The success of any business depends largely on its external stakeholders: customers, competitors, governments and the general public, to name a few. What these stakeholders think about the organization is the gap between success and bankruptcy.
Therefore, effective and consistent communication with these groups is crucial. For a business to successfully innovate, it must have working knowledge of their perceptions and beliefs. Branding and differentiation are also non-negotiable. These key concepts explain the difference between successful and sustainable business entities and those that collapse.
Do you wonder why some companies seem to find favor easily with the masses? This is true even when the company is not geographically localized to come of its clientele. For example, people in Lesotho often talk about alibaba.com even though the wholesale giant is located thousands of kilometers away. What about alibaba.com makes it more preferable than the many local companies providing the same service?
In Winning the Reputation Game: creating stakeholder value and competitive advantage, Grahame R. Dowling argues that this is grounded primarily in the field of strategic marketing. The strategy part focuses on how companies use their capabilities to create superior products and services. The marketing part focuses on how they attain and retain their target customers.
Success at these endeavors is at the heart of why a company like Apple and a university like Harvard have strong reputations that have helped them achieve leadership in their industries. They offer superior value for their employees and target customers compared to most of their competitors.
With this success comes the authority to tell an engaging story about the character and leadership of the organization. These stories contextualize the reputations of each organization for employees, customers, business partners, media, and investors.
As a business, when last did you talk about strategic marketing? Many companies have come to rely on the expertise of consultants, public relations practitioners and others to help them tell their stories. In considering the competitive nature of business environments today, it is easy to see why investing in effective communication with external stakeholders is crucial.
According to Grahame, psychologists have discovered that most people make judgments and decisions by consulting their emotions. As a business, it is important to figure out how you can tap into these emotions to draw attention to your products and eventually turn admirers into customers.
Dowling continues that for a company, being admired and respected can have some powerful effects:
- Current employees are more engaged, more likely to recommend their employer to potential employees, and less likely to bad-mouth the company.
- More potential employees will consider working for the organization and seriously consider its job offers.
- Current customers give the company a higher share of their spending, are more tolerant when they experience an isolated episode of bad customer service, believe and like the company’s advertising, and provide a positive recommendation if asked.
- Potential customers are more likely to notice the company’s advertising, believe what other people tell them is good about the company, and consider its products and services.
- Business partners are more likely to offer more opportunities and be willing to engage with the company on favorable terms.
- Unions are less likely to encourage damaging action by their members.
- Shareholders are more likely to be longer term investors and believe what the company tells them.
- Politicians are less likely to be hostile to the company.
- Regulators are less likely to make an example of the company when they have the choice.
- The media are more likely to give the company unwarranted praise.
- Community members are more likely to tolerate the company’s presence or praise its contribution.
Gaining favor with external stakeholders is definitely worth the investment in strategic marketing. As a business, it is very important to study why some brands seem to carry more weight than others – especially in your industry.
Find that and duplicate what works in your immediate context. Your profit margins will thank you.