Your World Is Now Radically Transparent

Companies have pumped countless millions into building and maintaining their reputation through traditional channels: advertising, public relations, brand marketing, and other fields are dedicated exclusively to this task, but they have been slow to adapt to the addition of the Internet channel.

Case Study: Jet Blue Airways

Jet Blue Airways was in the enviable position of having loyal, even evangelistic customers. An ice storm in 2007 grounded much of its fleet over a six-day period, resulting in many dissatisfied customers.

The company took remarkable steps to address the situation and accommodate those stranded, from an operational standpoint. It also engaged a number of PR firms to help it handle the crisis through traditional channels, which it also did very well.

However, the company completely neglected the online channel. Meanwhile, customers stranded across the nation generated a huge buzz online - using a wide array of media (blogs, video sharing, etc.) to vent their frustration at the way the crisis was being handled. Meanwhile, the company seemed, to consumers in the channel, to be completely ignoring the problem and the flack it was catching as a result.

Both sales and share value plummeted, and the company continued on a downward trend for two months before it took action in the online medium, which was too little and too late, and the company has experienced a major setback that will require years of effort to recover.

A few other cases are presented that demonstrates how a company can have similar problems under "normal" conditions - when there is no single crisis to precipitate a widespread reaction - but a slow uprising of disgruntled customers who take control of their online reputation while the company remains silent until the damage has been done.

A sound-byte from a PR consultant: it takes four years to recover from a reputation blemish, and another three to make it sustainable.

The Reality of a Transparent, Always-On, Wired World

To reiterate: the explosion of social media means that anyone can express their opinion of your company. This is not entirely new, but in the days preceding the Internet, word of mouth spread slowly. Now, everyone is a "citizen journalist" who communicates to the world.

There are sites that are dedicated to consolidating consumer opinion (customer reviews) and sites that are developed to criticize a specific company or a specific incident - but even a personal blog can have postings about consumer experience or public impressions - and thanks to search engines, this information will come to the surface.

It's also worth mentioning that the power of the consumer's voice is considerable. The majority of individuals indicate that they feel that "a person like yourself" is the most credible source of information. Only 40% feel that a doctor provides credible information; 26% trust a CEO, and 14% trust a public spokesperson.

Of note, people have a higher level of trust in the "regular employees" of a company - people who work for a company but are not paid to speak on its behalf - and grant them far more credence than most corporate sources (about 35%), but still slightly less than an everyday person with no connection at all.

Companies are slow to come around: in the early 1990's, they were reluctant even to share annual reports via the Internet, and has slowly evolved. In many cases, information was provided only to combat disinformation. It wasn't until the early 2000's that the first few companies became proactive in providing information of all kinds, even the unflattering truth, to preempt online sources from 'exposing" them.

The bottom line is that a company is already transparent: any document the company provides to anyone (a news release, an annual report, SEC filings, the resumes and personal profiles of key personnel, etc.) is there for anyone who takes the time to look it up. Even information that is not purposefully provided is often available online: testimony delivered in court, information leaked by competitors and other sources, etc.

The problem is that if a person has to dig it up, it gives the public the impression that the company wants to bury it - and that fact alone makes people pay greater attention, and give it greater credibility. If the company is late in providing the information, it appears reluctant to be honest about things until they have already been found out.

Additionally, it's much harder to get attention to a positive message than a negative one, and people are much more likely to voice their dissatisfaction than speak out on your behalf. In the earlier days, not much stock in what "some kook" said on the Internet - but with the emergence of social media, the people who speak out online aren't perceived as eccentric, but as being "like" everyone else.

Also, social media is a bottom-up phenomenon. Companies who attempt to join in the conversation as a corporate entity, or even as an official representative, are patently unwelcome. A corporate MySpace page, once all the rage among marketers who saw this as a way for companies to participate, is now seen as an awkward and comical breach of etiquette. Other intrusions are less easily forgiven.

Companies largely have to rely on their customers to represent the in the digital space - and genuine customers, rather than paid mouthpieces. The "real" people on the internet are good at sniffing out impostors, and their reaction is never positive.

Social Media Overview

A sidebar lists the kinds of social media presently out there, but stresses that it's an evolving medium, and may have changed by the time the book is published:

Reputation 101

The term "reputation" implies the quality or character of a person (or company) in the opinions of others.

Reputation is not merely a matter of a positive or negative customer experience - though that tends to be one of the strongest contributors to a person's impression of a company, they are also influenced by information they receive from other sources. And to go to the statistics previously quoted, the "other sources" they feel are the most credible are other customers, not company-sponsored messages.

In the modern market, a company's reputation is of greater value than its brand. The authors cite various surveys that all point to the same conclusion: that a recommendation from an individual carries far more weight than advertising or PR, or even media coverage.

It's also worth noting that a strong positive reputation takes more work to maintain: people expect a lot more from you, and it's much bigger news, especially in the online channel, when you disappoint them or act in a manner that is not in line with your reputation.

Now for the Good News

Thus far, the authors discussed the downside of public opinion in the online channel - but there are also great benefits.

Primarily, the Internet is a great research tool for understanding your customers' impressions: people are frank and honest, and will say things openly that a company may not be able to gauge by any other means (even independent surveys are skewed).

A case study is given where a company went out of its way to make things right for a customer who complained in a personal blog. The implication is that this same person never voiced a complaint to the company through the channels provided to him, and the company never would have learned of his dissatisfaction (or the resulting negative word-of-mouth) otherwise.

Monitoring the Internet is fairly easy, given that everything out there is searchable, and users tend to cluster in groups according to their attitudes and interests.

Finally, there is an upside to the online medium as well. While people will speak out about bad experiences, they will speak out about good ones as well (albeit in smaller numbers) - and your loyal customers may rush to your defense if you are unjustly attacked.

Become Radically Transparent

At this point, the author's don't disclose any how-to information for leveraging the medium, but they suggest that it is possible, and will provide more tactical information later in the book.