We know what a brand is, and why we need to build one. But reputation? We're not there yet.
As the concept of branding has evolved, businesses have embraced the idea that a brand can (and should) be actively built and managed. It's understood that being deliberate about building a brand will enhance people's perceptions of the company.
Before we can embrace the advantages of being proactive about reputation in a similar way, we need to
understand what it is.
The three types of reputation
Individual reputation
We can all think of a high profile figure whose reputation springs immediately to mind. We might think of Richard Branson's eccentricity and entrepreneurial spirit. Or Tim Cook's reputation for driving product innovation. Individual reputation is tied to personal integrity; to doing what you say you will do, and being recognised as doing so. It's also tied to a sense of personal drive and momentum.
Company reputation
Company reputation is internally driven. It is based on the decisions and actions of the leadership team, the governance measures in place to check and balance those decisions, and the culture those actions create.
Company reputation is 'hosted' by multiple stakeholder groups at once -- shareholders, customers, employees, company leaders, investors, the media, government, regulatory bodies, and the community.
At various times, stakeholders form perceptions about the company that influence how they behave and whether they engage in a value exchange.
Stakeholder perceptions of company reputation are heavily influenced by CEO reputation. They include:
- Direct or indirect experience (they've been a customer, received a referral, or they've read about the company or CEO somewhere)
- The strength of connection (do they know someone who works there; is it active in their community)
- Social and cultural context (is their a public issue that might alter their perception)
Take a prospective employee deciding if a company is a good place to work.
They consider factors like their interest in the company and industry; their association (do they know someone who has worked there); their impressions of the culture, company values and leadership; and whether it meets their personal priorities (eg, for meaningful work, logistical factors, good remuneration, career development, long-term stability, etc.)
Assessments are being made, and perceptions are being formed, all day every day by stakeholders. Together they are either building a company reputation or eroding it.
Above all, a company’s reputation must be authentic. It's not possible to make people believe something about the company if it doesn't match what they observe and experience in the real world. This will create a reputation / reality gap (sometimes called a credibility gap) which harms reputation. That’s why all proactive reputation building work starts within an organisation, well before any external communication takes place.
Brand reputation
Brand reputation is externally driven. It is based on clients' or customers perceptions of the value of your products and services relative to alternatives. It's influenced by your company reputation, but it also operates separately.
Stakeholder perceptions of brand reputation are heavily influenced by the quality and relevance of your products and services, as well as your brand identity. They include:
- Depth of knowledge and interest (is the category relevant to them; how much do they know about it)
- Length of association (have they heard of the company once or has it become familiar over time)
- Personal priorities (how important is the company's offer to them at this time)
- Company reputation (what is their perception of the company's values and conduct)
Building all three types of reputation makes business sense
Per Brunswick Research, "If reputation is an organization’s most precious asset, and the tangible business outcomes impacted by it are increasingly understood, are many organizations missing out on the power and benefits of proactive reputation building? How would shifting an organization’s emphasis from reputation risk management to opportunity building unleash added value and what would it take to usher in this new way of thinking?"
A new way of thinking about reputation will require a deeper understanding of what it is and why it matters -- beyond regular communication or stakeholder engagement activities.
Corporate reputation has been studied since the late 1990s. But only in the last couple of years have studies revealed the link between high-revenue, high-reputation companies and those that consistently measure, leverage, and strategically communicate around specific reputation drivers.
In terms of its widespread acceptance, the idea of building reputation proactively is at least 20 years behind the concept of building and managing brand proactively.
However, a proactive approach is increasingly being adopted by forward-thinking companies globally. It is our mission at Reputation Sherpa to guide smaller businesses to follow this proven path to success.
