By Peter Walshe
Global Account Director
Millward Brown

The word ‘reputation’ can be very simply defined as ‘what someone/a company is known for’. So it can be good or bad or just unknown. The closest related word in English is probably ‘repute’ which can suggest good or ill.

The Italian word is ‘rumore’ or rumour! The Dutch say ‘faam’ or fame and the Portuguese ‘renome’ or renown. Reputation has many sides.

Some corporations may well be faceless and unknown to consumers. But many, like it or not, are known for something and that something is not always positive. But does it matter?

Millward Brown has carried out the second in a series of corporate reputation studies* amongst more than 20,000 consumers across the USA and UK rating 213 consumer facing corporations (106 in the USA and 107 in the UK) during December 2006/January 2007. And what we found is that reputation matters a great deal - on average 20% of sales can be explained by reputation.

Corporate familiarity is low, but communication is key
Only 19% on average claimed to know a lot about the corporations surveyed but 59% did know something. Knowledge was based primarily on a mix of product or service experience (33%) or communications (32% having seen, heard, or read lots about the corporation).

Those who had heard more (the top third) are much more likely to have heard good things and have a very high opinion of the corporation. As a result they are much more likely to buy products or services from the companies that belong to the corporation, and buy or own their shares:

This is definitely a communications effect as experience of the corporations’ services and products are the same across all three.

What is important to consumers?
If, as we have seen, communication makes a positive difference to a corporation’s standing, what exactly is it that should be communicated?

There is of course no magic formula to apply equally across all corporations, but we can see what it is that impresses and affects consumers.

The first decision to be made is whether the corporation has any meaning for consumers or not. The points of contact for most consumers are the brands and services that the corporation owns rather than the corporation itself. So if you are Unilever it is likely that Dove, Lipton or Slim-Fast might be one of your flag bearers. The consumer might not be aware of any connection with the corporation, in which case this could be an opportunity to add something to the individual brands.

If there is a well established connection in the mind of the consumer it becomes imperative to know whether this is positive or negative and what is driving it.

We therefore ask consumers to describe their views of corporations against a detailed set of criteria that sum up corporate behaviour. And we establish which of their brands connect with the corporation.

Because we know (from our BRANDZ™ study**) how the individual brands rate and the connection between their scores and subsequent purchase, we can relate the corporation ratings via the brands to sales. This gives us the importance of the corporate ratings in driving ultimate sales.

The 20 aspects on which we rate the corporation fall into three distinct groupings:

The first two are much more important in driving sales and account for 47% and 42% respectively, leaving ‘Public Responsibility’ in its own right at only 11%.

The implication is clear:
Innovation, success, good products at a fair price, communicated fairly are the aspects that count with consumers.

‘CSR’ in isolation is unlikely to be very meaningful for consumers
As a positive driving force for sales, ‘CSR’ therefore needs to be supporting messages of leadership, innovation and customer service.

Retail brands tend to score well on ‘Public Responsibility’ because they are essentially a part of the local community for many people and many tend to have community programmes and in this way can demonstrate their ‘consumer fairness’.

Perhaps it is no accident that corporations such as Body Shop, Walt Disney and Microsoft all have excellent scores on ‘Public Responsibility’ as well as a good overall reputation score that relates to success in sales terms. The whole brand essence of Body Shop revolves around an ethical and environmental stance. Disney has a long established programme of community outreach and a strong Disney VoluntEARS programme in which employees devote their personal time and effort in an attempt to impact local communities in a positive, meaningful and helpful way. And of course Microsoft is impacted by the Bill and Melinda Gates Charitable Foundation.

Different sectors face different challenges
The twelve sectors we covered have dramatically different ratings and therefore expectations from consumers. Knowing what the context is for your corporation can help focus in the most productive way. Below you can see the relative strengths for each sector alongside their overall Effective Reputation Index (ERI). Average score overall is zero and the top companies achieve about +200 and the bottom -100:

It is immediately apparent that the top scoring sectors base their success on innovation, great product delivery and fair pricing. A really warm relationship.

As you go down the scale, consumers are more distant in attitude from the corporations and ‘admire’ them for being financially successful. Rather a cold relationship.

Consumer responsibility – carbon offsetting
The study included a benchmark measure of the consumer awareness of the carbon footprint and to what degree consumers are likely to act.

Only 5% in the USA said they offset their carbon footprint. (This study took place just before Al Gore won his Oscar for ‘An Inconvenient Truth’ and the widespread adoption of environmental issues by the 2008 presidential would be nominees.)

This minority tended to be higher earners (34% of them earned $100,000+ compared to 18% in the rest of the sample), and be much more likely to travel by plane leaving a carbon footprint (on business 77% cf 17%, and on leisure 85% cf 31%). But they tended to buy new (more energy efficient) cars (80% cf 41%).

They are also much more self-confident and trusting of others (apart from Friends and Family):

But perhaps most usefully, they are much more likely to spread the word as they are ‘Influencers’ (51% cf 24%). So corporations should ensure they do not upset this group!

Reputation matters
So we can see that reputation does matter – the ‘faam’, ‘rumore’ and ‘renome’ are all part of an international language for corporations to translate to their advantage. It just makes good business sense.

*ReputationZ
Designed and executed by Millward Brown with fieldwork carried out on-line from the Lightspeed panel in December 2006/January 2007. Results are available to WPP companies to share with their clients and prospects.

**BrandZ
The WPP brand equity study designed and executed by Millward Brown has covered more than 38,000 brands, interviewing 1,000,000+ people across 31 countries since 1998. Results are available to WPP companies to share with their clients and prospects.

For access to both of the studies and advice on how to monitor your brand or corporation please contact Peter.Walshe@uk.millwardbrown.com