Business

Champions of their kingdoms

Mail & Guardian Correspondent

Blue chip is as blue chip does. The same names appear consistently over the years in this research.

Pick n Pay is not known as blue chip for nothing.

Between 2001 and 2011 and again this year, Pick n Pay, Unilever, SAB, Standard Bank, Absa and Old Mutual feature tops. These companies are not known as blue chip for nothing.


But some things do change. Entire industry sectors worth billions that have never existed before have come into being in the last 10 or so years. Think cellphones, Facebook, MXit, Pinterest.

Telecoms: The new boys in town
The telecoms sector barely existed in the first Top Companies Reputation Index study in 2001. At the time, cellphones and internet access were a niche domain for the affluent; now they are a core part of life.

The telecoms that provide these services are also some of customers’ least-favourite companies and consumer complaints sites are awash with bitterness towards the mobile operators. MTN, Vodacom and Cell C had well over 10 000 entries each over the past year. By comparison, banks, retailers and car manufacturers had a scant few hundred.

But they also have massive, massive­ marketing budgets. AdFocus, the advertising industry publication, estimated that together the biggest four – MTN, Vodacom, Telkom and Cell C – spent R1-billion on advertising in the first eight months of last year. These companies are highly visible and spend fortunes on corporate social investment campaigns and sports and entertainment sponsorships to keep them close to our hearts.

Despite Vodacom being the much bigger spender, MTN managed to score much more strongly in the Top Companies Reputation Index scorecard, followed by Telkom and Neotel. Cell C, 8ta (Telkom) and MVNO Virgin Mobile lagged behind.

Bold bank breaks out
The clear winner was innovative and internet-savvy champion FNB, followed closely by the other big three. The exception is Nedbank, which fell quite far behind. Some of this is attributable to the bank’s fairly public woes over the past year or two and some to its struggle to connect with the mass market.

Of the life assurers, Old Mutual was by far the standout company, whereas Metropolitan and Sanlam fell behind. A surprise entrant in the top echelons is Discovery Bank and Discovery Life, fairly recent offshoots of this high-profile medical aid company.

Everything still keeps going right
Toyota, the evergreen favourite of middle South Africa, dominated the vehicles sector with a high mean rating that would have earned it second place in the gold Top Companies Reputation Index. Likewise, the reputation scores of Mercedes Benz (second) and Audi (third) were high enough for them to have been top 10 companies, but their advertising spend did not qualify them to be rated in this category.

Lexus, a much smaller brand, did well to beat the behemoth of South Africa’s luxury motoring landscape, BMW, whose score of 78.76 falls outside the top 20 Top Companies Reputation Index gold index companies.

Consumer products and services
Coca-Cola, of course, tops in the Top Companies Reputation Index score, but in the consumer products and services section Woolworths stands out as a close number two and SAB Miller and Pick n Pay are not far behind.

It is interesting that the more aggressive marketers that have an edgy, even challenging approach to consumers are further back in the rankings. Nando’s, a great one to kick up a storm, is 17 places behind Debonairs Pizza, which has a more timid, unassertive image.

But that does not stop the punters lining up for the spicy flame-grilled chicken across South Africa, Southern Africa, India, the Middle East, Australia, the United States and the United Kingdom: safe is nice to work for, spicy is good to eat.

Boutique brands
There were a number of companies that were exceptionally highly rated with scores in the mid-80s, enough to get into the top 10 for the gold award. But, because they were rated by very small samples, they were not included in the overall rankings.

Interestingly, the financial newswire I-Net Bridge was extremely well regarded as pretty much a necessity in the industry it serves. The other big winners were either companies that sell alcohol brands (we do love our dop in South Africa), such as Distell, RGBC, Pernod Ricard, or cosmetics and skincare products (Rimmel, Reckitt & Benckiser, Clarins). Personal financial services companies also did well, including Channel4life, Allan Gray and Coronation Fund Managers.

Get business right and reputation will follow
Reputation is big business. Just one large firm, the Reputation Institute, has offices in about 30 countries across the world.

Reputation management used to fall to the public relations industry, but with the growing influence of management consultancies of every type - from brand to digital to business specialists – this has changed.

But does managing a reputation matter?
Goldman Sachs’s reputation is in tatters after a government bailout and scandal after scandal, such as the public roasting it got from departing employee Greg Smith, which ran front and centre in the New York Times.

JP Morgan Chase is another case in point. Just as complicit in backroom double dealings as its peers, just a few weeks ago it managed to lose $2-billion in a trading snafu in its London office. Yet, these companies are still posting record profits.

One could hardly say tobacco companies have good reputations, but Philip Morris International managed to pull in $7.4-billion in the first quarter of 2012, up by 10%.
Similarly, cellphone companies are widely loathed by their customers for poor service, impenetrable contracts and uncompetitive pricing, yet they make money hand over fist.
Perhaps the companies that get on with their business – making good products that their customers admire and providing the services that impress them – is what makes a business successful and drives its reputation.

Perhaps the reputation is the result of a good business, not the start of it.

In a recent essay in The Economist on the new move to put the reputation cart ahead of the customer service horse, the last paragraph concluded with a quote from John Stuart Mill’s Autobiography related to the fact that one should not make happiness one’s direct end, but that happiness comes from pursuing some other worthy goal.

If companies engage in fair trade and labour practices, are transparent in their activities, clear in their vision, clean in their governance and regularly deliver great products their customers want (all the factors accounted for in the Top Companies Reputation Index study), how much would they have to spend to build their reputations?

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