August 15, 2019
Warren Buffett famously said, "It takes 20 years to build a reputation and five minutes to ruin it." Who am I to disagree with Mr. Buffett? According to the Reputation Institute, intangible value — including corporate reputation — makes up 81 percent of market value. Additionally, a one-point increase in reputation yields a 2.6 percent increase in market cap, which translates into an average of $1 billion.
However, corporate and financial communicators know that if a company is going to market now, it doesn't have 20 years to build its reputation. With 24/7 media, globally connected social networks and online marketplaces, investors, influencers, customers and employees can alter the perception of a corporate brand in the blink of an eye.
As corporate reputation impacts valuation, communicators must close the gap between the reality of a company's current operational status and the perceptions of key external stakeholders. And, the vast array of external influences can interfere with a company's ability to control its narrative. Given this, it's more important than ever for a company to use all the tools at its disposal. Where to begin?
It starts with storytelling. Financial and corporate communicators need to build compelling narratives rooted in data that show an obtainable goal, all to be measured by a roadmap that tracks a company's progress. For all companies, financials are the obvious, and sometimes most critical, gauge of success. It's fairly straightforward: tell your stakeholders what you're going to do: increase sales, control expenses and grow the bottom line; execute your plan; and then report back. Unfortunately, financials are only one metric used to measure a company's success and not all companies are at the same moment in their lifecycle.
A narrative must go beyond the numbers. Stakeholders must understand the vision of the company: what are you trying to achieve beyond growth? Start-ups and early-stage companies too often default to, "We're a disruptor in an industry that has been stagnant for too long." Great, but what does that truly mean? Disruption has become a cliché. What are you really doing as a company? Solving the last mile of affordable and efficient transportation; bringing life-saving preventative medicine to those most in need; providing connectivity and speed to rural populations? All of these are disruptive and also showcase achievable goals. Build a story that people can relate to, follow and rally behind. Now that you have your story and you know what your audience wants to hear, you need to reach them where they are. Not every stakeholder is reading the same publication, visiting the same websites or even using the same social media channels. Your audience is as unique as you are. You need to understand how they consume information. Whether it's a commentary in The Wall Street Journal or a thought leadership piece in The Atlantic or a listicle on BuzzFeed, make sure you're telling a consistent story that is relevant to the outlet's specific audience. Ensure that you employ this approach through all your communications channels. While the appeal of a "third-party" endorsement in earned media remains the holy grail for many, it's not the only means of connecting with and influencing key audiences.
Developing original content provides an opportunity to control the narrative, but it will also allow you to showcase your corporate DNA. As mentioned, companies aren't evaluated by financials alone because corporate culture, management credibility and even likability are a part of intangible value. Original content highlighting customer success stories, community involvement and corporate evolution can engage stakeholders in ways companies never dreamed possible 20 years ago. Go ahead, show off your creativity and bring your story to life. Make sure you stay true to your brand and remain relevant in the eyes of your key audience.
Finally, and possibly most importantly, the role of communications isn't solely the responsibility of the CEO, executive team or communications professionals. I'm not suggesting you move the responsibility from the top of the organization. That would be ridiculous! I am, however, suggesting that there needs to be a top-down and bottom-up strategy.
The CEO and executive team remain the primary source of information, consistently conveying the corporate narrative during every interaction including media interviews, conferences, investor meetings, employee townhalls and customer engagement.
Additionally, employees from all levels must be involved in the external communications approach; they're a company's most valuable assets. When they believe in a company's vision, mission and purpose, they'll be brand ambassadors and help close the gap between inaccurate external perceptions and internal realities. It's important to provide employees with the training and tools that adequately equip them to advocate for a brand. They're on the frontlines, speaking with customers, partners and colleagues daily. If they're not properly trained, they can inadvertently be the cause of the spread of disinformation.
Additionally, companies must create social media guardrails and provide the tools for online employee advocacy programs that will afford their brand the opportunity to dramatically increase their reach. Not only is their reach broader and highly relevant, the cost to implement employee advocacy programs is a fraction of advertising. There's no reason for your No. 1 asset to be sidelined. Get them in the game.
Closing the gap that exists between perception and reality is critical to preserving corporate reputation and maximizing shareholder value. Remember to build a narrative rooted in data and designed with purpose; understand your audiences to ensure relevance and reach them where they are; and deploy a holistic communications approach that empowers employees to be advocates and stand aligned with executives. Follow this blueprint and you won't need 20 years to build your reputation.
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