Should Marketers Care About Corporate Reputation ?


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?

GM -- Reputation Lost

GM -- Reputation Lost

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.

AIG -- Reputation in Tatters

AIG -- Reputation in Tatters

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.

Citi - Rebuilding Reputation: Where to Start ?

Citi - Rebuilding Reputation: Where to Start ?

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.

Stakeholder Tracking

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.

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11 Responses to Should Marketers Care About Corporate Reputation ?

  1. Joni Fisher says:

    Great post – simplistically put, marketing, PR, corporate communications (etc.) need to comprehensively reinforce the Brand of the organization. In a consumer’s mind, corporate reputation is the foundation of all the drivers used to communicate a positive message. Everyone needs to pull in the same direction in order to present a seamless Brand in the eyes of the consumer.

    While I am not a Marketer by profession, this should be a strong Call to Action to all Companies providing a product or service, regardless of the depth and scope of the Organization.

    • beardrs says:

      Joni — Thanks for your comments and reading the blog. It’s heartening to see that people who are not Marketers by profession still understand and take to heart the importance of EVERYONE in the organization working together to deliver the brand promise. I wrote another post on this topic (How Marketing Builds Brand Value), and think it is a topic often not well understood. I like your description of corporate reputation as the “foundation” on which everything else is based. This is a great analogy, as it’s almost impossible to build a strong brand with a weak corporate reputation. The two are tightly linked.
      Randall

  2. Mike Ferry says:

    Randall-

    Great topic. While I agree Corporate Reputation does not equal Brand Equity, the two are inextricably linked.

    To me, much of Corporate Reputation comes down to trust.
    – Do I trust company leadership to act with
    integrity?
    – Do I trust company leadership to provide a high
    quality product or service at a fair price?
    – Do I trust company leadership’s ability to
    operate in a fashion that maximizes shareholder
    value, while appropriately managing risk?

    Unfortunately, many companies have acted in a fashion that does not inspire trust in recent times, and this creates a negative halo across entire industries.

    Thanks for addressing this topic, and for an informative blog.

    • beardrs says:

      Mike — Thanks for reading the blog and sharing your thoughts. Excellent points and ones I totally agree with. Trust is inextricably linked to reputation. In the modeling I’ve seen done, several drivers like open and transparent communcation, etc. drove overall reputation, and trust and business intention were outcomes of reputation. So, to say it differently, reputation drives trust, which intuitively makes sense. When you communicate openly and transparently, deliver good value for money, and provide excellent shareholder value–and do these things consistently–you build reputation and trust. One of the biggest dilemmas companies face is what to do when negative information appears, but consumers don’t know about it. A good example is SIGG bottles, where the CEO just had to apologize for not telling consumers about a not so attractive ingredient. In the end, companies need to take the medicine early and communicate openly and transparently–even when the news is bad–to build trust and credibility with consumers.
      Randall

  3. Tim Guen says:

    Hi Randall,

    Yet another interesting topic, thanks for posing the question. The simple answer to your question is YES, marketers should care deeply about their company’s reputation; the more relevant question is: why do most companies choose to limit Marketing’s role to such an extent?

    I’d suggest the three following reasons:

    1. Leadership bias – if you look at the pedigrees of most CEO’s and Presidents of large companies, they tend to come from manufacturing, operations, finance, with the occasional sales/business development leader thrown in. What do these functions have in common? They typically are Marketing’s organizational antagonists, they see marketing as a cost to be minimized instead of an asset to be leveraged, and they just don’t get the nuances of how advertising and emotional connections work. And they carry these biases into the top chair of the company.

    2. Joint custody – Corporate reputation, as you noted, is usually the granted domain of corporate affairs or public affairs. Why? Because public affairs is primarily about playing “defense” and mitigating risk, which CEOs understand much better than the abstractions of marketing. Those CEOs who understand that product brand building can boost the corporate brand reputation will expect marketing and public affairs to collaborate on holistic brand building, but do not create the processes or governance to enable it to occur productively. This error of omission produces a significant amount of left-hand, right-hand confusion for people both inside and outside the organization.

    3. Corporate culture – Brand equity is certainly not synonomous with corporate reputation, and to most CEOs it’s not even the closest proxy. Most would say that the company’s culture is a more accurate reflection of their reputation (or at least they want it to be); and once again, this is seen as out-of-bounds for Marketing to play an influencing role. Human Resources is usually assigned the leadership role for culture, and while it’s no secret that HR is internally-focused and unconcerned with customers or other external stakeholders, there is rarely a request for the CMO to help develop employee engagement strategies. You can call it parochialism, or xenophobia, or turf politics, or even prejudice against marketing people who are perceived to be more like mercenaries and not as vested in the company culture.

    Looking at the giant companies you cited in your post, you can imagine how deeply ingrained these organizational habits are, and how difficult they will be to break. Perhaps the enormous financial difficulty these companies are in will be the burning platform that will lead their CEOs question all the old paradigms and giving marketing a more influential role in all aspects of corporate reputation building. Like all matters of corporate strategy change, it requires inspired and insightful CEO leadership to align the silos and create a truly holistic environment for brand growth.

    Thanks again for the opportunity to comment, and please continue raising our consciousness on these critical issues.

    • beardrs says:

      Tim — Great points, all. Couldn’t agree more. The inertia in large organizations is a huge issue when dealing with Corporate Reputation or similar topics. It takes a CEO with real vision and also the fortitude to change organizational norms and behaviors to drive the kind of cultural change you allude to. The CMO must also paly a role. My experience is that CMO’s with P&L experience tend to have more influence over the CEO and corporate culture than those who came up thru Marcom roles. I was at a CEO/CMO roundtable yesterday when John Quelch, the Harvard Business School prof, made the point that “the best CMO’s are ex CEO’s” (of a BU). Thanks again for reading the blog and your thoughtful comments.
      Randall

  4. Richard VandenBrul says:

    Reputation may not matter to the marketers or current “management team”. However the public like an elephant has a long memory. There are many people who will not deal with fallen icons. It has taken Ford 25 years to restore its reputation for quality.
    It may take UBS many years to restore its reputation.
    Would you trust your money with AIG,Citi,Merrill etc.
    I do not and would not. I have a long memory.

    • beardrs says:

      Richard — Thanks for reading the blog and your comment. You raise a really interesting point about how long it takes to recover from reputational damage. I’ve seen some analyses of this and generally, they point to something like 3-5 years. However, my sense is that the reputational damage of the last couple of years is far bigger than anything studied in the past. So, I think you’re right that it will take years for firms to recover. All the more reason that firms must be proactive in understanding the drivers of reputation and then focusing on those relentlessly to accelerate the recovery.
      Randall

  5. Dayo Abinusawa says:

    Interesting article Mr Randall .

    I would assume a summary of all that has been mentioned is, first;
    1.Traditional media/communication techniques still has a place in the near future;
    2. Avoid information suger-coating
    3. Give marketeers broader control – with communications as added value tool.
    3. Continuous process adaptation is key
    4. Seamless information flow & purpose unity across every aspect of organisation makes a big difference
    5. Continuous learning of individuals in leadership to understand culture in-depth and how it affects their perceptions
    6. and I guess applying good old ethics in all dealings is not such a bad idea after all because in the end it shapes/defines public(s)perception.

    ……Informative Blog…I`ll be back for more……..

    • beardrs says:

      Dayo — Many thanks for reading the blog and your interesting perspective. Your 4th point around “seamless information flow & purpose unity” is an interesting one, particularly for B2B and service oriented consumer business. In these types of business, much of the “brand” is delivered thru people and the servicing of the customer. Having every touchpoint, including the important human ones, aligned on the key drivers of corporate reputation is key. This is also really hard to execute with excellence in a large, complex, multi-national organization. Companies that understand this kind of operational excellence, like Singapore Airlines, are much better equipped to deal with these kinds of reputational issues because they already have the information flow and unity built into their operational DNA. Great point.
      Randall

  6. […] previously about the importance of Marketers contributing to corporate reputation efforts (Should Marketers Care About Corporate Reputation?), but the Tiger Woods story presents a new angle: how celebrities impact corporate and brand […]

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