Don’t Get Robbed Of A Good Reputation.
Brand reputation impacts everything from pricing to attracting and retaining talent to competitive advantage and intent to purchase. It’s time to protect it.
Before quarantine, I went to the bank to sign some paperwork. The bank was closed due to an “incident.” While waiting outside for the bank to reopen, a man approached the door and demanded that the employee on the other side let him in, saying he was a private banker and didn’t care about the incident. He escalated into a swearing tirade against the employee who was merely following protocol.
Brand reputation is at the constant mercy of events often outside of a company’s control. As customers, we expect companies to act empathetically, but we rarely have it in return. A bank robbery should not rob a bank of its reputation, but in today’s social media reality, it doesn’t take much to wreak havoc.
“It takes 20 years to build a reputation and only 5 minutes to ruin it.”
Warren Buffet
Reputation is a critical driver of business, impacting everything from premium pricing to attraction and retention of talent, competitive advantage, and intent to purchase. Weber Shandwick’s study on the State of Corporate Reputation states, “reputation is an invaluable asset with an appreciable impact on a company’s bottom line.” Executives from around the world attribute 63 percent of their “company’s market value” to their company’s reputation.[i]
As with people, brand reputation is incredibly fragile and sometimes impossible to control. Customers have zero tolerance for mistakes, and they brandish social media as a weapon to have things go their way. Over 60% of Canadians believe their actions, from boycotting to protesting, directly influence how companies behave.[ii] It’s part of the perfect storm that’s been brewing for some time concerning corporate reputation.
For starters, brand trust has eroded across categories. Only 34% of people say they trust most brands they use, a new low, highlighted in Edelman’s 2019 Trust Barometer. A lack of trust is a big problem, given that after losing it, 85% of people avoid using the brand again.[iii] Some of the most trusted brands on the planet have either been caught in a lie, such as VW and Diesel Gate or face severe yet unproven allegations, such as Johnson and Johnson’s alleged cancer-causing baby powder. True or not, a blade has been driven through the heart of our trust in brands.
Another reputation challenge is linked to transparency. There isn’t a company immune to difficulty, ranging from rogue employees to company-culture issues, product flaws, or gaps in customer service. A poor reputation cannot merely be swept under the proverbial company rug. Though it isn’t always easy to look in the mirror, it’s essential to let stakeholders know what needs improvement and what action plan is required.
Transparency pays off, not only from a company culture point of view but from a revenue and growth point of view. For example, when Domino’s Pizza experienced same-store sales decline year-over-year, and their stock hit a $3 low, they asked themselves why our pizzas suck? They then did the unthinkable. They launched a transparency campaign admitting their pizza tasted like cardboard, developed a new recipe, and encouraged customers to provide unfiltered feedback and let them know when they missed the mark. This year, their stock reached $373, outperforming the growth of Amazon, Apple, and Netflix during the same period.[iv]
94% of consumers prefer brands that practice transparency.[v] However, many organizations have been built on closed-door policies where transparency sits on the top floor and never takes the elevator down. To be successful, transparency must be infused throughout company culture and extend to customers.
In today’s perfect storm reality, no matter how big or small, the opposition can never be taken lightly. We are witnessing political, social, and cultural voices form into movements for change, disrupting everything from business to infrastructure. Roads and bridges are blocked; micro rallies quickly formed. We are experiencing a surge in employee strikes, with a 35 year high in striking activity in 2018 and 2019.[vi] NIMBY (not in my backyard), CAVE (citizens against virtually anything) and BANANA (build absolutely nothing anywhere near anyone) are not only movements with political agendas but also barriers to brand growth and a positive reputation.
Today is an extraordinary moment for brands to take a stance on world issues on race, equality, sexual violence, and the environment. It is time to right the wrongs of the past and chart a new course for a better future. The line between brand and beliefs is no longer separate, with 64 percent of people are belief-driven buyers.[vii] According to Accenture’s Global Pulse Research, over half of Canadians want companies to take a stance on social, cultural, environmental and political issues. Taking a stance requires more than merely turning a social page black for a day or putting up a rainbow sticker in a store window to celebrate pride. Real change requires action, not words. We can learn much from Ben and Jerry’s, the famous kid-friendly ice cream brand. They’ve emerged as leaders on critical global issues, ranging from the environment to world peace, to Black Lives Matter. They don’t beat around the bush or filter what they believe. Their current homepage isn’t focused on the flavour of the day but on making the point that “we must dismantle white supremacy.” They boldly state that “silence is not an option,” calling out every other brand or individual who may choose to fly under the radar on the BLM issue, and they provide ways for people to get involved.
“There are moments in the course of history when it’s important to stand up and be counted.”
Christopher Miller, Head of Activism – Ben and Jerry’s
The best way to plan for the unplanned is to have an inspiring Brand Stance, shared beliefs backed by company actions, and an equity bank filled with goodwill. Without such a plan, no one will give your brand the benefit of the doubt, and you just might get robbed of your reputation without even knowing it.
The following five principles are a starting point for building a lasting positive reputation.
Take a stance. If you don’t stand for something, you’ll fall for everything.
Be open. Don’t let the good stuff fly under the radar, and don’t be afraid to own the bad either.
Be responsive. Every complaint is a chance to listen and turn unhappy employees or customers into advocates.
Control your narrative. If your brand isn’t telling its story, somebody is saying it for you.
Be ready. Shift your internal dialogue from crisis management (reactive) to risk management (proactive).
[i] Weber Shandwick: The state of corporate reputation in 2020
[ii] Accenture – Global Pulse Research 2019
[iii] Bazaarvoice, Global Survey – 2020
[iv] Contagious Livestream, Ask Heretical Questions – 2020
[v] Label Insight Survey – 2016
[vi] Economic Policy Institute, 2020
[vii] Edelman Earned Brand Study, 2018
The End.
