Relationship Capital: Brands versus Reputation

The final category of relationship capital (after customers and partners) is brand and reputation capital.

Brand is how your customers see your products. Reputation is about how all your stakeholders view your entire operation. Each is important. Brand communication is generally thought to leave more room for definition by the holder. That is, I can influence how you see my brand through my marketing and management of the customer experience. But both brand and reputation are as much about your stakeholders’ knowledge of you as it is your knowledge of them. This shared knowledge is what make brand and reputation part of relationship capital.

In this point of view, brand and reputation are assets of the modern organization. The value of these assets is determined by your stakeholders. In the final chapter of this book we make the case that reputation is becoming as important as net income as the “bottom line” of your business. Net income tells you whether you made a profit last year. Reputation tells you whether your stakeholders have confidence in your ability to deliver a profit in the coming year.

It’s no secret that the management of brand and reputation are changing in the Internet-enabled world where information is more available than ever. Word can spread like wildfire via the Internet and social media that include Twitter and Facebook about mistakes and missteps an organization makes. The way people spend their time is changing how they receive and process information about the products they buy. Like so many other aspects of management, the dominant way of managing brand and reputation in the past was from the top down—controlling the message that is delivered to customers and stakeholders.

However, these models are breaking apart. Advertising in mass media is being replaced with customer experience in on-line communities. Internet-enabled word of mouth can create viral marketing opportunities that could never be bought. It is no longer about what you say about your organization but, rather, about letting your actions speak for you. As our mothers told us, “actions speak louder than words.” This new paradigm of branding has the potential to create stronger and more genuine relationships than a television commercial ever could.

Adapted from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization