Got Respect? Why Companies Should Care
by John Jessen

Recently one of our large corporate clients came to us and asked if we could comment on the concept and measurement of respect. She explained that her senior management asked her to research a simple question: was their company respected in the marketplace? After thinking about this and looking at many industry syndicated studies that examine such constructs as respect, she concluded that her answer could not be a simple "yes" or "no". Furthermore, other senior executives asked her not only about respect, but wondered out loud if the question was not really about success. Were they thought of as a "successful" company? Again, she could not give them a straightforward answer.

What, she wondered, was the reason behind the question? Why should one care suddenly about respect?

Our short answer to this question was that in her industry (telecommunications) being respected as a business is huge if you understand that within the concept of respect lies shareholder value.

Gaining or having respect is a derived phenomenon. The old saying, you have to earn my respect, is truer today in telecommunications than ever before. Competition is fierce; everyone is struggling to capture a piece of the action, while at the same time providing high quality products and services to a wide variety of markets, both domestically and beyond. New technologies and new delivery channels often favor newer more agile firms. Large, established firms are fighting their own inertia just to keep in the game.

Higher Order Behaviors

Respect, like loyalty, is a higher order behavior that demonstrates a true attachment to the organization. The people showing respect or acting loyal have positioned themselves in a semi-permanent relationship to the company. It is semi-permanent in that only some negative experience or influence will disrupt it.

As higher order behaviors, both respect and loyalty manifest themselves through other behaviors. For loyalty these include repeat purchase, larger share of budget, cross purchase and willingness to pay a price premium. That covers customers, but what about the investment community, where respect is critically important?

Respect is to the investment community what loyalty is to the customer base. Just as loyalty manifests itself through revenue generating behaviors among customers, respect manifests itself through share price supporting behaviors in the investment community (i.e. initial investment decision, increased holdings, willingness to pay a P/E premium, willingness to hold during a general market sell-off, encouraging others to purchase and gaining extra slack from analysts and media).

The Rearview Mirror Problem

Let's assume that senior management wants to proactively increase investor community respect for the company. Given the similarities between respect and loyalty, one might naturally conclude that the traditional methods of measuring loyalty among customers should be applied to measuring respect among the investment community. Such a conclusion would be wrong - not because of any difference between the dynamics of the two behaviors, but because the traditional methods of measuring loyalty are inadequate for either circumstance.

Virtually all loyalty measurement is based on lag indicators - conclusions about current and future loyalty based on past behaviors. These measurement approaches are very good at telling you what has happened, but they are virtually useless in providing information to guide decisions for the present and future. In effect, this is the equivalent of driving a racecar at top speeds on a crowded track using only your rearview mirror. In order to win the race, you need a full field of vision. In addition to knowing who has been respectful/loyal, you need to understand the elements of value that create those higher order behaviors in the first place, and how to deliver those "value drivers" in the right places and in the right way.

The value drivers that resonate on the customer side and on the investor side will likely be different, although frequently will be based on common themes.

The impact of both is based on a common source - the performance of the company's brand as demonstrated by it's ability to consistently deliver on those value drivers that are most important to the specific target group. The measurable result (in dollars) of this is your brand performance. Understanding and consistently delivering on the most impactful value drivers for each group creates a symbiotic "upward spiral" in brand value and the customer/investor behaviors that come with it. Looked at in this way, it is not business results that drive increases in brand value, but rather increased brand performance that drives business results.

Back to the Future

Respect is indeed earned, but it helps greatly to know what drives respect, as it does to know what drives loyalty or purchase behavior. Once the specific value drivers and their impacts are identified, corporate activities can be targeted to fuel the behavior by delivering on them. The future of respect is built into the brand performance of today.


John Jessen is a Vice President with Chadwick Martin Bailey, Inc., Boston MA, a market research and consulting firm that uses advanced, proprietary research and measurement to help its clients identify and penetrate markets, develop products, improve service delivery and build brand value. John's focus is technology and telecommunications and can be reached by calling 617-350-8922 or visiting www.ChadwickMartinBailey.com .

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Copyright 2002 by John Jessen. All rights reserved.

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