Posts Tagged ‘corporate reputation’

An article in the New York Times on purpose-marketing echos my firm belief that the company behind the brand matters more than ever. In fact, Stuart Elliott says it himself: “Purpose marketing is becoming popular on Madison Avenue because of the growing number of shoppers who say that what a company stands for makes a difference in what they do and do not buy.” These socially conscious buyers are avid researchers and they know whether the companies behind the products they are considering treat their employees well, have high quality products and are well-led. The article is about Panera’s new advertising campaign that is based on the company’s core values — “Live consciously. Eat deliciously.” Has a nice ring to it.

Take a quick look at our research on the company behind the brand for hard evidence that corporate and product reputations are blending.  Perhaps I should coin a new phrase called reputation-marketing to join the marketing folks who now call reputation-building campaigns with a conscience purpose-marketing. Just about a year ago, I wrote a proposal for some new business and dubbed it reputation with a purpose. Has a nice ring to it too!

A new study was just released called the Champion Brand Index from APCO, another PR Firm. It caught my interest because it ties corporate reputation to sales which we all know to be true. The survey was conducted among 10,000 consumers around the world. If you follow my work, you know that we also examined the link between corporate and brand reputation in our Company behind the Brand research. The Champion Brand Index found similar strong ties between the two and I am happy to report them here in defense of the indivisibility today between the corporate and brand reputation:

• 40% of respondents say they decided not to buy a company’s products or service because they did not agree with the company’s practices, policies or activities
• 77% of respondents believe that corporations have a greater impact on their lives today than 10 years ago
• Nearly half say that global companies have a bigger impact on their lives than the government
• 67% say that it is as important to know how a company operates as it is to know what it sells

Good stats for continuing to make the case that corporate and product brand reputation are increasingly one and the same today with the vast penetration of the Internet and globalization shrinking the world. The fact that over three-quarters of consumers notice how corporations have become tabletalk in our lives is a good one to save.

I could tell that it must have been the one year anniversary of the Costa Concordia because I started hearing about the shipliner crash in the past few days.  Reputations keep rolling along throughout the year but especially hit home one year later. Whereas they might be fleeting memories at first, they all come together on the year one anniversary to make us take notice. Today I started hearing more about the memorial service for survivors and families of those who lost their 32 dear ones in Giglio, Italy and it started to stick more than two days ago. There were 846,000 mentions on Google when I searched for Costa Concordia anniversary today.

For reputation, one year anniversaries are part of the reputation process.  It is almost like it fits into the five stages of grief. The one year anniversay is a day of reflection and return to the reputation demise that caused the loss in the first place. All the pictures of the cruise ship on its side off the shores of the little Tuscan city are back in view. Debates over raising the ship and removing it are back in the news. Anniversaries are important because they remind us that reputations should not restored overnight. The bigger the loss (especially when lives are lost),  the longer reputation takes to repair. That should be law.

I especially remember the Costa Concordia because we were launching our survey on how corporate and brand reputations have become nearly indivisible. The parent company of the cruise liner pushed media requests over to the Costa Concordia CEO — the brand leader — in an effort to disentangle the corporate reputation from the brand reputation. Due to the ease of information flow and the Internet’s reach, much of the media coverage mentioned the parent company in the coverage which only proved that corporate and brand reputations have definitely converged. Because the entire incident happened just as we launched the survey, it is forever lodged in my mind.

Talking about reputation, tomorrow’s Oprah Winfrey interview with cyclist Lance Armstrong will be another one for the record books.  I am not sure how Lance’s confession that he used drugs to help him win the Tour de France several times will go over. My sense is that an apology might not curb his rapid reputation decline and Lance’s reputation might not just keep rolling along but might face a hard stop for awhile. No telling where it will be, however, in three or four years.  I will be interested to tune in and watch.

I attended a Council of PR Firms Critical Issues Forum about one week ago. However, I can now only think in terms of PHS (pre-Hurricane Sandy) and PostHS.  It feels like the world has been turned upside down since life has not yet to normal. My neighborhood is basically fine (meaning we have power) but everything seems different in some indescribable way. Since I cannot get to the office, I have been working at home. We will see what Monday brings.

I wanted to write about the survey that Harris Interactive did with the Council on the connection between brand and corporate reputation. This topic was the theme of the forum. As you know, this is a subject we at Weber Shandwick also know well — take a look at our report on The Company Behind the Brand: In Reputation We Trust.  The Harris Interactive study analyzed results from several of their own studies (50,000 consumers) and VP Robert Fronk concluded: “Marketers might profitably think of themselves as operating in the corporate reputation business, while corporate communicators might think of themselves as operating more deeply in the product marketing business.” As we also found, brand and corporate reputation are now indivisible. The Harris Interactive analysis looked at three industries — auto, B2B and Food/Beverage. It is worth looking at their brochure, Hidden Harmony, which I highlighted above because it shows what drives purchase consideration and recommendation. To give you a taste, below are the drivers of purchase consideration for the auto industry. I was fascinated by the importance given by consumers of how employees are treated when it comes to perceptions of reputation in the auto industry. And no surprise that trust is high on the list for both brand and reputation. Brand consideration appears to be very me-centric (how it fits with my own image, seeing it everywhere, brand is exciting). For reputation, in constrast, the drivers are very company-centric. They are different but when strengthened together, they are a powerful punch. They should not be siloed.

You have probably read enough about our survey The Company behind the Brand: In Reputation We Trust. The first segment of the study, released in early 2012, reported on the growing interdependence of product brand and corporate reputation. The findings alerted marketing and communications executives to a tectonic shift in communicating the voice of the “enterprise” to key stakeholders. The survey, conducted with KRC Research, was among nearly 2,000 consumers and executives in two developed markets (U.S. and U.K.) and two developing markets (China and Brazil). The second release focused on CEOs and their role in reputation-building from the viewpoint of consumers and executives. This third release, just issued today, explores how executives in companies that market their products under multiple brand names differ from those companies who market mostly under one single brand name in their approach to building reputation. It addresses why it may be critical for product brands to be transparent about their ownership, even in cases where a company has made thoughtful and strategic decisions to lessen the exposure of the corporate brand.

We learned that 75% of executives at companies that manage products under multiple brand names now believe that a strong parent brand reputation is as important as the company’s individual product brands. As I was quoted in today’s release and executive summary: “Historically, multi-brand organizations more extensively marketed their product brands over their corporate brands, but their future success might entail determining how to bring the corporate brand forward to realize the full potential of all their reputational assets.”

I always get asked what surprised me. First, despite the advantage of leveraging the parent brand to enhance the reputation of the product brands, the survey found that many multi-brand executives aren’t fully embracing consumers’ increased scrutiny of the company behind the products they buy. While more than eight in 10 single-brand executives recognize that consumers are increasingly checking labels and doing research to identify the company behind the brand, significantly fewer multi-brand executives recognize how proactive and discerning consumers are about what they buy.

 The second surprise was that despite the fact that multi-brand executives say they are promoting company reputation as much as product reputation (81 percent and 80 percent, respectively), they fall short in communicating some key drivers of company reputation compared to their single-brand counterparts, particularly how employees are treated. There was a particularly large gap between single- and multi-brand companies when it comes to communicating about their workplace (73 percent vs. 52 percent, respectively). Companies that are proud of their records for employee satisfaction should not be reluctant to communicate these qualities and tout their awards or placement on ‘best of’ lists. These credentials help drive the overall reputation of a company, regardless of how many brands it markets, and possibly influence purchasing behavior.

Take a look at the summary for greater detail. When I was talking to PRWeek about the findings, they said they were surprised how little information was available on this topic. We agree. When we did the background research on the increasing indivisibility of the corporate and brand reputation today, we were floored by how little had been done and how companies had been relying on “this is how we’ve done it” thinking. We hope that we at Weber Shandwick are filling in some critical gaps on this dimension of corporate vs. brand reputation in a no-secrets-consumer-is-in-the-driver’s-seat Internet world.

2012 is the Year of the Dragon — the ulimate sign of courage, prosperity and good fortune.

Just saw this from the Hay Group. It’s pretty cool. People are asked to make their predictions about who will top the Fortune Most Admired Companies survey in various countries and sectors as well as by the 9 drivers of reputation.  I love the dragon theme and design. It is a way to draw attention to the release of the survey on March 1. 

The votes are already in from top executives, analysts and board members so here is a way for the “masses” to vote on who their choice for most admired corporate reputation is.  So if you are up to predictions, this might be fun. Definitely auspicious.

I have thought about the company behind the brand for at least a decade (maybe more?). Years ago, I was involved in a pilot test where we placed corporate and product ads for several companies from different sectors in a business publication to try to determine the right balance of corporate to product messages to generate awareness and interest to buy. Should a company run one corporate advertisement and 1, 2, 3, 6, or 10 product ads to gain notice? Should they alternate the order — three product ads, one corporate ad, three product ads in that order? Do they even need corporate ads? Over how many months would it take to generate the most interest for the company and the products being sold? This was in the days when companies were wondering if they should communicate what they stood for, who they were and if it really mattered. Obviously pre-Internet days. It was a huge research undertaking that involved printing presses and hand-inserted advertisements. I learned alot about rubber glue and washing sticky hands. But my interest in the company behind the brand has always remained with me and kept me wondering how important it was to consumers (and executives). Do they really care? Does anyone notice the face of a company and its character, its values, its narrative? What do people do if they don’t like the parent company but still want the product? 

Luckily, we now have research on how important the corporate brand or parent company really is and why it matters to consumers and executives alike. We released the research today, The Company Behind the Brand: In Reputation We Trust, conducted with KRC Research. Some of the key findings are:

• 70 percent avoid buying a product if they don’t like the company behind the product (consumers)
• 67 percent are increasingly checking product labels to see what company is behind the product (consumers)
• 61 percent get annoyed when they can’t tell what company is behind a product (consumers)
• 56 percent do research to learn about the companies that make what they buy (consumers)
• 56 percent hesitate to buy products if they can’t tell who makes them (consumers)
• Executives estimate that, on average, 60 percent of their firms’ market value is attributable to its reputation. 
• 86 percent of executives report that their companies increased their efforts to build reputation over the past few years

More to come. And it’s been a busy day getting the research out so will return shortly.

Have been reading about corporate brands and went back to my stash of articles. The IBM CMO C-Suite studies has solid information in their report, “From Stretched to Strengthened” which was conducted among the nearly 2,000 CMOs worldwide.  Not the main focus of the research but they do report that it is no longer enough for a company to just markets its products and services. In fact, the report talks about how the character of the company is now on full display as “social media has exposed the bones beneath the skin.”  Only 53% of CMOs report that their corporate character is understood in the marketplace and 57% say they have significant work ahead to get employees on board.

Here is the  part that I liked best because it speaks to corporate reputation today. “For many decades, the CMO’s job was to market an organization’s products and services. Today, it begins with the marketing of the organization itself.”  A fairly sizeable 61% said that one of the initiatives they have set for themselves ahead is to orchestrate a single view of the brand, something we call enterprise branding.

When people ask me what reputation means, I always say it is all about a company’s character. Glad CMOs agree.

Took me a few days but finally found a chance to read a fascinating review in the Financial Times of the impact of the insider trading scandal at management consultant McKinsey & Company and its impact on their reputation. Andrew Hill did a fine job providing a historical review of McKinsey’s ups and downs over the many years of its storied existence and finding former partners and employees to offer their perspectives. As you already know from the trial of Raj Rajaratnam of Galleon Group, the hedge fund CEO is accused of insider trading using tips from former McKinsey partners’ Anil Kumar and Rajat Gupta, global managing partner who left after several terms in 2003.  What intrigued me of course was how McKinsey was recovering from this reputation catastrophe and how it fit with the best practices in my book on reputation recovery. This is not just a bruise but a serious injury to McKinsey’s reputation. Here is what they did so far:

• Communicated regularly with employees and former employees
• Initiated an independent inquiry with the help of a law firm
• Improved processes over protecting confidential client information
• Reviewed its ethics policies and standards
• Redefined what constitutes ”material non-public informtion”
• Built a formal “stop-list” of client stocks that no McKinsey person can trade (not just those assigned to the account)
• Added new training procedures
• Strengthened governance

True to its highly analytical way of attacking corporate challenges (they work for 90 of the top 100 companies in the world, among others), they looked back at how they handled prior problems. Coincidentally, the article points out that they had been putting together a comprehensive internal history of the firm which luckily offered them insights on how they have historically dealt with challenges to their reputation and livelihood. The latter best practice is one I highly recommend to others. In my book, I talk about the importance of the Rewind period where companies study their mistakes to from the past to create a better future. Lord John Browne of BP did so after the refinery fire in Texas City and asked the question of how they did not see the pattern of errors that turned deadly sooner. Looking in the rearview mirror may take time that leaders do not think they have but critical warning signs are often present. Retromining is a critical piece of recovering reputation. As the new McKinsey global managing director, Dominic Barton, also did, he studied other thriving cultures that failed. As Barton said in the article, he had been “thinking what happened with the suppression of the Jesuits in the 1700s. This may seem strange, but [it was] an organisation that was thriving and doing well and all of a sudden was severely challenged.”

  The trading scandal at UBS brings to mind the long journey that companies undertake to recover and restore reputations. UBS is now back at square one as they deal with the recently revealed $2.3 billion rogue trading. This reputation disaster brought me back to the days of the Societe Generale SA rogue-trading incident three years ago. If you recall, Jerome Kerviel managed to lose $7.2 billion on his derivatives scheme. The reputation drag on SocGen’s reputation today and on UBS tomorrow is quite real. The SocGen scandal has not entirely faded in the past three years. In fact, everytime one reads about what happened last week at UBS, the SocGen scandal gets replayed. This is unfortunate for those who go down the path of reputation recovery like SocGen. SocGen’s recovery program was quite extensive when you look at it from a three year vantage point – they dismissed Kerviel’s bosses, demanded that the bank move slower as new security systems were put into place and launched an internal controls program called “Fighting Back.”  In addition, other measures were set forth such as spending on new IT security, starting a newly independent accounting group, beginning a SAFE (Security and Anti-Fraud Expertise) program to oversee financial operations and training 7,800 employees about fraud. Ultimately the CEO and chairman stepped down one year later.  All these remedies for recovering reputation came from an article in yesterday’s WSJ and I was glad to be able to list these steps for other companies contemplating what to do when faced with sky rocket type scandals.

Yesterday morning started off with an email to me from Netflix’s CEO Reed Hastings. I immediately went to the Netflix‘s CEO apology on the blog.   What confused me however was the tone of the video. Although I am a loyal customer and fierce advocate of what Netflix has done for delivering movies to my home, I thought that the video apology was abit too cheery (outdoors in sunny California. albeit a parking lot) and efficient.  Maybe too rehearsed is the right word. I did not get the sense that this was a very repentent CEO who had seen his stock value decline 52% since the change in pricing occurred. But what really threw me was that he did not share the stage alone. In the video, CEO Reed Hastings had the new head of the DVD spinoff, Qwikster, Andy Rendich, joining him.  I always say that CEOs get all the credit when things go right but all the blame when things go wrong. Why did Hastings deflect some of that blame on this poor soul. I cannot remember the last time (if ever) I witnessed a CEO apology tied to the announcement of a new spinoff. I sincerely doubt that was a good launch plan for Qwikster. My sense is that there’s more apologizing to come. This poor guy Andy looked like he too was somehow responsible for the communciations debacle.

Despite these ramblings, the article on the Netflix problem in today’s New York Times made me smile. The authors wrote, “But in the short term, the risk to corporate reputations is palpable.”  It is not often that I even see the words “corporate reputation” in a top tier publication. Usually it is referred to as brand health or brand reputation or positioning.  It is fairly rare to see corporate reputation used as a commonly understood concept.  My two cents is that short term feels like long term these days when you are in the spotlight. As someone said to me, it’s like a nuclear assault whether it is 6 days, 6 weeks or 6 months. Ultimately, Netflix will be forgiven but like the SocGen example above, reputation damage takes its toll and lingers longer than most CEOs care to imagine.