Rise of the Reputation Economy

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Like the old adage says: “Perception is reality.” When it comes to your company, many people will believe whatever they read or hear, whether true or untrue, and that becomes a reality that’s hard to break.


Reputation Institute (RI) defines reputation as “the degree of trust, admiration, esteem and good feeling that stakeholders have for a company.”1 RI conducted a survey of over 350 managers who are responsible for public relations, communications and/or marketing at their organization. The results showed:

  • 83% of respondents believe we live in a “Reputation Economy,” where consumer perceptions of companies drive sales, employee recruitment and investment
  • 38% believe their customers’ purchase decisions are driven by the purchaser’s perception of the company itself, more than the actual product or service being purchased.2


These results seem to align with the CNW Group‘s statement that 20% of a company’s sales can be attributed to its reputation.3


The “Reputation Economy” has emerged for several reasons, including:

  • The rapid spread of information via the internet, especially through social media
  • Heightened consumer expectations regarding corporate social responsibility
  • The intensity of media coverage surrounding disasters, controversies and other issues4


The internet is an undeniable factor in reputation management — 97% of consumers will search the web before buying a product.5 Social media, too, is important — nearly 30% of consumers use social media outlets most of the time, if not all the time, to conduct research prior to buying a product. In situations where controversial or offensive material hits the web, that information can spread quickly or even go “viral.” Many companies have found themselves in hot water as a result.6 Read Dave Carroll’s story for just one example of the power of social media.


Good reputation management is all about understanding the risks associated with conducting business in the Reputation Economy, and identifying new, effective ways to manage your brand. There are many facets of reputation management, but you have to start somewhere, so why not the internet? We’ve shared a few of tips and tricks to help you optimize your online reputation.


View related theory | View related best practice

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