It takes only a cursory glance at the daily headlines to understand that corporate reputations are under immense pressure due to growing media and stakeholder scrutiny.
However, what is less well understood is that corporate reputations in Africa are dramatically shaped by the context in which an industry plays. And while customer service is essential in all industries, when the interactions with an organisation is less frequent media exposure has a very strong impact on the drivers of reputation.
Word of mouth
Magna Carta Reputation Management Consultants undertook an ambitious research project in 2016 to explore corporate reputation in the South African context. Insights from several focus groups revealed that the two most important sources of knowledge around an organisation’s reputation is personal experience and word of mouth. It is reasonable that frequent interaction is more related to personal experience, while less interaction is related to word of mouth, the area where media has a powerful influence.
The research culminated in the inaugural Africa Reputation Index (ARI), which measures the corporate reputation of companies in 5 different sectors, with 44 reputational drivers collectively grouped into 9 overarching attributes. These are used to evaluate corporate reputation across these sectors. As they were measured in isolation, it is possible to determine the main reputational drivers and attributes for each sector.
The top reputational driver in the telecommunications sector is good governance. Considering the dominant media exposure that companies in this sector received in 2016, this comes as little surprise. Fines, lawsuits, inappropriate comments and court cases dominated the headlines. The CEO’s of the top 4 mobile network providers all received media exposure for different reasons, some positive and some negative. Governance is closely followed in importance by drivers of customer service and quality. Should public attention shift away from the leaders of these companies, we might see a repositioning of the top attributes.
Food retailers – another one of the sectors analysed – had a challenging year in 2016 due to the drought which resulted in food shortages and price increases. The majority of media articles focused on these macro issues, but in this sector, where customers shop daily or weekly, the research found that customer service drivers are top drivers of reputation.
There have been reports in the media around low service expectations of South African consumers, as well as general dissatisfaction with service. By increasing service standards, food retailers have the opportunity to nurture a loyal customer base. The first place to start is with staff training, particularly with regard to being welcoming and approachable. Smaller entrants who may struggle to break into this sector will have a competitive advantage with a service offering, even if they can’t directly compete on a value proposition.
The SA financial services sector, meanwhile, is one of the cornerstones of the modern SA economy. However, banks experience daily reputational risks with customer complaints around banking fees, poor service, IT issues relating to products, and cyber-crime. In the media in 2016, the big 4 banks came under immense public scrutiny following the closing down of accounts of politically exposed people, but this does not have a strong direct impact on the average South African consumer. The top reputational attribute in the retail banking sector is customer service, with 4/5 customer service drivers emerging as the top reputational driver. The emergence of Capitec as a ‘5th’ top bank in the retail space indicates the power of good service. The bank has received extensive acknowledgement for good customer service and simple, affordable products.
The automotive industry receives extensive media exposure on new models, interesting innovation and the various motor vehicle awards, as well as reports of recalls of some brands due to faulty parts. A car is a huge investment for many South Africans and many will research components before reaching a purchase decision.
While consumers will likely interact with sales people during the decision making process, once a car has been purchased, there is less interaction with a dealership. The ARI results showed that the top reputational attribute in this sector is quality, with customer service following second. Ultimately South African consumers want to be proud of their purchases – forums, clubs and other interactions that speak to the consumer’s personal identity will go a long way to encourage recommendation, the most powerful driver in this sector.
The public services sector is not a competitive set, but consumers do tend to group government organisations together. This diverse sector is frequently in the news regarding the working conditions of government employees, including salary and workload complaints, safety concerns, and threats of strike action.
This was mirrored in the ARI findings where the top reputational attribute in this sector is a good working environment. Attracting good staff, treating them well and investing in skills development are important to the public. Having happy staff also has important implications with regard to service – the second most important attribute of reputation. Efficient and happy staff who are motivated in the working environment are more likely to meet consumer needs of maintaining a good standard, providing efficient service delivery and being responsive.
Companies in Africa need to be aware of the challenges they face from a reputational perspective. Adopting a blinkered approach to reputation will only serve to increase the gap between what they think they are doing right and what consumers and other stakeholders actually want.