Globally, more businesses are starting to recognise reputation as an important source of value creation and opportunity. It is our mission at Reputation Sherpa to guide Australian B2B companies to follow this proven path to success.
Reputation and brand as concepts
Brand as we know it today has evolved at an accelerated pace since the 1950s. The proliferation of brands led to the notion of a 'corporate identity' that could and should be actively managed. Over the next few decades it became accepted that a brand had value beyond distinguishing one company from another. By the 1980s, the idea of brand as a multi-channel experience had taken hold, although mostly among owners of consumer brands.
Online branding became popular as the 90s progressed. Global B2B companies started to embrace the idea that brand could convey relevance to business customers too. The notion took hold that business people made purchasing decisions based on emotion, just as consumers did. If business customers liked and trusted a brand then they would choose it over others.
So what was the role of 'the corporate reputation'?
As brand gained recognition as an asset, interest in corporate reputation grew.
In the early 2000s, a large number of research papers on reputation were published in academic journals. Although the findings were still inconclusive, evidence emerged that reputation made its own unique contribution to business success, quite apart from the contribution of brand equity.
As the decade progressed, researchers began to distinguish between brand and reputation, which were previously seen as interchangeable. Brand was recognised as operating primarily in the customer dimension. Its aim is to build relationships through customer experiences that differentiate the company and ensure its relevance to customers.
Reputation, on the other hand, spans all aspects of a company's performance. Its aim is to raise the credibility and recognition of the company among all its stakeholder groups. This is not simply name recognition. It is the recognition, or perception, of the unique value that business provides. As a measure of past performance and a signal of future behaviour, reputation influences whether or not stakeholders (including customers and employees) trust the company to deliver on its promises, and perceive a fair exchange of value.
As brands became more successful and higher-profile, recognition of the need to protect them from damage grew. A number of well-publicised disasters, culminating with BP's Deepwater Horizon crisis at the end of the decade, underscored a place for reactive reputation management. The idea of proactively building reputation existing, but in a nascent and still evolving form.
Between 2010 and 2016, a growing body of literature showed that reputation did have a significant positive impact on both customer and financial outcomes for companies when managed proactively (Yasin, 2017).
Some larger businesses had begun to take note. A European survey of senior communication professionals by The Brunswick Group found a growing acceptance of reputation as an untapped source of value and opportunity. They suggested that a number of businesses were potentially missing the advantages brought by this new way of thinking.
A new way of thinking
A new way of thinking about the importance of reputation will require a deeper understanding of what reputation is, why it needs to be 'built' proactively and how to do so - beyond just engaging more fully or frequently with stakeholders.
"Companies don't wait for a disaster before deciding to rebrand; they manage their brand proactively and consistently throughout its lifecycle. Why? Because the value in doing so is widely understood. We are not there yet with a proactive approach to reputation, but it is just a matter of time."
Jo Kinner, Reputation Sherpa, 2022
Without this widespread understanding, the obvious question from company leaders is: "why invest in building my company's reputation when it has built itself through our good actions?'
A starting point is to define what reputation is and what it was not.
Definition(s) of reputation
As the concept of corporate reputation was studied throughout the 90s, there was consensus that it is based on perceptions or judgements about an organisation formed over time.
A popular distinction between reputation and brand took hold that went (something like) 'brand is what a company says about itself, while reputation is what other people say about the company'.
While a useful distinction, it propogated the idea that only brand can be approached proactively. Reputation, it seemed, was something to be managed in the rear view mirror. Given the asymmetrical nature of reputation, this is understandable. From the time a company starts to build its reputation proactively, it takes -- on average -- two years for that specific reputation to become established (assuming the work is done effectively). The effect of this lag, we believe, was that few people tried to measure the effectiveness of reputation, so very little credit was given to its influence.
Between 2005 and 2010, some commentators formed the opinion that 'reputation management' whether reactive or proactive, must be little more than "spin" as stakeholder perceptions were the opinions of individuals and couldn't be 'managed'. (While we agree reputation can't be directly managed in the same way as a brand, it can, and should, be influenced and leveraged proactively).
The view of reputation management as spin lacked several key pillars of understanding. These have only came into place within the last decade.
1) an understanding of the multi-dimensional and issue-specific nature of reputation, and;
2) the many external influences that affect how stakeholders' form perceptions (that have very little to do with a company's actual actions or performance);
3) that the way stakeholders perceive value is rarely the same as the company's internal view of value.
It is the multifaceted nature of reputation, and the ability to leverage these facets individually, that is the key to unlocking the value in a company's reputation. We know that when a company's reputation 'builds itself' much of the value that business brings to each of its stakeholder groups is not recognised or correctly interpreted by those stakeholders.
"Reputation is the feelings people have and associations they make about a company. It is based on their perceptions of a company's actions and performance. These perceptions are filtered by the share of their attention; the length of their association; the strength of their connection; their social and cultural context; and, their personal priorities."
Jo Kinner, Reputation Sherpa, 2023
Only from 2020 onwards has there been broad consensus, based on several large global studies, that even the strongest of reputations must be proactively leveraged. Without doing so, the social and financial benefits that earlier research foreshaddowed were slow and difficult to realise.
Our experience over the last ten years has confirmed that companies that invest in proactively building their reputations achieve greater financial returns and attract quality customers and employees.
However, the majority of businesses do not believe they can afford to invest in their reputation. This misconception leads to a potentially significant source of financial value remaining untapped. In our experience, this is particularly true for medium sized B2B companies. At this point in time, they do not view themselves as having the need (as consumer brands do) or the resources (as large organisations do) to manage their reputation proactively.
The concept of branding took many years to become mainstream and accepted by businesses of all sizes. Reputation Sherpa aims to accelerate this process when it comes to reputation. We've developed the Six Steps to Proactive Reputation Building (PRB™) to guide leaders of medium-sized B2B companies to take on this rewarding journey.
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