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The Basics Of Building A Strong Market Profile

Written by: Jeff Roach

Article Overview: The process of establishing and maintaining a strong market reputation has moved well up the priority list for businesses over the past few years. And for good reason.

The Basics Of Building A Strong Market Profile

The process of establishing and maintaining a strong market reputation has moved well up the priority list for businesses over the past few years. And for good reason.



The collapse of Enron, Worldcom and the Anderson Group, and the high-profile troubles of corporate mainstays like CIBC, among others, have hammered home the importance of what a corporate reputation is worth and the difficulty of rehabilitating it once it’s been damaged.



Recent research has helped to uncover the bottom-line impact of a quality reputation. In the fall of 2000 a research project by the New York-based Reputation Institute asked consumers in the United States, Australia and 10 European countries to name the two companies they feel had the best and worst reputations.



After the list was compiled an analysis was completed comparing the financial performance of the best and worst. Very revealing indeed. It shows conclusively that the nice guys on the corporate reputation front tend to finish first.



All of the organizations analyzed were publicly traded. The numbers show that the strong-reputation companies had an almost 20% advantage in cost of goods sold over their poor-rep counterparts. They also enjoyed employment growth rates that were 1.4 times higher, experienced net margins that were at least 85% higher and generated returns on assets that were twice as high.



On a five-year average basis, their cash-flow-to-sales ratios were almost 50% better, their price earnings ratios were over 50% better, returns on equity were almost 1.5 times better and their returns on assets were almost twice as good.



In plain English, they were much better places to work. They sold a lot more products and services. They grew a lot faster. And investors liked them a lot more.



The study didn’t cover small- and medium-sized enterprises. But it doesn’t take a huge leap of logic to figure out that if a strong reputation works for the big guys it is very likely to work for the SME.



The big question of course is: How does the SME go about the effort of formally building a strong reputation with a much smaller bank account? The answer is that it’s more a matter of thoughtful planning and disciplined execution than wads of cash.



A way to approach the challenge is with the conviction that your reputational assets – your standing with your business stakeholders including customers, investors, suppliers, employees, industry peers and employment sources among others, need to be managed just as carefully as financial, physical and intellectual assets.



Where to start? Figure out who your most important stakeholders are, assess the quality of your relationships with them and get going on a plan to strengthen and maintain them. Chances are, this will be a first-time exercise for many of you.



The next step is what to do? Elementary, really. Set some realistic objectives based on your assessment. Decide how best to achieve them. Then list the steps (who, what and when) needed to execute the plan.



Hint – keep it simple. There are five traits that mark high-reputation companies. They are Visible, Transparent, Distinct, Authentic (they walk the talk) and Consistent.



Start with Visibility. In this category, put advertising at the bottom of the list. It’s your most expensive and most blunt instrument when it comes to building a reputation. First question: Do you have in place a set of basic visibility tools? A web site, an information package on your company, an employee communications vehicle, an annual report and quarterlies (if your company happens to trade on a stock exchange) product and service information and news releases are a good place to start.



How well do the tools you have measure up against what your stakeholder assessment tells you? Make the changes and adjustments you think are needed. If you have none or only a few of these tools great! Starting from scratch is always easier.



Once the tools are in shape, decide how you plan to use them. The direct approach is always the most effective. But think laterally. Do all of your stakeholders know about your web site and what it offers? When is the last time you told your employees and shareholders, for example, about your products and services and about your major contracts and sales? Are your customers on the list for your employee newsletter, annual report and quarterlies? Why haven’t all your stakeholders received your corporate information package?









You’ll find some gaps. The exercise accomplishes several things. It helps you to do a better job of leveraging what you already have in place. It establishes more frequency and reach in your reputation management program by exposing more stakeholders to a broader range of information about your organization. And it’s low cost. All you do is expand the reach of the reputation management tools you already have in place.



In the hierarchy of activities an organization can undertake to promote itself, this is one of the most basic. Yet few owners/operators of SMEs get around to it.



They are daunted by the high-end promotional and marketing communication programs they are exposed to in their everyday viewing and reading. They assume the activity is strictly a big-bucks, Madison Avenue-type exercise. They fail to take full advantage of the tools they have by using them with a broader range of key stakeholders.



This is not is to suggest that moving the communications/promotion effort up a notch or two is not a good idea. It is. And it can be done quite cost effectively.



The next article will cover the basics of press relations. It will lay out how to get started, how to target and how to expand the effort over time in a manageable fashion.

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