Tuesday, February 21, 2012

The Importance of Reputation

Reputation Motivational Poster

The saying goes, "nobody's perfect". Even the best people (and companies) are prone to making mistakes at some point throughout their lives. Some are able to handle it well while others end up having a public relations meltdown. What separates the two? The answer is reputation. If people trust you, they know that even if you make a mistake, you'll fix it and continue to strive to be the best.

Case in point? Toyota was recently highlighted in a study done by Robert Hammond at North Carolina State University. Back in 2009, recalls were made due to a problem with "sudden unintended acceleration" caused by the wrong floormats being installed in certain vehicles. Despite extensive media coverage, Hammond uses sales data to show that Toyota sales remained consistent among used car buyers after the recall was made.
He compares the recall to another one that occurred in the 1980's with automaker Audi. Audi saw a more noticeable effect on the price of its vehicles, with a price slide of around 16% due to the publicity of the recall (compared to Toyota's 2%). Since the Audi recall was for the same reason, why did they see a larger drop? In 1982, Audi was a lot more unknown to American consumers than Toyota was in 2009. They had only been around since 1970, while Toyota has been familiar to the American market since 1958, and had more drivers willing to vouch for the overall quality of the brand.

Trust and reputation are not built overnight. It's an effort that an individual (or business) cultivates over a long period of time. Whether through word of mouth, longevity of the business, reviews, or testimonials, there are many different ways to establish it. In fact, Toyota was recently announced as one of the top rated brands in a new vehicle dependability study by JD Power and Associates. Additionally, the 2012 Toyota Camry received one of the highest accolades - a "recommended" review from the February issue of Consumer Reports! 

What are the most important factors you look for when deciding how reputable a business (or individual) is? Do you hold yourself to the same standard?

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