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The ROI on reputation: When a crisis breaks, it’s incalculable

Discussions between CEOs and communication professionals often bog down on one topic: what is the return on investment in public relations? It’s a difficult question because reputation itself is an intangible asset, one that can be influenced but never controlled. Nonetheless, a look at some recent high-profile crises points us toward some answers.

This week, the Toronto Star asked me and Professor Ken Wong of Queen’s University to evaluate crisis communications in various recent high-profile stories, including the latest marine mishap for Costa Crociere, Europe’s largest cruise line, and the tragic VIA Rail train derailment near Toronto.

These cases aren’t just similar because they involve passenger travel; they are also examples of the explicit connection between communication and the rise, fall, recovery or maintenance in the value of a reputation and a brand. (As the Star article shows, Ken and I agreed that one crisis has been managed better than the other, at least so far).

Here are a few “takeaways” for communicators and their clients:

1. Communications must be aligned with reality. Let’s get this right up front: the facts on the ground (or at sea) will have the greatest influence on the reputations of these organizations as investigators determine whether or not was there human or corporate error, negligence or liability. Communication can only be used to amplify the positive or mitigate the negative that is intrinsic to each case.

2. Having said that, communication has a direct — albeit often incalculable — impact on the business. Consider the obvious link between the quality of communication, public confidence and therefore sales. This is about both the organization’s conscience and its competence. It’s not just about whether your customers like you; it’s about whether they trust you.

3. Goodwill matters: Did you have some in the bank? A reservoir of goodwill — built over time through credible, consistent public relations — is another incalculable, intangible asset when the organization has to manage a problem — from a minor issue to a major crisis.

These lessons aren’t just for the corporate world. Canadians saw another example of the consequence of poor communication last week when the federal government put its proposed internet surveillance act on hold following an ill-chosen comment by the minister of public safety. See for yourself in the following video:

While there was already a rising chorus of opposition to the legislation, the tipping point was the minister’s attempt to vilify his opponents, coupled with an absurd attempt to deny what he had plainly said. To continue the transportation metaphor, the government’s “business” was derailed by disastrous communication.

Research, measurement and evaluation are fundamental to professional communication, and clients should challenge communicators to excel in these areas. But smart organizations resist falling down the “ROI” rabbit hole in trying to measure the impact of a specific financial investment in building a reputation. The resulting “paralysis of analysis” risks leaving the organization vulnerable and the playing field open for others to define the game or change the rules. When a crisis breaks, the return on public relations is incalculable.

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March 1st, 2012 | Posted in Ideas | 0 Comments

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