Risk and reputation: preparing for business reality

New research from The Chartered Institute of Marketing reveals the reputational risks facing brands in a customer-empowered, social era. Thomas Brown, associate director, research and insights at CIM, explains


Isn’t social media fantastic?  Consumers from across the planet congregate in the same place to share what they think, what they like and what they’re up to. What’s more, businesses and brands are able to join this conversation, connecting directly with their customers in a way never previously achievable. Add to this the cost efficiencies of social media and it’s almost too good to be true.

The problem is everything comes at a price. What’s developed over the last decade isn’t merely a new, low-cost marketing channel. Rather, we are witnessing a paradigm shift in how people communicate and consume information.

The permeation of technology and adoption of social media platforms has led to a fundamental shift in power. Whereas businesses used to broadcast their messages and ideals to the public, we are now seeing the amplification of consumers’ opinions and influence through their social networks. There has been a power shift and it sits with the consumer.

What does this mean for businesses? The answer is risk and reward in equal measures.

These days, a single frustrated customer or a disgruntled employee can launch a media-grabbing campaign against a company before the business even hears of their complaint. This democratisation of conversations can have profound implications for a brand.

The permeation of technology and adoption of social media platforms has led to a fundamental shift in power

Rather than retrenchment in the face of a brand battering, what’s required is readiness. Whether or not an organisation chooses to engage with customers, clients or consumers in a social space is irrelevant because the conversation will happen regardless. It’s how prepared businesses are for it that will make the difference.

What’s essential, as with any risk or vulnerability, is for an organisation to understand the issues and make the appropriate preparations to mitigate or avoid them. An organisation can’t hope to control the conversation or silence its critics, but it can make sure its own people understand the role of social media in business and how to best represent an organisation.

Our latest Social Media Benchmark explores the role of guidelines and policies to support and co-ordinate employees’ use of social media and its impact on an organisation’s brand. An early preview of results reveals a widespread recognition of risk, but a looming reputational vulnerability.

We know from past research that the vulnerabilities associated with social media are widely understood. In our last wave of this study, 50 per cent of marketers strongly agreed that, if left unmonitored and unmanaged, social media poses a significant reputational risk.

In our latest research, however, readiness to address this fell short of expectations: while 98 per cent of businesses acknowledged the risks and vulnerabilities of social media, only 44 per cent of organisations currently have a defined set of social media guidelines and policies in place.

In a world where “red tape” is often met with disdain, it’s understandable that some may shy away from rules and procedure. However, the potential damage that can stem from mismanagement of such a visible and fast-growing media cannot be ignored. Just ask HMV.

Of those organisations who have invested time in creating social media guidelines and policies, our research reveals a surprisingly light-touch approach. Some 75 per cent of businesses say their policies contain only principles – high-level guidelines lacking detail, best practices or case studies – and 65 per cent say these policies fill less than four pages of A4.

What’s more, 60 per cent of organisations only introduced these policies as recently as 2011 or 2012, raising the question of how road-tested or effective they may be given their relative newness.

While we advocate the use of guidelines rather than rigid or cumbersome rules, the fast-moving world of social media necessitates a level of guidance beyond merely “pointers”.

A robust set of social media guidelines can only be constructed by looking outside the marketing team and utilising companywide expertise. Governance, oversight, training, crisis management and disciplinary processes are well-worn terms in HR, IT and legal departments. Through harnessing this experience, marketing and digital teams can create social media policies that will effectively defend a company’s reputation.

However, our research reveals that organisations have, on the whole, taken a narrow approach to formulating social media policies.

Of those surveyed, 60 per cent say their most senior marketers were party to their formulation, but only 32 per cent say their HR team had any input, while 30 per cent say their legal and compliance teams were involved, and less than 20 per cent of IT departments took part.

Organisations need to break down silo walls. If social media guidelines and policies are truly to be of value as a management tool, they will be stronger for bringing the right parties to the table in their creation, roll-out and ongoing management.

Full research findings will be published at the CIM/Bloomberg 2013 Digital Summit on June 28. You can watch and participate from your desk for free at www.cim-summit.com