The Pitch: A good reputation can be measured in dollars and cents

By STEPHEN LLOYD

Reputation matters. If managed well, it is a valuable asset and represents a significant proportion of a firm's market value.

It is a source of stock market equity. It is a source of stakeholder loyalty and makes an organisation more resilient to sudden and unexpected downturns.

There is evidence of a growing consumer focus on what a company stands for rather than just its brands and its branding.

In Japan, marketers have, for many years, understood the value to brand development of getting consumers to like the company.

So, what is reputation? Simply stated, it is the overall esteem in which an organisation is held. It is an assessment, made over time, of its ability to provide valued outcomes to stakeholders.

If it is so simple, why are so many organisations getting it so wrong? Why are they learning, too late, of its vital importance?

I think it is because of some basic misunderstandings:

* That reputation is the concern only of big companies - Fonterra, Air New Zealand, BNZ, The Warehouse and Telecom. It is not. It is vital to any organisation: to start-ups, SMEs, NGOs, government departments, universities, political parties, cause-related organisations.

* That reputation is relevant to a limited area of communications activity. In practice, however, it has been seen to be essential to the development and implementation of effective communications strategies. In its successful pitch for the British Rail account, JWT London identified two key functions for advertising: to increase revenue and to improve reputation.

They overlap. Clearly there is no value in increasing people's respect for an organisation unless that respect helps the organisation to become more successful, more self-sufficient, delivering greater satisfaction.

* That branding is a sine qua non that pre-empts the need for reputation communications. Alas, branding is not enough. When Air New Zealand was preparing for a major share offering, it took more than the projection of brand properties to strengthen its reputation in the eyes of potential investors.

It took an understanding of its renewed spirit of determination and of its international successes and achievements to create a TV and print advertising campaign that built legitimacy for the airline in the eyes of targeted stakeholders.

Staff and New Zealand travellers were not overlooked as stakeholder targets. Reputation, therefore, is as relevant to advertising strategy as it is to PR and to other elements in the communications mix.

* That reputation is synonymous with image, identity and branding. It is not. These components are quite distinct from, yet contribute to the development of a strong reputation.

* That reputation communications are vague, untargeted and cannot be monitored. This is clearly not the case, provided communications are stakeholder focused.

Consumers, lapsed users, investors, suppliers, distributors, licensees, the Government, may all be stakeholders. Each stakeholder segment has distinct needs and expectations. Communications, therefore, must be strategically targeted and co-ordinated.

* That reputation is of interest only to CEOs. They certainly need to be involved. They are vital to reputation management and development.

An organisation's reputation is closely correlated to its CEO's reputation and vice versa. Yet if reputation is about the recognition of what a company stands for - its culture and its achievements - it needs to be more than a top-down exercise.

While a sense of urgency is important in reputation assessment, management and communication, it does not come as a quick fix. Organisations should be thinking today about the reputational space they want to occupy in tomorrow's marketplace.

* Stephen Lloyd is a member of the Marketing and Advertising Group at Auckland University of Technology where he directs an organisational reputation programme.

* The Pitch is a forum for those working in advertising, marketing, public relations and communications. We welcome lively and topical 500-word contributions.
Email The Pitch.