Sunday, September 30, 2007

Reputation is About Competitive Advantage, Not Being Liked

I have attended a number of conferences lately at which the term reputation was bantered about. For the most part, the term was used to denote an organization "doing good things", or "building up the trust fund so that there are friends when times are bad". These definitions fall far short of something anyone could or should take to a CEO for action. It's little wonder that there are so many companies doing so many things poorly, but investing in community activities and philanthropy believing that they are building themselves a good reputation.

A good reputation should build a relationship with key stakeholders and have them behave toward your organization in desirable ways. That is, a good reputation should help you attract and keep the best talent, it should lower your cost of capital, it should attract investors, and it should make it safe for government officials to support your actions. But, let's recognize that organizations do not operate in a vacuum. Everyone has competition. A good reputation, then, should help differentiate you from your competitors in the eyes of your key stakeholders.

So, let's stop all the talk about about doing "good things" so that people like us more. Having people like us is great, but companies don't exist to have people like them. They exist to make money. Companies with higher reputations tend to do better financially, but the financial success comes because a company meets the needs and interests of its stakeholders better than do others in the competitive set. Certainly, companies that desire a good reputation also need to be concerned with how they are viewed by their communities and others, and social responsibility is an important part of a reputation program. But, social responsibility of CRM, as is is often called, is not, I repeat is not, a reputation program. It is just part of it.

Let's put the focus where it should be when we talk about reputation with CEOs and others--on helping the organization to create value and beat the competition. That's what marketing and communications executives get paid to do.

Thursday, September 20, 2007

Privacy--Is a New Concept Needed?

There has been considerable concern amongst many people about the potential loss of privacy in the new media environment. What will we do, ask these people, when advertisers and others can reach us through our smart phones?

I share the concern about unwanted intrusions, but we have lived with these when we have used other media and have learned how to deal with them. No one invited commercials that interrupted their television shows. We never knew we had a choice other than to accept these intrusions. With new technology, we can zip through the commercials we don't want to watch. Unwanted telephone calls can now be blocked through the "Do Not Call" registry and call display.

We have never really had the privacy that we believe we have had and, if we are smart, our new technology may not only allow us more privacy, but also allow us to receive information and offers specific to our interests. To achieve this goal, however, will require us to rethink our concepts of privacy.

I have worked with lawyers at several companies who have taken a very strict definition of privacy. They will not accept the notion of "opting in" or "opting out" of information. By opting in, a customer would willingly give the company information about him or herself in exchange for receiving information, goods and/or services specifically of interest. A good example of this is "Real Age", a medical web site that asks users to provide some rather detailed and otherwise confidential medical information about themselves. In exchange, the user receives an analysis of that information that calculates their so-called "real age". Not only does the user receive this analysis, but by opting in, they also are willingly giving their permission to receive other interesting medical and health information. I have used "Real Age". Not only was I pleased to learn that my "real age" was 12-years younger than my actual age, but I later received some useful information about dieting that I could use.

When I mention this site to pharmaceutical companies, they argue that the FDA and their lawyers would never allow them to share information directly with consumers in this manner. "Opting in" is not considered possible in the pharmaceutical industry. What a shame? These companies should recogize that patients are getting information from the Internet, some valid and some not valid. There are blogs and website of all stripes that provide medical information. In fact, doctors regularly indicate in research that the majority of their patients come to them to some extent "self diagnosed and self prescibed". If pharmaceutical companies cannot communicate with patients, they are denying these patients valuable information.

Now, at the same time that I suggest this, I realize that there will be some pharma companies that will misuse the ability to communicate. They will attempt to sell the patient rather than having a helpful dialogue and/or sharing unbiased medical information. Consider the strengthening of the relationship between the pharma industry and patients if the industry were willing to share and discuss medical information rather than focus on pushing their drugs. I have not yet understood why the pharma industry is a laggard in understanding pull marketing.

The point I would argue is that we need a new concept of privacy that is more in keeping with the possibilities of new technology. We need to recognize that some people are willing to provide information in exchange for something of value. Some people, obviously, will not want to "opt in" and that should be respected. It is hoped that sites like "Real Age" will not abuse their relationship with their users, but rather will help lead a new revolution that provides willing consumers with greater useful information than they were ever able to receive in the old media environment.