Brand Reputation: It Takes 20 Years To Build, Five Minutes To Ruin
The ICCO just released its World PR Report 2020, which details public relations firms’ predictions for the future year. It’s a substantial, well-researched, and authoritative document. It draws on responses from 3,000 agency heads working in the ICCO’s 41 member associations to give a sense of magnitude. This is the type of thing I have to read as chairman, strategic, and executive head of my organization.
The most striking discovery for me was that corporate leaders constantly regard reputation, the basic objective of my company, as their most valuable asset. Furthermore, it is predicted to be a significant development area during the next five years. The appetite for reputation management and advice seems limitless, stemming from two impulses:
1. Proactive: seeking to project a positive image of a person, brand or enterprise.
2. Reactive: fearing a sudden crisis or media disaster which will rock the company boat severely.
We deal with both of these concerns, but I’m happy to report that the vast majority of our work is focused on proactive, positive reputation management. Clients come to us with a vision of who they want to be, how they want to be viewed, and how much power they want to wield. It’s an enjoyable challenge.
So, what is the value of reputation? In a society where we see companies as amoral, greedy, slightly sinister institutions out merely to profit their leadership and shareholders, why does it assume such importance? What do other people’s feelings, many of whom aren’t even customers, mean to them? There are two elements to this: the obvious fact that reputation is important to the bottom line, and the more complex fact that a brand’s image is tied to its fundamental purpose. Based on my experience as an entrepreneur and a public relations professional, I’ll try to investigate them both.
“Repetition generates reputation, and reputation makes customers,” said Elizabeth Arden, and I believe she was perfectly correct. When consumers make a conscious (or unconscious) decision between companies, they are influenced by a complex web of factors that can be summed up as “reputation.” An automobile buyer may opt for a manufacturer with a track record of dependability. A perfume buyer can choose a brand with a luxurious and elegant image. When shopping for electronic equipment, a buyer may be swayed by the image of sleek design and efficient functionality.
Consider the following examples: For decades, Apple has marketed its products based on their aesthetics and youthful appeal; Chanel has a hard-wired reputation as the embodiment of French style, and Audi’s ubiquitous “Vorsprung durch Technik” motto has served the Ingolstadt automaker well for nearly 40 years. Simply put, reputation is a significant factor in sales and, hence, profit. According to the World Economic Forum, a company’s reputation accounts for a quarter of its market value, and 87 percent of executives believe reputational risks are more critical than other strategic risks. That is something you cannot overlook.
The value of reputation is also increasing. Online reviews have become an important aspect of a company’s marketing strategy. Nearly 40% of customers have grown to doubt traditional advertising — consider how much money is still spent in corporate marketing departments — but the majority will regard online peer reviews in good faith as infinitely more reliable and authentic, more “real.”
Furthermore, buyers are increasingly looking for social awareness in the brands they buy or the businesses they use for services. This is a common description of millennials. Many consumers (especially younger ones) are concerned about sustainability and environmental issues. As Nestlé found when Greenpeace mocked a Kit Kat ad, the usage of palm oil in confectionery has become a poisonous connotation. To counteract the optics of its fossil-fuel trading, BP is now advocating a low-carbon future, and the size of the problem of nonrecycled plastics has recently dominated the news narrative. Brands must show a green face to the world in order to attract the lucrative younger generation and groom them as long-term clients.
This is part of a larger problem of “poor publicity” vs. “positive publicity.” According to ICCO research, the dynamism in corporate strategy is now driven by purpose. What is the purpose of a corporation? What are its principles? Profit alone is no longer sufficient; in fact, it is beginning to appear dated. Uber, for example, has had a significant impact on the urban landscape in the last ten years, actually altering the way we move, but it is a loss-making business, and it stated as much when it went public earlier this year.
The distinguishing trait of the future of business appears to be purpose. In his annual letter to shareholders in April, JPMorgan CEO Jamie Dimon talked of the bank taking “advocacy to the next level” and devoting its resources to causes like education, immigration, and tax reform, rather than the cold numbers of the bottom line. Inspired by Henry Ford’s ambition in the early 1900s, the Ford Motor Company established itself as a prominent force in transforming how the world moves, investing heavily in autonomous driving technology and the creation of digital tools. Purpose comes first, followed by reputation, and finally profit.
So I’m back where I started. The management of reputation and its contribution to corporate performance is increasingly a hot topic in boardrooms and executive suites. That’s fantastic news for the industry, but it also means we have to be proactive, inventive, and aware of public opinion trends, as well as cognizant of squaring the circle of virtue and profit. It’s not easy, but then again, a few things worth having are. It’s multifaceted and ingeniously knit, necessitates profound and creative thought, and poses a dozen questions for each one it answers — and I can’t wait to read it.