While there is widespread support for the notion that organizations with better reputations outperform their rivals, there is uncertainty about how to create such a reputation, especially among the managers responsible for this task. For example, organizations often give money to worthy causes or create social responsibility programs in the hope that this will appeal to their stakeholders. When approaches such as these are only loosely coupled to the strategy of the organization they appear to be "bolted on" rather than "built in." Thus, they are likely to foster a reputation that is less consistent with the principal actions of the organization and less credible. They are also easy for competitors to imitate. Because of this, a reputation grounded in the strategy of the organization has a better chance of providing a sustainable competitive advantage. This article presents a normative framework that illustrates a strategy-led approach to reputation building.
With the recent loss of public confidence in firms in America, Australia, Britain, and other countries, more companies are being forced to promote themselves to their internal and external stakeholders in order to maintain and protect their reputations. Advises firms to communicate their reputation message in the form of a corporate story--a narrative that speaks about the company's mission, morality, and modes of operation--and then provides guidelines for creating and evaluating these stories.
Although all companies would like a better corporate reputation, many are not sure what it takes to create a good reputation and others are not sure that they should use their good reputation to compete in their various markets. Mimicking the behavior of respected companies does not provide a reliable resolution to these dilemmas. Presents a framework to help managers create a better corporate reputation for their organizations and assist them in deciding whether to use this as a primary basis for competition. Also exposes some of the main costs for an organization that decides to compete on its corporate reputation.
Customer relationship management (CRM) is premised on the belief that developing a relationship with customers is the best way to gain their loyalty. It is argued that loyal customers are more profitable than nonloyal customers. Recently, academic researchers have questioned some of the key premises that are used to support CRM in general and relationship marketing and customer loyalty programs in particular. This article critically examines the assumptions that underpin CRM and presents the results of research that is skeptical of its value. CRM should be adopted only after a careful appraisal of its cost effectiveness.
This is an MIT Sloan Management Review article. A company that initiates a customer loyalty program usually wants to retain existing customers, maintain sales levels and profits, increase the potential value of existing customers, and encourage customers to buy its other products as well. But, based on a review of behavioral loyalty research, the authors posit that the schemes do not fundamentally alter market structure and, instead, increase market expenditures without really creating any extra brand loyalty. Research shows that only about 10% of buyers for many types of frequently purchased consumer goods are 100% loyal to a particular brand over a one-year period. Consumers do not buy only one brand. For any loyalty program to be effective, say the authors, it must leverage the value of the product to the customer. Therefore, the program must have: (1) a direct or indirect effect, such as the General Motors rebate scheme that builds up savings toward a new car; (2) a perception of value, such as cash; and (3) timing--when rewards are available. The more delayed the reward, the less powerful. The authors suggest ways to design an effective program: ensure that it enhances the value proposition of the product or service, fully cost the program, maximize the buyer's motivation to purchase again, and consider the market conditions when planning.