Reputation Leadership™

How to Rank First in the Hearts, Minds and Wallets of Global Prosumers”
by Tom Hinton

A new battle is taking place in the trenches of consumer marketing. At stake is not only which companies will win the hearts and minds of nearly 400 million Global Prosumers (GPs), but also their wallets! When you consider that GPs will spend more than two trillion dollars on products and services this decade, the importance of quality and innovation have never been higher. One of the strategic tools companies are using to capture Global Prosumers is Reputation Leadership™, a strategic initiative that helps companies establish brand dominance in their industry through their service, products, or principles.

First, let’s analyze the global world of Prosumers through the eyes of Reputation Leadership™. The word Prosumer was coined in 1980 by the author and futurist Alvin Toffler in his book, The Third Wave. It is the blend of two words -- producer and consumer. Toffler used it to describe a type of consumer who would become involved in the design and manufacture of products and services so they could be made to individual specification. Little did Toffler know that within thirty years, the generation that was being born as he wrote The Third Wave would, in fact, become a reality and change how businesses think and respond to consumers in a truly global marketplace.

The Battle for Global Prosumers:
The battle for Global Prosumers is taking place in the traditional retail market as well as in the design and manufacturing of everything from automobiles to airplanes to residential communities. Around the world, GPs are actively engaged in helping companies innovate and produce dynamic new products and services to ensure they meet their personal requirements.

There are some key success factors companies must build into each product or service they deliver. Reputation Leaders™ understand the importance of this strategy. Among the most desired attributes coveted by GPs are quality, service, reliability, and techno-friendly features. Interestingly, the price tag is not a key factor when it comes to owning the latest, greatest tech gadget like Apple’s new iPhone or a fuel-efficient hybrid car.

As Global Prosumers begin to purchase more expensive items such as autos, homes, vacations, and household goods including appliances and furniture, businesses are re-evaluating the best way to win over these affluent, new customers. This is causing businesses to rethink their marketing strategies and customer relations tactics. It is also forcing them back to the quality tools they put away at the turn of the century. Companies are also reallocating their marketing and advertising dollars in unique ways to attract GPs.

For example, the most progressive companies have recognized that non-traditional, GP-friendly venues are the best way to market to Global Prosumers. The beneficiaries of this spending increase include satellite radio stations, internet sites such as You Tube and My Space, internet and retail book stores and coffee cafes, non-traditional sporting events such as the X Games, social networking venues, and anything related to cell phone text messaging services or hand-held consumer technology. The losers are the traditional venues including most major newspapers (with very few exceptions), network television, and traditional AM/FM radio stations that have lost ground because of their antiquated formats and heavy commercials that turn off GPs. This is one reason why early converts to Internet marketing and user-friendly websites and consumer policies such as Toyota, Patagonia, Southwest Airlines and JetBlue Airlines have been able to corner their respective markets with Global Prosumers and capture their industry’s Reputation Leadership™ flag.

How Does Reputation Leadership™ Work?
Reputation Leadership™ is defined as the recognition of a company’s indisputable ranking as the pre-eminent leader in its industry or a global improvement niche as determined by consumers, brand loyalty, and measured by the Five P’s -- Purpose, Principles, People, Process, and Performance.

Here’s how Reputation Leadership™ works. The first step to implementing a Reputation Leadership™ initiative is to perform a comprehensive Brand Effectiveness Assessment. This would include your organization’s customer contact and operational support activities which includes: sales, marketing, billing, call centers, shipping, and other customer support activities that can make-or-break customer relationships. In step one, your goal is to measure your organization’s consumer performance against the Five P’s -- Purpose, Principles, People, Processes, and Performance. By responding to 66 key questions that are part of the Reputation Leadership™ initiative, your organization will gain a comprehensive understanding of its strengths and weaknesses through the eyes of the consumer experience. This important step reveals the linkage between your organization’s customer performance and sales results as measured against customer satisfaction ratings and an analysis of your Five Ps.

Step two of the Reputation Leadership™ initiative is to focus on your strengths while fixing any potential fatal flaws that could damage your reputation or brand image. An example of the “Fatal Flaw” factor could be a product recall such as the disastrous Made-in-China toy recall facing Mattel, corporate ethics violation, or some other scandal that tarnishes your brand or corporate identity. GPs want major products to work right the first time; and, they expect competence at the service delivery level. With regard to the focus on your organizational strengths, we have found that GPs look for unique factors that distinguish your product from the competition. This is why innovation, quality, and consumer-friendly products rank high among GPs and are rated very high in any Reputation Leadership™ initiative.

Step Three is to determine which leg of the Reputation Leadership™ Triad you want to base your brand leadership strategy. The three legs of the triad are: Service, Products, and Principles.

Disney, Coca Cola, Southwest Airlines, Wal-Mart, and Starbucks have based their Reputation Leadership™ strategy on “Principles.” If you examine each of these company’s slogans and consumer messages, you’ll note their branding strategy has little to do with a specific product or service. Instead, they win Prosumers through “the senses” that are based on a Principle.

Home Depot and Sharp use Products to establish its Reputation Leadership™ strategy while Apple actually uses a rare blend of both Products and Principles to win over Prosumers. However, the key principle behind Apple’s brand leadership remains cool technology.

Finally, Nordstrom, Ritz-Carlton, Four Seasons, and Washington Mutual have chosen Service as their Reputation Leadership™ strategy.

Once your organization has adopted its Reputation Leadership™ strategy, it is essential to invest in your people by training them to serve customers at a level that is memorable; and, adequately fund your marketing campaign especially in the area of brand recognition or a global improvement niche. It is imperative that your employees be trained to delight customers. This means being responsive to their concerns and needs at every point of customer contact. This is especially true (and frustrating) among call center operations. Our research shows that a growing number of GPs resist calling corporate call centers because they don’t like being placed on hold for several minutes or dealing with people who are uninformed, poorly coached in phone etiquette, or unresponsive to basic questions about how a products works as well as exchange/refund policies. The largest number of complaints we noted from GPs dealt with their frustration in telephoning cable companies and internet services. Another big offender are the major airlines who cannot seem to deliver such basic services as seat assignments on co-share flights with their international travel partners. Apparently, the major airlines cannot access their alliance partner’s seating charts! Another complaint area among GPs is the frustration of dealing with outdated website information. This is definitely a deal-breaker for GPs.

While there are other components to a Reputation Leadership™ initiative, these three steps represent the heart of a successful program that can help boost your brand success, increase sales, and improve your customer service ratings.

Two Ways to Capture the Prosumer Flag through Reputation Leadership™
Through Reputation Leadership™, a company can distinguish itself not only as a brand leader but also as a niche leader in a Global Improvement area. For example, several companies have captured the Reputation Leadership™ flag because they are recognized for their outstanding quality products/services. Among these Reputation Leaders™ are Toyota/Lexus, Singapore Airlines, Nordstrom, 3M, Boeing, Microsoft, Apple, Google, Whole Foods Market, and Harley-Davidson.

But, there are also a number of companies that reap the benefits of Reputation Leadership™ status because of their good deeds as corporate citizens in global improvement areas such as the environment, human rights, healthcare, diversity, employee relations, working with the poor, and other noble endeavors. These companies demonstrate their commitment to global improvement initiatives without any expectations in return. But, because of their unselfish commitment to global improvement causes, GPs take notice and spread the word quickly via the Internet that such companies merit their support. One recent example is (Red), a movement that was created by musician Bono and political activist Bobby Shriver, to raise awareness and money to eradicate AIDS in Africa. Companies produce red-branded products -- everything from cell phones to credit cards -- and donate a percentage of sales to the global fund. GPs strongly support these global improvement companies and spend billions of dollars in the process.

Enlightened business leaders know there is more money to be made in the long term by responding to the wants and needs of Global Prosumers. This includes embracing their social agenda. This is one reason why companies, that have initiated the Reputation Leadership™ strategy, are realigning their values and principles with those of the Global Prosumers. Some of the values and principles that resonate with GPs are: peace, freedom, diplomacy, environmentalism, universal health, self-expression, social acceptance, two-way conversations, democracy, and personal fulfillment.

Who Are the Reputation Leaders™?
Let’s look at some interesting examples of Reputation Leaders™ from three industries - Commercial Airplanes, Fast Foods and Hotels.

In the commercial airplane business, Boeing is the undisputed Reputation Leader™ and has gained a decided competitive edge over its competitors by including the wants and needs of Global Prosumers in the design of its exciting, new Dreamliner 787 jet. Nearly fifty percent of the new airplane is made from composite materials which increases its fuel efficiency and makes it more environmentally-friendly. The twin aisle jets are wider; and, the spacious seats provide more leg room making the airplane more comfortable for coach cabin passengers on long hauls. Overhead luggage space has been increased as have the size of cabin windows. Boeing even considered the importance of onboard ambiance by developing a cabin lighting system that can be altered to create different moods depending on day or nighttime flights.

Atop the list of fast food restaurants are two chains that stand-out among GPs. First, is In-N-Out Burgers, the popular fast food restaurant chain founded in 1948 in Baldwin Park, California. It’s family-owned and operated with more than 150 locations in California, Arizona, and Nevada. For sixty year In-N-Out Burgers has honored it slogan, “Quality You Can Taste.” GPs flock to In-N-Out not only because they deliver on their quality promise, but also, they enjoy the youthful, upbeat ambiance that is generated by well-trained, well-mannered, and well-groomed college-age employees who work hard to ensure a clean environment.

In Kingsport, Tennessee you’ll find Pal’s Sudden Service, another small, privately-owned burger chain. With 20 locations within sixty miles of the Virginia-Tennessee border, Pal’s beats out the competition with superior service and great burgers, fries, soda, and milkshakes. Pal’s also won the Malcolm Baldrige Award in 2001 and continues to focus on excellence with its 500 youthful employees. Pal’s is a great example of how a company can remain small, keep it simple, and satisfy the hunger needs of its customers.

In the hotel industry, Sol Melia Hotels is a Reputation Leader™. Founded by Gabriel Escarrer Julia in 1956 in Palma on the Mediterranean island of Mallorca in Spain, this unheralded hotel chain is making noise by capturing a growing share of the resort and conference market throughout Europe and the Americas. With 350 hotels in 30 countries on four continents, Sol Melia is the third largest hotel chain in Europe and the 12th largest hotel chain in the world. Because of its quiet reputation for service excellence, Sol Melia is ranked as the world leader in resort hotels and also ranked number one in Latin America and the Caribbean.

Calculating the ROI for Reputation Leadership™
Ultimately, the key question any senior executive should ask when weighing the benefit of this initiative is: What can I reasonably expect within 3-6 months of my investment? While the answers will vary depending on a company’s market, size, reputation, and commitment to the process, CRI Global developed a revenue formula known as the RL™ Factor that calculates the anticipated financial gain from a Reputation Leadership™ initiative. CRI Global studied the financial data of leading companies in six major industries over the past four years and measured their financial results against the results of their four closest competitors.

The preliminary results show some impressive numbers when calculating the ROI for Reputation Leadership™. In the chart below, the RL™ Factor shows what the anticipated ROI will be for a company with annual sales of $10 million that implements a Reputation Leadership™ initiative.


RL™ Factor Chart. (Based on Annual Gross Sales of $10 Million)
If your Industry Ranking is first, second, third, or fourth, your expected "ROI Percentage" and "Revenue Realized" from a Reputation Leadership™ initiative is noted below:
1st .012% $120,000
2nd .008% $80,000
3rd .006% $60,000
4th .004% $40,000


To determine the potential ROI for your company from a Reputation Leadership™ initiative, multiple your gross revenues by the ROI percentage above depending on your industry ranking (if you rank lower than 5th place, use .0012 as your percentage). For example, if your business generates $10 million in gross sales, and you currently rank third in your market, your ROI for a Reputation Leadership™ initiative should average $60,000 in the first year. As your brand acceptance and customer performance levels increase, your ROI will increase annually at that rate.

But, here’s the exciting part. Your ROI gets even better when you factor in one more key variable -- the Accelerator Value Factor (AVF). This means that your ranking as the Reputation Leader™ in your industry or a Global Improvement niche is worth considerably more because of the market place benefits your company will derive as the Reputation Leader™. Below is an example, based on your Reputation Leadership™ status. Let’s say your pizza shop won top honors in a newspaper poll as “the best pizza place is town!” Assuming your current gross annual revenues are $400,000, your AVF factor on top of gross sales would be:

Industry Ranking: Percentage: AVF:
1st 2.8% $11,200
2nd 2.2% $ 8,800
3rd 1.8% $ 7,200

If you are the top-ranked pizza shop in your region, multiple your gross sales by 2.8% to determine your AVF benefit. In the example above, the pizza shop that is ranked Number 1, would see a windfall of $11,200 due to its ranking and increased customer business. That’s some nice dough for a pizza place that has been recognized as the “best pizza in town!” For a business that ranks below 3rd place, the AVF is insignificant to your top line.

Global Improvement Niche Leader Factor:
Finally, if you are a Global Improvement niche leader, the top ranking is worth 1.2%; a second place ranking is worth .008%. Below that level, the Global Improvement niche benefit to a company’s bottom line is insignificant.
Global Improvement ROI Factor Chart (based on $1 million in gross sales):

Your GI Industry Ranking: ROI Percentage: Revenue Realized
1st .012% $12,000
2nd .008% $8,000

As an example, let’s look at Vanity Fair magazine, which is very supportive of the (Red) campaign mentioned earlier। Vanity Fair’s African-themed July issue is being guest edited by music superstar Bono and it is carrying more than twice the number of advertising pages as the July 2006 issue. Bono's issue will have 105 pages of advertising, compared with last July's, which had 49, making it the biggest July issue ever for Vanity Fair. The potential increase in single-issue sales for July could be as high as $1 million. Additional advertising revenues (for fifty full-page ads at a cost of $80,000 per page) could reach $4,000,000. While the numbers won’t be known for a few months, suffice it to say Vanity Fair will reap the benefits of its global improvement commitment. By the way, the July issue will far exceed the 1.2% revenue bump we’ve calculated for Global Improvement niche leaders.

In the final analysis, launching a Reputation Leadership™ initiative pays! It can boost sales and profits for your organization. It can also help you re-position your company as a brand leader or global improvement niche leader which will also contribute to your bottom line. Marketing alone will only carry you so far with Global Prosumers. The benefit of a Reputation Leadership™ initiative is that it will ultimately strengthen your reputation, reliability, and relationships with Global Prosumers.


About the Author:
Tom Hinton is president & CEO of CRI Global, LLC, an international consulting and training firm that helps its clients create a culture of excellence and implement Reputation Leadership™ initiatives. Tom is the author of four books including: The Spirit of Service, Customer-Focused Quality: What to Do on Monday Morning, Leadership Lessons I Learned on the Links, and, 10,000 Days: Finding Purpose, Peace and Passion for the Rest of Your Life. He is a popular speaker at corporate and association meetings. Contact: tom@tomhinton.com