustments.
In the aftermath of the most serious financial crisis since the Great Depression, Marketing has a new challenge – to help rebuild corporate reputation. CMO’s must think about their role more broadly than just building brand equity. They must work in partnership with Corporate Communications in a more systematic and disciplined manner to deliver what everyone should agree creates significant long term shareholder value–a strong brand and an improved corporate reputation.