Marketing professionals tend to believe that by positively impacting the attitudes of influencers will eventually translate into increased shareholder value in the form of share prices at a higher multiple than the sector average. While sector-price multiples rise and fall in the broad markets for a great many variables beyond reputation. Even so much work has been done to try and demonstrate a correlation between reputation, positive impressions, attitudinal shifts and share price multiples above the sector average. 

Measure the Payback of Reputation Investments

reputation measures metrics relevance effectiveness business success

There is however value in measuring the payback on investments designed to enhance reputation. An important consideration in determining payback is to first understand what specific behavior for which constituency group(s) (customers, employees, investor, shareholders, members of the media, market analysts, partners/resellers, etc.) you are trying to change. Each group is unique in how its behaviors can positively or negatively affect your company’s reputation and other business outcomes. Behaviors might include referrals/endorsements, retention, coverage, higher and more favorable ratings, contracts, etc.

For example, favorable ratings from a market analyst can accelerate the sales cycle and generate greater interest in the company’s solutions. An endorsement from an influential community interest group can open doors for powerful partnerships, increase acceptance among customers, employees and analysts, and could even generate increased interest within the investment community. The point is that these behaviors are measurable, can be tracked and are directly related to a business outcome.

Set Metrics that Connect Reputation Objectives to Business Outcomes

The key is selecting the right metrics for your reputation initiatives is to establish reputation objectives that tie in directly to behaviors that are aligned with your business outcomes. This will enable you to create outcome-based metrics. Let’s look at an example.

Imagine company A invests $1 million in a public relations campaign to enhance its image and increase awareness among mid-market line of business buyers in the banking industry. Given these objectives, Company A measures the effectiveness of its investment in terms of the change in attitudes regarding its image and awareness against the target. To measure whether the campaign worked, Company A will develop and deploy elaborate surveys to measure the pre-post differential in the affected market vs. control markets. These control markets were those in which there was no campaign, such as one which decided to measure the number and nature of media “hits” received in the banking industry-related press and calculate the value of that exposure if it were paid at rate card for each media. When the program is completed they find out that the attitudes did indeed change.

Now let’s look a Company B, which decides to embark on the same type of public relations campaign for approximately the same level of investment but does so against a different set of objectives. Their objectives are:

  •  increasing the number of “power resellers” (those doing more than $10 million annually in sales) from 20 to 34
  •  improving customer retention from 70% to 85%
  •  securing a leader/visionary position on Gartner’s Magic Quadrant and in correlation to increase inbound inquiries by 20%
Measure Corporate Reputation
Set Metrics to Measure Reputation

Company B also measures shifts in key brand attributes among the key audiences along with measuring the amount and nature of media coverage it receives. The firm measures the number of resellers-to-power-resellers migrations, customer retention rates and it’s position on Gartner’s Magic Quadrant and whether the change in position impacted the inbound inquiry rate as well. So when it comes time to report back to the management team and board on the campaign effectiveness, the board can relate how the attitudes have improved among the key constituency groups AND:

  •  the firm increased the number of power resellers to 40, which has a forecasted net present value (NPV) of $1.4 million
  •  customer retention fell slightly short of the 85% goal at 82%, but the expected savings in recruiting and retraining are still worth $1.8 million NPV based
  •  the position on the quadrant was achieved, which has translated into 500 incremental new inbound inquiries increasing the pipeline by $50 million

In this example, Company B shows a stronger relationship between the investment made in enhancing the company’s reputation and financial payback. So what did Company B do differently than Company A? While both companies measured attitudinal shifts, Company B selected metrics for their reputation initiatives tied to financial, tangible business outcomes.

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