Leaders are facing a tough market right now.
Consumers want more from brands they buy from. Loyalty and spend is increasingly derived from a company’s values, and the actions that bring them to life.
Sustainability regulations are on the rise globally, with the likes of energy, emissions, waste, and reporting taking centre stage in the ESG spotlight; few brands are left untouched.
Even talent expectations have evolved. Candidates aren’t only gravitating towards purpose-led roles, but purpose-driven brands. Those that demonstrate they care are the cream of the crop.
The list goes on, but the message remains the same: brands and their leaders are at the centre of seismic change, and no matter which way they turn, the pressure is on.
Naturally, brands are reaching for more of a competitive and commercial edge than ever before to outbid one another in the market. A challenge for most businesses, yes, but emerging brands and scaleups are disproportionately impacted by a tougher landscape.
Last year presented serious challenges in startup investment with venture capital funding dropping by 38% compared to 2022. A drastic change following the more lucrative figures of pre- and early pandemic years. And scaleups are equally as impacted with limited funding rounds.
Bottom line: startups and scaleups need to work harder to establish themselves in the market (more than usual), often with limited resources, competing priorities and ambitious revenue goals set by shareholders. Stack the aforementioned pressures on top, and you gain a glimpse of just how challenging it is for new brands.
But the common denominator underlying each of these factors is how a business is perceived. Brand reputation has never been so critical, particularly considering its impact on risk and revenue. And for leaders, the intrinsic link between all three factors presents clear opportunities - and obvious challenges.
At its core, reputation drives revenue. How a brand is perceived internally and externally directly influences its ability to sell, scale and protect its bottom line, and the power of perception has never been so true as in 2024.
Without making sweeping statements, brands with strong reputations typically achieve higher annual turnover. And there’s any number of facts and stats to reinforce this.
Take DEI as an example. Diversity, equality and inclusion has been on the radar for decades, and it’s now evident what prioritising the pillar can lead to. Late in 2023, Harvard Business Review found that companies with “above-average” total diversity had 19% points higher innovation revenues, and 9% points higher EBIT margins.
ESG and sustainability is another example (arguably the example), and a strong reputation towards environmental and social efforts can open all manner of opportunities in 2024. Sustainability Disclosure Requirements are amping up across regions, and prospective partners are using reporting to determine the viability - and worth - of collaborations. Meaningful action against key issues can also make funding and investors easier to secure, and market share increase.
Suffice to say, a great reputation doesn’t just build revenue, it protects the bottom line. It can increase customer loyalty and longevity, and makes it simpler to attract talent; who wouldn’t want to work for a brand which cares?
Talking about what can be gained from a great reputation lends to what can be lost from a poor one. And unsurprisingly, reputational damage is one of the biggest risks businesses currently face.
Loss of capital is an obvious one, and it can hit in a number of ways. Brands that suffer from a supply chain crisis or not-so-flattering exposé about its leadership practices can experience a decline in stock market value and customer retention. In a recent survey, around 90% of customers said they won’t buy from a business with a poor reputation.
But a company can also see a decline in retention stats if the issue is large or contentious enough; few skilled candidates want a brand name on their CV after a big fallout.
In many senses, the biggest risk starts with loss of social capital, with not insignificant knock-on effects. Fortunately, cultivating and maintaining a great reputation help mitigate even the most notable of risks, and keep a business’ market position - and objectives - firmly in place.
And the right consultants with the right skillsets can advise your governance on just how to achieve that.
Brand reputation isn't static. And neither is risk or your revenue. Cultivating a great public perception is an effort that never ends, but nonetheless, a crucial one in 2024 and beyond.
Being agile and adapting to incoming (often unexpected changes) is imperative. It’s no longer enough to address a crisis after the fact, give a quick public statement and sweep it aside. Now, leaders need to work intelligently and collaboratively to avoid reputational damage in the first instance. And subsequently, protect its revenue and reduce risk.
In practical terms, that means forward-thinking and forward-planning. Leaders need to closely monitor public rhetoric and sentiment towards their brand, and keep a particularly close eye on social changes that could be in view.
They’ll also need to keep an eye on regulations, new policies and changing goalposts, particularly if they plan to expand overseas, or enter new market streams.
All of this combined, having an effective governance structure who are closely aligned with one another - and the wider industry is absolutely essential. This will keep strategies holistic and productive, and make any risk, revenue or reputational management you do need to enact, that much smoother.
A skilled independent consultant can support you each step of the way. That might look like a Sustainability Consultant to drive your ESG strategy, a Brand Consultant or PR Specialist to manage your reputation, a Fractional CMO to create a revenue-centric plan. Identifying the weaker areas of your operations should give you a better indication of what’s needed. Or, you can speak with us for a more tailored consultation.