Customers are increasingly choosing which companies to support based on the company's reputation.
The 2017 Top Companies Reputations Index (TCRI) survey results, compiled by Plus94 Research come at a time when matters of reputation are foremost in the minds of most South Africans. The issue of state capture and implicated companies such as Bell Pottinger and KPMG, and the closure of bank accounts of Gupta-owned businesses seems to have brought the issue of reputation to the fore, and in particular the idea that an unsavoury corporate reputation can be contagious and detrimental to the sustainability of companies. For many companies, disassociating themselves from implicated companies is the best solution for their own reputations.
The importance of reputation to consumers has been growing continuously since 2011. The results have proven over time that the public is prepared to let their money do the talking by disassociating from companies with a bad reputation, and rewarding companies with good reputations with their loyalty. In 2014, a significant 43% of the public would deliberately not buy products from a company with a negative reputation. By 2017 this resolve to avoid dealing with companies with a negative reputation had increased to 58% of the general public. At the same time 81% of the sample was willing to reward companies they considered to have positive reputations by purchasing goods and services from them. This confirms that reputation may be the single biggest consumer purchaser criterion, assuming price parity.
The highest impact of reputation on consumers was perceived to come from companies they interacted with the most. These include grocery shops, clothing stores, fast food outlets, banks and telecommunications companies.
A running theme throughout the 2017 findings is the importance of quality employees to overall corporate reputation. All things considered, the biggest driver across the different sectors turned out to be the competitiveness of the business, punctuated by its ability to take advantage of market opportunities and having positive future prospects. The market seems to warm up to businesses they consider to be competent, esteemed, and committed to engaging in meaningful corporate responsibility initiatives.
The overall top 50 companies are chosen based on overall advertising spend over the 12 months preceding the study. The rationale for this is that the high advertising budget companies have high levels of public engagement and familiarity across the board. However, the TCRI rates large numbers of companies each year. In 2017 a total of 171 companies were included, with the additional 121 companies being competitors of the top 50 in their respective product categories. In order to avoid speculative associations, rating of businesses was done by respondents who are familiar with those businesses.
A total national sample of 2 628 respondents participated. The TCRI was conducted in the country’s urban areas covering all nine provinces. The measurement is based on a nine-dimension reputation model which has been tested over many years to correlate strongly with overall reputation perception. The reputation of a company is determined by rating and aggregating 31 individual attribute statements. The sample is demographically weighted to reflect lifestyle and spending propensity across LSM groups five to 10.2.
Samsung South Africa ranked first as the most reputable business in South Africa, with a TCRI score of 84.00. Among other considerations, it was seen as a strong financial performer and outperformed its competitors. Coca Cola, which dominated the ratings in the past six years, came in second with a score of 83.69. The quality and the familiarity of its products and services accounted for the positive manner in which it is perceived. Pick n Pay, McDonalds and Volkswagen came third, fourth and fifth respectively. The balance of the top 10, in order, consisted of SAB Miller, Clicks, Makro, Nestle and Vodacom. Importantly, McDonalds and Samsung were associated with positive financial results, while Pick n Pay came across as a business with strong vision and leadership credentials.
To demonstrate the volatility of reputation scores, only four of the 2016 top 10 companies remained in the top 10 in 2017. The companies appearing in the top 10 in both years were Coca Cola, VW, Clicks and Vodacom. The other six, including the winner Samsung, were previously outside of the top 10. If there is one business attribute that cannot be taken for granted, it is certainly corporate reputation, hence the importance of regular monitoring. Most recent results show that the performance of the reputation of banks is waning relative to other types of businesses.
The Top 10 companies had an aggregate score of 80.99, which is distinctly higher than the average score for the categories, the highest of which was soft beverages at 78.04. The scores drop gradually per category, with the exception of online classifieds and short-term insurance, where the drop is markedly bigger. This gradual drop belies some significant differences in reputation scores, for example between soft beverages (78.04) and investment and insurance (73.49).
In general, nearly all reputation scores declined from their levels in 2016, this being amply demonstrated by the drop in the top 10’s average from 83.49 to 80.99. This more stringent view of the corporate sector may be due in part to harsh economic realities, but also potentially because of the increasing national scrutiny of the activities of big business. Alcoholic beverages companies declined from an average of 79.26 in 2016 to 73.51 in the latest results, while short-term insurance scores fell from 75.67 to 70.67.
The household and home category was unique in improving on its 2016 performance from 74.52 to 76.60. This may be due to consumers placing more emphasis on more essential household goods and less on luxuries such as personal care, which declined from 80.61 in 2016 to 73.51 in the latest survey.
Outside of the programmes and activities of the company, reputation scores are susceptible to macro-economic factors and national sentiment.