Reputation is everything, or at least it is for American corporations. According to the 2013 Harris Poll Reputation Quotient, six out of ten U.S. consumers study a company’s reputation before buying a product or service. It’s not uncommon for large American companies to spend billions on advertising annually to endear themselves into the hearts of the public and to prove that they are trustworthy.
Reputation can impact a company's sales revenue and stock price. Robert Fronk, executive vice president of Harris Interactive Reputation Management, sat down with The Daily Ticker to explain why.
Apple’s (AAPL) dramatic fall in stock price happens to correspond with its fall from the number one most reputable company in the United States last year. “For a number of years, their reputation was driven by their innovation, their products and services almost being ahead of their time and almost driving the market,” says Fronk. “Now, actually, financial performance is a dominant driver of their reputation and of course financial performance can be somewhat out of your control, as they’re finding.”
The American people may have lost faith in Apple but are finding it again in Amazon (AMZN).
Amazon.com earned the highest reputation in this year’s Harris Poll, edging out not only Apple but also companies like Google (GOOG), Disney (DIS), and Johnson & Johnson (JNJ). According to Harris, Amazon holds the most emotional appeal, provides the best products and services, and is the most trusted company in the U.S.
Of all households surveyed, 50% had discussed Amazon within the past year and nearly 100% of those conversations had been positive.
“There’s no doubt that having an array of products and services at the right price is valuable,” explains Fronk. “But they take that advantage and actually use a lot of the information that they’re able to define about their consumers and make recommendations back to them, help them lead a better life, and even delight them on occasion.”
Customers trust Amazon to use their private information properly, a significant act of faith given that 70% of survey respondents are concerned about companies invading their privacy.
“I think that the way they do it is that they use that information to create the right level of intimacy with you, but without going over that fine line of being intrusive,” says Fronk. “Perceptions are that they’re not giving that information to anyone else to monetize it.”
When it comes to reputation, the power may not be in the purse, instead company's must find a gentle balance between soft factors and the bottom line.
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