Measuring Corporate Reputation

Kathy Leech

Partner, Communications

8/14/20

A company’s reputation is important. A company with a strong reputation attracts top talent, its employees are more loyal, consumers buy more of the company’s products, communities welcome the company as a partner, and regulators are more willing to listen.

A company’s reputation is important. A company with a strong reputation attracts top talent, its employees are more loyal, consumers buy more of the company’s products, communities welcome the company as a partner, and regulators are more willing to listen.

Creating a simple, consistent measurement framework used across the enterprise will help you understand your current reputation, help you to define your future reputation goals and the actions necessary to achieve the vision.

How do you measure corporate reputation? There are many options, but my preference is favorability which comes from the political world. Political teams track favorability to see how likely a candidate is to be voted into office and, while in office, how the politician’s policies are perceived. It’s a responsive metric that moves as voters’ feelings change towards the politician. For example, according to Gallup, George H.W. Bush’s favorability fell from 89% in early 1991 to 29% just weeks prior to the 1992 Presidential Election where he was soundly defeated by Bill Clinton.

Favorability can also be used to understand how a corporation is perceived and over time can help a marketer to understand and improve the target audience’s perception of the company. During the Gulf Oil spill, bp’s favorability fell 25 points in one month – a massive change that took years to rebuild. Favorability tends to improve more quickly than trust, but over time, better favorability should lead to improved trust. Favorability is also correlated with Net Promoter Score.

Defining favorability

Favorability is usually asked on a ten-point scale, with 1 being very unfavorable and 10 being very favorable. The scales are combined into five categories – very and somewhat unfavorable, neutral, and somewhat or very favorable.

Using favorability to better understand your target audience’s current perceptions

Overall favorability. The percentage of people in the sample who are either “Very Favorable (answered 9 or 10) or somewhat favorable (answered 7 or 8). Favorability below 50% is cause for concern as it means more people are unfavorable to your brand than are favorable.
Relative favorability. How your favorability score compares to your competitors and aspirational competitors. For some categories like oil and gas, the category itself may have a negative impact on the brands.
Net favorability. The difference between your total favorable and total unfavorable percentages. By removing the neutral percentage, you get a good sense of overall brand health. Companies with poor reputations will have a net negative favorability score.
Favorability breakdown. By breaking down the percentage of people into the five categories, you are able to understand the intensity of the feelings towards your brand. Respected brands like Apple may have a large number of consumers who are strongly bonded, or very favorable, and only a small number that are very unfavorable. If the neutral percentage is high, the brand may need to be more clearly defined. Clearly, the more weighted towards the somewhat or very unfavorable, the bigger the reputational challenge.
Customer vs. non-customer. It’s important to understand the difference in favorability between the corporation’s customers and non-customers. Non-customers may not have experience with your brand, or your brand may have changed significantly since they were customers and they need more information before they will change their perception.
Time. All of these measures can be tracked over time to measure progress.
Changing favorability

The favorability data will help you to understand your current reputation and point to any issues. I have found PATH modeling to be very useful to identify the key drivers, their relative importance, and the sequence in which they should be addressed. Customer service, product price and quality, external or internal scandal, category, environmental footprint, and corporate management are possibilities among many others. The key is to understand the most effective sequence of messages. Post the Gulf Spill, bp needed to communicate its focus on safety before any other messages could break through.

Qualitative research like social sentiment, ethnography and one-on-one conversations with your target audience will give you a more complete picture of how to improve your company’s reputation.

Favorability may also move as a result of external circumstances that either help or hurt the corporation’s reputation. During the current COVID crisis, Morning Consult tracking shows that the video conferencing app, Zoom, gained 19 points in favorability since March 2020. As you can imagine, luxury goods and the airline industry did not fare so well.

Measuring favorability is a useful metric that clarifies what actions the company needs to take and how it needs to communicate those actions in order to improve corporate favorability.

I’m interested in hearing other ways you are measuring and managing corporate reputation!