Reputation Winners and Losers: Highlights from Prophet’s First Annual U.S. Reputation Study

Does your company have a strong reputation? If it happens to be one of the 130 companies included in Prophet’s U.S. study, you will now be able to find out. And the findings could not have come at a better time.

The mortgage crisis, financial market meltdown, and massive industry bailouts have put companies under more public scrutiny than at any other point in history. With less than 9 percent of consumers believing companies today have strong reputations, understanding where your company stands and determining what you need to do to measure, manage, and build your reputation, has never been more important.

For its first annual evaluation of major corporations and reputation, Prophet surveyed over 4,300 U.S. consumers on key measures of reputation. The reputation scores were translated into a Reputation Management Index (RMI), allowing a ranking of both industries and companies.

Industry Winners and Losers

Delivery services/logistics, consumer packaged goods (CPG), and the retail industry lead the way in our reputation study. All of the companies included in these industries receive high marks from consumers on their ability to provide reliable, high quality products and services at a good value. These attributes are particularly important to the level of trust, admiration, and respect consumers have for these companies. The hotel and technology industries also fare very well. Like other top ranking industries, the hotel industry financial services, oil & gas, healthcare, energy/utility, and insurance industries all landed at the bottom of our rankings with poor or failing reputation scores.

In fact, financial services found itself dead last among all industries included in our study, a hard position to swallow, but as we saw from our rankings, not all is doom and gloom. JPMorgan Chase & Co. is one organization that weathered the storm better than others, outranking retail banking peers such as Wells Fargo and Bank of America, and investment banking peers Morgan Stanley and Goldman Sachs.

In our estimation, JPMorgan Chase’s articulation of the company’s vision for the financial services industry through “The Way Forward” communications platform and the leadership visibility of CEO, Jamie Dimon, on key issues have helped its reputation during these turbulent times.

Pillars of Reputation

How can companies measure and build their reputations? In addition to the overall reputation score, Prophet further distills reputation into six distinct “pillars” of reputation: People, Pacesetters, gets credit for offering “high quality products and services” and “delivering reliable customer service and support” – both of which are important characteristics of a service-oriented business. While the technology industry also gets credit for having quality products and services, its high reputation scores are primarily driven by innovationrelated attributes like “offers the latest and most advanced products, services, and technologies,” and “is a company known for its innovative products.”

Then there are those industries that didn’t fare as well, which is not surprising given the microscope many of them have been under in the past year. Players in (*CHART 1) Products, Performance, Purpose, and Personal Relevance. These pillars provide companies with a more granular understanding of where reputation strengths and gaps exist.

A cross-industry view of the companies included in our study reveals that products, personal relevance, and performance are the pillars most important to driving overall reputation. Attributes like “offers reliable products and services” (products), “products/ services make a difference in my life” (personal relevance), and “is a well managed company” (performance) rise to the top. Companies that succeed in building strong reputations must, at a minimum, perform well on those attributes. However, reputation drivers vary across industries so understanding your specific industry’s drivers and how your company performs relative to peers is critical for reputation building efforts.

Leading and Lagging Companies

Who is winning the race for a strong reputation? You won’t see AIG anywhere near the top of this list, but you might find yourself wondering “What can Brown do for me?”

Kellogg’s finds itself number one in our rankings, with a reputation score of 82.1. Kraft Foods follows closely behind with a reputation score of 80.5, while other consumer packaged goods companies like General Mills, Coca-Cola, and Colgate-Palmolive also rank in the top 10. These companies are followed by family entertainment giant Walt Disney, Johnson & Johnson, UPS, Sony, and Google, all of which have leading reputation scores.

In addition, there are companies that stand out because of their leadership in their respective industries – in some cases seemingly free of their industry baggage. Companies like Toyota, who is by far the top performer in the auto industry, ranking 18th overall, has a reputation score over 10 points higher than the auto industry average. In the insurance sector, USAA has also made a name for itself, ranking 34th with a reputation score more than 10 points higher than the insurance industry average.

What are these companies doing that allows them to break free from some of the negative industry perceptions? They focus on what matters most.

Early on, Toyota saw an opportunity to make “green” relevant to consumers and has been able to reap the rewards of its foresight with its Prius model. It is the number one selling hybrid car, having sold more than one million units since it was first introduced in 1997. So, it’s not surprising that being an environmentally responsible company is a key reputation driver for recent car buyers. Toyota also gets credit for having high quality, reliable cars – not something all in their industry can boast – with a score on this attribute 8 points higher than the industry average – and 30 points higher than DaimlerChrysler, which falls to the bottom of our auto industry rankings.

And USAA? It seems to be connecting with consumers on a personal and emotional level, getting high marks on key industry reputation drivers such as offering products and services that “make a difference in my life” and “gives me peace of mind.” Further, USAA is recognized for providing the highest quality insurance products and services in the industry; with a reputation attribute score five points higher than competitors like MetLife, Nationwide, and Geico.

Reputation Linkage to Business Performance

What does having a strong reputation actually get you? Should companies care if their reputations rank at the top like Kellogg’s or at the bottom like Fannie Mae and AIG? If they care about their business results, they should.

In the past year, companies with leading reputationshave achieved annualized shareholder returns 13 percent higher than others and outperformed the S&P average by over 22 percent. Over the last five years, these same companies outperformed the S&P by over 100 percent and their stock prices were 88 percent higher than the average. That equates to a lot of market value, particularly in an economic environment where access to capital is tight.

Our study also reveals that consumers are twice as likely to purchase, four times more likely to pay a premium, and almost ten times more likely to recommend products and services from companies with “leading” reputations versus “failing” ones.

Given reputation’s strong impact on a company’s market value – as well as its influence on selling more products and services, there is a strong business case for companies to have a systematic approach for managing and measuring reputation over time.

How to Measure and Manage Reputation

What should companies do if they find themselves at the bottom of the rankings? What are the steps required to actively measure and manage reputation?

Regardless of a company’s position in the rankings, all companies should have a consistent way to measure and manage their reputation. Syndicated reputation studies provide a solid benchmark of overall reputation performance relative to other companies. However, in order to actively manage reputation, it is important to look at the specific pillars and attributes critical to driving perceptions of the company and industry overall, thereby providing a more tailored and actionable view of how best to close reputation gaps.

Companies must then develop strategies and programs to address gaps, ensuring these activities align with and support the organization’s overall business goals. They must also have measurable benchmarks for evaluating reputation enhancements and a framework for making judgments. These tools give companies better visibility into the business environment and allow them to build stronger relationships with key stakeholders.

Take Sempra Energy, the number two company in the energy and utility industry, ranked second only to Duke Energy. While it is unlikely the energy and utility industry will ever lead the overall industry rankings, this does not seem to be stopping Sempra from addressing key reputation gaps. In fact, they are activating programs to improve performance on key reputation drivers. In the past year, Sempra launched a corporate advertising campaign, published its inaugural corporate responsibility report, became the first California utility to commit to having 33 percent of their energy portfolio come from renewable resources, and started rolling out smart meter technology within their service area. Beyond these programs, our study reveals that Sempra gets credit for energy reliability and high-quality customer service – both of which are key reputation drivers among general consumers. By focusing on what matters most, Sempra is positioning itself to strengthen its reputation and drive long-term business success.

Reputation building is a journey that requires commitment and discipline – and those with the strongest reputations are clearly benefiting in the form of higher customer loyalty, increased market value, and more. How is your company doing on its reputation journey?

About the Study

Prophet’s reputation study was conducted in June and July of 2009. The study was taken by approximately 4,300 general U.S. consumers, representative of the U.S. census. Consumers were asked to rate 130 U.S. companies on various pillars of reputation, as well as purchase behaviors.