Some reputations are worth billions of dollars

Business Week reports on an in-depth study into the effects on company share prices of their reputation. The headlines are quite impressive; Coca-Cola would be worth an extra $4 billion if their reputation was as good as Pepsi’s. Walmart’s share price could be nearly 5% higher if their reputation matched Target’s. Also singled out are Intel and Fedex among others. The over-arching message is that there are many large, public companies who are not handling their reputations as well as they could be.

These are focussing on reputation across the board. Increasingly, however, we are seeing the Internet being the starting point where the issues that go on to shape a company’s reputation are formed. The nature of online buzz and the speed with which news and opinion spreads online means that many of the defining events in a company’s reputation history have their roots in blog discussion and social media. Of course, this is particularly true of technology companies whose customers, users and evangelists are all heavily online, but it is becoming ever more important for all businesses.

The benefits of being small

As with many online issues, the big guys do not necessarily have the same weight advantage they enjoy offline. In the same way that the small guy can make a big noise online, and the (dream of) meritocratic search engines allows smaller businesses to compete with their advertising as long as they can create a profitable set of transactions, it is easier for smaller businesses to participate in online discussion of their products and their brand.

When you are a small company, with a relatively small set of enthusiastic customers, you can get pretty close to being involved in all the online discussion about you that you want to. While there are some conversations that are probably best avoided, there are many where a well-timed, friendly and personal response will add up nicely to a ripple-effect improvement in your reputation. Communicating with people who mention your brand has the dual effect of improving people’s opinions of you and spreading the word further afield, to new potential customers who hadn’t previously encountered you or your company.

The first step in this process is, of course, to monitor what is being said about you and it is here that small businesses have an advantage over the large corporations. While there might be hundreds of thousands of new mentions of Coke every time they check, most smaller businesses can easily read through the handful of new mentions regularly and decide if they wish to respond.

So is it all doom and gloom for the big businesses?

Not at all. There are immediate steps that each of the large corporations mentioned in the Business Week study (and others that happened not to be picked upon) could take to begin the process of improving online discussion of their products and brand. This would lead naturally to an improvement in their whole reputation and, as the article reports, a significant increase in the value of the company.

For example, Business Week allocates much of the differential between Fedex and UPS’s reputations upon the fact that:

UPS does a better job publicly communicating its strengths, such as its ability to handle complex global delivery challenges with high reliability.

Suppose Fedex were to monitor the public comments about their brand better, and find criticisms such as this one and this one in a timely fashion so that they could find problems with their processes and attempt to make it up to people who have suffered particularly badly. Even just the fact that it would show that they are listening would help.

By this point, it’s obviously too late to actually fix the initial problem, but even just in a few minutes of searching I have seen a definite recurring theme of the kind of complaints that are being made about them. If Business Week are right about the scale of benefit available if they were to improve the situation, then time spent working out how to fix some of these issues would be time very well spent.

Why are they not doing this already?

Some big companies are. There are some stories you hear about where large companies have participated in the online discussion of their brand in a really positive way (see the Google painkiller story for example). I think it’s mainly a process and focus problem. There is no executive who obviously owns this area (is it marketing?) and so it falls by the wayside. I think, however, that as we see social media continue growing in influence, tomorrow’s leaders are going to be those companies who sit up early and take notice.

Will Critchlow

Will Critchlow

Will founded Distilled with Duncan in 2005. Since then, he has consulted with some of the world’s largest organisations and most famous websites, spoken at most major industry events and regularly appeared in local and national press. Will is part...   read more

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