Nuts & Bolts - Research : Direct Marketing a Reputation

For many consumers trying to weather the economic storm, any trust they may have had in corporations has evaporated. So finds management consulting firm McKinsey & Co. in its June 2009 issue of McKinsey Quarterly. In the article "Rebuilding Corporate Reputations," consultants provide recommendations on how companies can rebuild their reputations, mostly through direct marketing channels.

McKinsey bases its recommendations on proprietary research—the "Economic Conditions Snapshot, March 2009: McKinsey Global Survey Results"—and information from the 2009 Edelman Trust Barometer. (In the former, McKinsey found that 72 percent of executives, globally, believe that public trust in business and commitments to free markets are gone. The Edelman report says 62 percent of the public has less faith in corporations than it did a year ago, and 77 percent of people wouldn't buy from a company they didn't trust.)

Here's what McKinsey says businesses can do to rebuild good reputations:

1. Reorient thinking to realize that action, not spin, builds reputation. "Even as reputational challenges boost the importance of good PR, companies will struggle if they rely on PR alone with little insight into the root causes of or the facts behind their reputational problems."

AstraZeneca placed national advertisements and let consumers independently judge raw clinical trial data on its Web site after the Food and Drug Administration expressed concern about Crestor's side effects. (The drug's market share stabilized.)

2. Create a more integrated response, and within it, include an early warning system for executives. From regulatory affairs to marketing and the general counsel to investor relations, multiple disciplines should be included in the response. But the CEO should take the lead. "An energized public will expect nothing else."

The response should be based on an analysis of the stakeholders, including the product preferences and political attitudes of consumer groups. Also, reputation management is a lot like a political campaign, and companies should analyze market segments from a "social attitudinal" standpoint. (The example McKinsey cites includes positive or negative views of the company that are coordinated with consumers' levels of participation and influence.) That information will help determine the actions that are most relevant to them, such as transparency.

McKinsey points out that "credible third parties speaking for the company," such as community activists and bloggers, "can boost its reputation more effectively than its own PR or marketing department."

Developing a two-way dialog with open-minded, influential consumers and then addressing their needs earned one company that followed this rule a group of dedicated advocates who then influenced others and improved its reputation.

3. Finally, be proactive. "Such actions need not take place only in response to reputational concerns; at other times, they help build good will that may provide some degree of cover against future bad news."

McKinsey cites Toyota Motor and GE's "willingness to tackle climate change" as a reason that their reputations have held up better than those of other major automotive and financial services companies. Best Buy even garnered sales from the electronics recycling program the business started in 2008, as customers had to enter the store to drop off the recycling.

To read more about the research, go to www.mckinseyquarterly.com.

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