Reputation and competitive advantage

How does reputation lead to competitive advantage?

I reckon in two ways: Reputation, or let’s say the net effect of all one’s interactions with a brand, provides an identity that becomes a rallying point for employees and makes customers proud to be associated with a company or brand. They have a clear understanding of what a brand is about and identify with the vision and value system associated with that brand. Abraham Lincoln would call this the ’tree’. It’s the real thing and cannot be faked … at least not for long.

Secondly, reputation affects image, or the way others view you – this is Abraham Lincoln’s ‘shadow’ analogy. A positive image attracts people to you – like prospective employees so you get to choose the best of the bunch, but the same may be said for attracting customers and shareholders. Image is good for share price; good for attracting people to your cause.

So a positive reputation helps a company keep its best people, attract and retain good customers, and adds value to the share price as the share takes on an intrinsic value of its own.

Where is the competitive advantage? Sustainability is key across the triple bottom line – people, planet and profit. Now if sustainability is important it means that experiential gains from employees, and their interactions with customers, become the means by which service levels soar, input costs are kept low and where one facilitates a premium on pricing.

Sound easy?  Not a chance.  A reputation is hard earned and easily lost.

Why do some companies get away with reputational damage and yet go on to even greater success?  More about that next post.

Online reputation management – when the message is positive but off strategy

You can imagine the situation – a comment about a brand, while positive, is entirely off strategy. 

Years ago I worked for autotrader.co.za. 

From time to time we would receive ads that – while representing a positive commentary about the brand – were entirely off strategy. 

Private advertisers would try and list their mother-in-law at a real knock down price. 

Hollard Insurance advertised 24 individual photographs depicting where a motor vehicle should have been.  The only problem was they had been stolen – not to worry said Hollard ‘that’s what we are here for’.  Great for Hollard, not so good for Auto Trader. 

And then Rand Aid advertised ‘a 1916, work horse, in great condition if a little worn around the edges, looking for a good home’.  You guessed it – the model was someone’s grandfather, an octogenarian who, having fallen on hard times, had nowhere else to go.  Rand Aid, a charitable organisation, was asking for donations to help them provide for people when they couldn’t provide for themselves.  Clever take but not on strategy. 

In the social media space we see the same sort of commentary. 

‘I love my jeans because no one else can afford them’ – not great if the brand aspires to coolness rather than exclusivity. 

‘My car is so hip I pick up guys all the time’ – a problem if the vehicle is pitched at the family values conscious yummy-mummy brigade.  

We call this sort of message ‘Incongruous’ – positive (I love my jeans and I have a hip car) but where there is dissonance between the nominal brand message and the commentary (coolness and family values not exclusivity and a guy magnet).

In such circumstance a brand should adopt what Pierre Berthon, Leyland Pitt and Colin Campbell refer to as the ‘applaud stance’. 

Here a brand is primarily positive about the comment but doesn’t do anything to encourage it.  

By applauding, the brand doesn’t appear tyrannical but is able to legitimately observe the conversation real time.

Matrix: Source:  Berthon, Pitt and Campbell, California Management Review, Vol.50,No.4, Summer 2008