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A resilient business is better at withstanding, responding to and recovering from disruption and ultimately surviving and succeeding in the long term. Adapting and taking advantage of opportunities that might arise due to a crisis is a testament to a company’s reputational resilience. Although often considered to be the same, brand and reputation are different. The brand is what a company says about itself to its customers, employees and the public through marketing and advertising. Reputation is what other people say. How the public talks about it online, in the news or on the streets. While branding does have a role in shaping reputation at the beginning of the customer’s journey, it becomes exposed to other influences.
Reputation is linked closely to the value of a company. While building the trust that enables a business to prosper can take years, it can take a fraction of that time to damage its reputation. When a company makes promises, such as how it behaves, the quality of its products, its workplace practices and its treatment of employees, and meets these promises over time, it helps to build trust with stakeholders. A business must consistently tell its story to maintain and strengthen stakeholder trust. That’s why managing reputation matters. When a company is in crisis, a strong reputation can help it navigate and be a buffer in times of trouble.
Legacy brands have been around for years, building reputations that earned them blue-chip status. But reputation is fragile. Digitization changed the landscape, and many legacy brands struggled as customers turned to other brands. Legacy brands, such as Nike, Apple and Lego, responded quicker and better to changing needs, reinforcing their heritage while delivering innovative products that resonated with today’s customers. Other brands haven’t been as quick to figure out how to combine legacy with adaptation. Remember Borders, the international book and music retailer, Toys 'R Us, Tower Records and Kodak?
Meanwhile, other factors also impact how companies are perceived. Politics and ethical behaviour, environmental policies and child labor, or the sourcing and composition of ingredients in their products are much more on the public radar than ever. And with social media, information is distributed faster and more widely.
Belgian beer giant AB InBev received backlash for working with a transgender activist and influencer on a Bud Light promotion. The battle played out on social media, with the beer giant getting caught in the crossfire of polarisation and deepening political disconnections. With the stock price plummeting amid calls to boycott the brand, AB InBev issued a statement to cool down the controversy. However, their action served neither as an apology for the collaboration nor support of the LGBTQ community and instead made the situation worse. As a result of the way the company handled the backlash to the promotion, the US LGBTQ advocacy group, the Human Rights Campaign Foundation, rescinded the top rating it had given AB InBev for its inclusion and equality efforts. With their non-committal statement, the company did little to affirm its commitment to diversity, equity and inclusion values.
Global RepTrak® 100 (GRT), an annual ranking and analysis of corporate reputation for the world’s leading companies, shows how people feel, think and act towards companies globally. The latest ranking reveals that reputation is in trouble. Based on data collected across 14 major economies, the latest GRT shows a downward trend in global reputation. Even amongst the most reputable companies, reputation scores are lower than in previous years. The data shows that companies are failing to meet the standards they set for themselves. In recent years, stakeholders asked their companies to do better, and many took up the challenge. Earlier rankings indicated that international companies were committed to building and nurturing their reputation. And indeed, stakeholders should expect a business to follow through on promises of corporate activism, fair treatment of employees, environmental pledges, ethical practices and product quality. Often that didn’t happen. Companies overpromised and did not live up to their promises. Stakeholders noticed, and perceptions of companies shifted.
The Axios Harris Poll 100 ranks the reputation of brands that are top of mind among Americans. A reputation score is calculated based on the cumulative averaging of different attributes, including character, citizenship and trust, and that score is ranked one through a hundred. Likewise, the ranking found that people prefer a company that knows what it stands for and is consistent with its message. Patagonia was the top-rated brand in the 2023 poll. With its focus on the customer experience, data privacy and eco-activism extending to practices in the real and digital worlds, Patagonia has led by example, showing it truly cares what customers think. It reinforced this sentiment in September 2022, when the company founder announced that he and his family were transferring their ownership, worth almost US$3 billion, to a collective that will use profits to fight climate change.
Tesla was one of the companies whose reputation took a nose dive on the 2023 Axios Harris Poll to 62 (from 12 in the previous year). At the same time, its competitors Ford and General Motors ranked 32 and 34, jumping nine and 18 places, respectively, over the same period. While Tesla chief Elon Musk’s takeover of Twitter and unfiltered social media presence likely impacted Tesla's reputation, the company has also faced reliability issues and recurring pricing and value concerns. In addition, the marketplace for electric vehicles has become more competitive, and Tesla is no longer the only player.
Businesses must keep a sharp eye on their reputation, regardless of size. Reputation is not the responsibility of any person or team in an organization. It takes a village to shape a company’s reputation because there are many ways to connect with stakeholders, who can influence how a business is perceived. Every employee should be considered a guardian of the company’s reputation.
While reputation is valuable because of its impact on a business, it is considered an intangible asset. It’s challenging to quantify the qualitative aspects of reputation, such as how people feel about a company. One way to measure reputation is through stock prices or financial statements. Research suggests that, on average, global executives attribute 63% of their company’s market value to their company’s overall reputation. Another way to measure reputation is with marketing metrics such as share of voice, which assess how variables such as a company’s ads, social media mentions and website traffic compare to the competition. However, it is one thing to know what reputation is worth and another to take it into your own hands.
Given how quickly things can change, managing reputation is complex and high-risk. Being prepared gives you an edge, and there are tools to help. CS&A International created ReputationScout© to give companies more control over their reputation management capabilities rather than relying on external reputation trackers. Supported by decades of crisis management consulting expertise, the solution provides invaluable insights and empowers companies to be a step ahead and work to improve. It helps them assess critical aspects of reputation excellence, including corporate status, people, operational excellence, communication, crisis management and business continuity. Learn more here.
Reputation impacts whether people buy or recommend your products and services. It influences if they say anything nice about you or trust you to do the right thing. It affects financial performance, relationships with partners and the ability to attract investors, customers and talent. And reputation is fluid. Changes to reputation are inevitable because the world is constantly changing. No company is immune from an attack on their reputation. However, a strong reputation can provide a goodwill buffer during a crisis. It can help the company navigate challenges while protecting its brand and reputation and safeguarding the best interests of employees and other stakeholders.
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