June 1, 2020 IT Systems Limited

Among the owners and top managers of domestic companies, there is a fairly widespread belief that in Russia, because of the “specific” business conditions, it is at least useless to engage in a reputation. And given that the money spent on a reputation could be used more efficiently to finance other areas of the business, it’s even harmful.

Along with the objective reasons for this attitude to reputation is the instability of the business and political environment (and, as a consequence, the complexity of long-term planning), a high level of corruption (on many issues it is easier to “agree”), etc.

Why is it vital?

There is a subjective reason – it seems that everyone knows about the reputation, it seems that everyone understands what it is, but few can clearly and concisely state what kind of reputation is and what REAL benefit it can bring to business. And it is unlikely that anyone will argue that a company that “knows how” to reduce the cost of solving the above and some similar problems will gain an advantage in the competition, its business will be more stable and cost-effective.

From the heading, it is clear that all these problems will be further proposed to be solved by working with reputation. But before offering how to manage a reputation, a definition that is convenient for work will be proposed and an approach to assessing the benefits of reputation for business will be described.

Without a clear understanding (at all levels of management) of what a reputation is, what its benefits are for an enterprise, and methods of assessing a reputation, one can only imitate stormy activity, but not manage a reputation. To make it simple, a synonym for reputation is predictability, in contrast to image – impression (perception).

How to act

In this interpretation, reputation is precisely the behavioral assessment of the subject. For example, I buy a gadget with my hands, which is not officially sold in Russia. I am aware that if it fails, I will not be able to return it, nor will I receive a branded service. In this situation, the reputation of the company does not bother me. I choose only based on the characteristics of the product. Moreover, the characteristics are not necessarily physical, it may well be status, fashion, etc. And, thanks to the brand, these characteristics can be not only real (which I know for sure), but also expected (which I assume for a product of this brand).

But if after making a purchase the consumer will have to continue interacting with the manufacturer (service, exchange, return, etc.), then the consumer will also take into account the reputation of the manufacturer in his choice. How will a manufacturer behave in various situations? Will it even be on the market or will it close after some time, and the consumer will be left without spare parts and service? What will be the dynamics of the service? And the more important this “behavioral” component of product quality, the more important is the reputation of the enterprise’s business for the buyer.

It must be understood that reputation is an assessment of future behavior, but it is by no means based only on the past behavior of the person being evaluated, as is commonly believed. When forecasting, practically any information about the subject and the experience of interacting with him is used: his past behavior (based on personal experience and ratings of others, in particular, media estimates), what he says, what he looks like, what is the quality and price of his products, etc.