Early reputation data shows initial solidarity and ensuing disillusionment when it comes to public perceptions of big business. Who’s most affected and what should companies do?
I’ve been working as a brand strategist and reputation advisor for over 20 years. And for over 20 years I’ve come across businesspeople who thought that corporate branding and reputation management are “nice-to-have” rather than “business-critical”. Even more so during these unprecedented Corona Days, many executives feel that thinking about their company’s reputation is a complete luxury in the face of urgent actions needed to ensure safety and business continuity. Is that so?
The social media feeds of most businesspeople these days are full of articles and posts telling them that how they behave now will have a significant impact on the future of their business. From McKinsey claiming that companies will be defined by their reaction to COVID-19, to Deloitte saying that leaders will be judged on how they respond to the crisis; from Mark Cuban saying CEOs should prioritize employees over shareholders, to Sustainable Brands celebrating companies that put purpose before profit in these times.
We at Caliber fully agree.
But as data analysts, we also couldn’t help but ask ourselves: what does the data tell us? What can our reputation metrics around the world already teach us about the impact of the crisis on people’s perceptions?
So we started analyzing. Having the benefit of surveying thousands of people every day about their perceptions of hundreds of companies around the world – we looked at the real-time data generated in the last few weeks and tried to identify what patterns emerge. And we found some very interesting patterns indeed.
To start with, we wanted to assess the overall public sentiment towards companies in different countries. We looked at the average Trust & Like Score – our primary measurement of corporate reputation – given by the public in Northern Europe (UK, Germany, Denmark, Sweden, Norway and Finland) when assessing the largest companies in their respective markets in recent weeks.
The first two months of 2020 – weeks 1 to 9 – show a fairly stable average level of perceptions with the usual limited ups and downs from week to week. But as of week 10 (the week commencing Mar. 2nd), when coronavirus cases in Europe started rising exponentially and governments started announcing preventive measurements, the average reputation of these 196 companies began rising consistently week after week. Is it a result of a general sense of public solidarity?
A sympathy vote from people towards businesses that will be negatively affected? Or perhaps a positive assessment of these large companies’ initial reaction to the crisis? Very likely it’s a mix of all of the above. But interestingly, this trend reversed very clearly last week, with the first average score declining after 3 weeks of rises.
So what changed? This could merely be a slight “correction” after the continuous increases. But one could also speculate that it’s a result of the fact that in recent days the severity of the situation in Northern Europe has sunk in: more people are dying, companies are starting to fold and people start losing their jobs. There’s now a sense that this crisis may last longer than originally expected, and people are starting to question the decisions made by governments and businesses to tackle the situation. This could very well be the reason behind the drop in overall scores after several “euphoric” weeks of continuous rises – a general sense of disillusionment.
Together we stand – or not
When looking at other countries beyond Northern Europe, we see some clear differences.
China, which has experienced this crisis earlier than others, tends to have higher reputation scores than in other countries in general – a phenomenon that can be seen in the average monthly perception scores there last year. But as of November, scores in China have been lower, possibly a result of the coronavirus crisis, which seems to have impacted people’s perceptions of businesses there negatively.
At the same time, perceptions have been improving since the start of 2020 in the US, Spain, Italy and the UK – with no apparent connection to COVID-19 which had only entered the collective consciousness in these countries in early March. Most tellingly though, the changes in March diverge across countries – with rises in the UK and Germany (2 of the countries that are said to be dealing relatively well with this crisis so far), and drops in the US, Italy and France – who are suffering more. The exception is Spain, with a rising March score despite the severe situation there these days.
So what conclusions can be drawn? There are of course many factors at play, and it’s hard to isolate the impact of the coronavirus vs. other triggers for reputational changes, especially considering that these figures are averages of hundreds of companies – but there does seem to be a general negative impact on perceptions, earlier in China and now in Europe and the US, after a short period of positivity. This reaffirms the tendency mentioned previously in Northern Europe, and may suggest that people are indeed observing companies and how they behave. And these early results indicate they may generally not be satisfied with what they’re seeing.
Where companies’ reputations head next is difficult to say. However, digging further reveals more interesting patterns – and differences across sectors.
Flying high and banking low
We drilled into our global weekly results and grouped company scores by sector to identify how the different sectors fare on a global basis. This is where we could clearly see that the above-mentioned tendencies are in fact more nuanced than they first appear.
The first sector we were interested in was airlines – those were the companies that experienced the earliest and deepest negative impact of this crisis. They were also the first ones that had to actively handle the aftermath by dealing and communicating with passengers, staff and other stakeholders. Reputational data of a selection of airlines worldwide shows that perceptions of the sector have gotten stronger over the last 6 weeks, with this pattern continuing last week despite the overall drop in sentiment seen across the board.
Banks and insurance companies, however, experienced things differently. Looking into these two sectors was interesting due to their increasingly important role in the current situation: insurance companies are expected to reimburse people for losses due to canceled travel plans or loss of employment, while banks are expected to inject liquidity into the economy and help their personal and business customers get by financially.
In both cases we’re seeing global public disappointment: insurance companies got a reputational boost at start, only to experience a large drop in score in week 14 as people’s expectations were apparently not met. Banks, on the other hand, have seen a continuous moderate decline since week 11 – perhaps expectations there were low to begin with, as opposed to the case with insurance companies. We know from previous studies that insurance companies tend to be viewed more positively than banks, but it’s the mirror image of how the reputations of these two sectors have evolved in recent weeks that is most interesting in this case.
These results are important. They show that while the general sentiment follows a certain pattern in most countries, opinions vary based on which sector and company people rate. This certainly confirms that not all large companies are seen as one, and that people are in fact judging companies (or at least sectors) based on what they do.
Another such divergence of opinions can be seen in the retail sector, where opinions about food retailers soared at first but have recently declined – whereas opinions of non-food retailers followed an opposite trajectory.
Were people first happy about the continued physical and online access to food stores, and then gradually got upset about food shortages? Were they disappointed with other retailers for lack of availability or online competency, but are now showing sympathy for their misfortune? It’s hard to tell, but the contradictory patterns are certainly interesting and unexpected.
What does all this mean about the reputational impact of COVD-19? Is it indeed fair to say that now more than ever is the time to think about your company’s reputation? Will it really have an impact on the company’s future commercial success?
While the insights emerging from our global analysis of companies’ reputations in recent weeks all focus on country and sector averages, our data clearly shows that crisis reactions from companies like Novo Nordisk, Visa, Unilever and others are already reaping reputational dividends to those companies. People are indeed paying attention.
Whether these reputational wins will be long-lasting or not may be hard to predict – but our experience from past crises shows that reputational gains are harder, and take longer, to achieve than reputational losses. It is fair to predict that those companies that face a negative backlash to their reputations these days will have to work hard and long to repair the damage – while those who preserve goodwill at these difficult times will benefit from it in the coming months and years. It is for this reason that we agree with McKinsey, Deloitte, Mark Cuban and many others in predicting that companies’ behavior at this time will have a profound long-term impact on their reputations: people take notice of how companies are reacting these days, and those impressions will stick. Companies who put employees and customers before shareholders, and purpose before profit, should see reputational dividends over time – and vice versa.
As for those businesspeople who still doubt the “business-critical” aspect of brand and reputation: if you really think you can build a successful business in the long run without being trusted by your key stakeholders – perhaps this crisis will give you pause for thought. The COVID-19 crisis will no doubt be vicious and wreak economic havoc; but it also gives businesses the opportunity to live up to their values and do the right things – both because of the moral and ethical imperatives and because it will benefit them in the long run, putting them on the right side of history in more ways than one.
Click here to read about our offer of free reputation analytics to help companies navigate the reputational impacts of COVID-19.
If you are interested in this topic you might like the following:
Trust in Financial Sector 2020
Helping companies navigate the reputational impact of COVID-19
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