South African companies operate in a changing landscape where consumers have more and more power to shape the fortunes of the businesses they interact with. We used to operate in a brand economy, but we are now increasingly doing business in a reputation economy.
To put it in simple terms, brand is what you articulate about your company’s values, purpose and strategy. Reputation comes from what your customers, public shareholders, employees and other stakeholders say about your business based on their interactions with you.
Anyone can create, own and control a brand, but a reputation is earned based on your relationships with and behaviour towards others. Reputation, rather than brand, is increasingly what shapes purchasing decisions in the connected economy. And it’s more fragile than ever before because of the reach and the power of the Internet.
In the past, your reputation was formed through the opinions of the mainstream media as well as through word-of-mouth. Today, it is shaped at least in part in the social web, where customers and other interested stakeholders discuss your business on Twitter, shopping portals, news sites, forums, Facebook, blogs and consumer activist sites.
It’s word-of-mouth amplified through a loudspeaker that makes it audible to a global audience. It is village gossip that travels as fast from one end of the globe as it takes an influential consumer to hit the return key after he or she has been delighted or disgusted enough by an interaction with a company to type a Tweet. And these words are frozen in the ember of the Internet for anyone to find by a Google search years later.
As Web 2.0 thinker Clay Shirky puts it: “The conventional wisdom is that a satisfied customer will tell one person and an unhappy person will tell 10.
That's now been upped by orders of magnitude." It is this reputation that will influence the decisions of people who might want to partner with your company, invest in it or buy its products and services.
The challenges that South African companies face are profound and will multiply as more people go online. Many organisations confuse reputation management with public relations and crisis management, but it is a strategic factor that touches every element of the business. It needs to be thought about in a holistic manner and treated as a business imperative.
In more advanced economies, we’re seeing companies take reputation so seriously that they have created the role of the chief reputation officer. This officer is a senior executive who reports directly into the board and who is responsible for looking at the impact reputation has on the company’s business.
What that means is that South African companies need to start thinking about reputational issues in a more strategic manner. What are people saying about your brand online? Chances are they’re saying the same thing offline. If it’s negative, can you change their perceptions? If it’s positive, can you capitalise on it? Are you thinking about what business decisions will mean for your reputation, online and offline? Could turning this medical claim down or culling that product line do costly reputational damage to your business that outweighs the cost-savings you achieve? And have you thought about how you will handle attacks on your reputation, whether they are fair or not?
These are all questions that matter more and more to your bottom-line.
Now is the time to invest in your online reputation. If you do this correctly, you will protect and enhance one of your most precious corporate assets and gain the trust among your stakeholders.