An incident I witnessed recently has made me think hard about the real nature of corporate reputation. It wasn't a crisis of the magnitude of BP or the News of the World. It wasn't even a poor set of financial results. It was simply the actions of a company employee.
The receptionist at a client's offices was speaking to a visitor in the rudest fashion and it occurred to me she had no idea to whom she was talking. It could have been anybody: the bank manager, come to discuss an extended overdraft, a new employee or even a new customer. The actions of the receptionist could have had an enormous impact on the visitor's perception of the company, and may have had a commercial impact too.
It seems, particularly in an age when you can vent your feelings to the world in a heartbeat, that any interaction a company has with a customer is critical. These interactions have the power to support and substantiate an entire marketing campaign. Equally, they have the power to undermine and negate any amount of brilliant comms work.
Consider Starbucks. When it was founded, Howard Schultz created a brand that had customer service right at its heart alongside an arguably decent product. It built a loyal, worldwide following based on the premise that with your cup of coffee, you'd get friendly service. In other words, the company lived up to its brand promise. Over the years, and in particular since its franchise programme started, customer service has plummeted and with it the value we place on the brand. In 2001 Starbucks was comfortable among Interbrand's 100 most influential brands; by last year it had fallen out of the top 100 altogether.
The company at the top of Interbrand's table of the world's most powerful brands - a position it has occupied every year since the table began in 2001 - is Coca-Cola. According to Interbrand: 'Coca-Cola gets almost everything right. Its brand promise of fun, freedom, spirit and refreshment resonates the world over.'
All of which brings us to corporate reputation. The traditional role of looking after corporate stakeholders such as media, key opinion leaders and influencers must evolve. In the future, corporate reputation must take on a company-wide guardianship role, ensuring that all operational aspects of the business support rather than undermine the brand.
This change of role for corporate reputation is critical - and not just to protect and build brand value; it can have a dramatic impact on a company's P&L too. Consider this: a two per cent increase in customer retention has the same effect on profits as cutting costs by ten per cent, while a five per cent reduction in customer defection rate can increase profits by between 25 and 125 per cent (depending on the industry). So say Emmett C Murphy and Mark A Murphy in their book Leading on the Edge of Chaos.
CEOs should think hard about these numbers. At a time when increasing revenue is becoming ever more difficult, small changes in corporate reputation can have a dramatic impact on financial results. Perhaps it's time to move on from the age-old discussion of whether PR should have a seat on the board and look at whether corporate reputation should take a broad, company-wide remit.
All of us in PR know the aphorism that 'reputation is everything'. In a world where a company's every action is judged continuously and almost everyone has access to a ready-made audience, I'm not sure that phrase is relevant any longer. In its place I suggest this: 'Everything is reputation.'
VIEWS IN BRIEF
How would you deal with an assault from UK Uncut on your clients?
Clear, honest, open comms and a genuine CSR programme to 'give back' to the community in which a company operates should minimise the risk.
What is the best example of a company that has planned its internal comms strategy to fit with its wider corporate reputation?
I love the way Pret A Manger has coalesced its internal comms, HR, marketing and corporate reputation, and is now completely consistent and coherent.
Which film title best sums up the spirit of your agency?
Some Like It Hot; full of talent, wonderfully humorous with enduring appeal.