October 2013

Tracking Reputation to Avoid a Little Shop of Horrors

Tracking Reputation to Avoid a Little Shop of Horrors

 

Mental patient Halloween costumes, Nazi memorabilia and extreme sex literature are just some of the offensive products that have caught out mainstream retailers recently.  

The retailers involved, such as WH Smith, Asda, Amazon and Ebay, did not intend to offend and yet their reputations were tarnished as a result of sales of these items through their websites.  These products cause understandable outrage, so why did they do it?  

The reason is because their business models allow it.  New, particularly online, business models allow third party businesses to access the large retailers’ digital shop windows.  Understandably, the retailers have core competencies in certain areas such as popular books and music but their desire to grow and offer a broader range of products through the same web shop front means they need to open up to others.  After all, an online retailer can in theory offer an almost infinite number of products, why not fill the shelves?

But things breakdown if you allow free reign.  Any organisation needs to understand and be able to manage a third party relationship.  After all, the third party is leveraging off the retailer’s good name and reputation and to all intents and purposes, will be perceived by the buyers as if it were from the big name retailer.  The fine detail of the commercial arrangement will be lost in any controversy.

This is a real risk to reputation.  The remedy is management and control.  An organisation needs to be aware and constantly alert to the effect of the actions of its associates and related organisations.  When an organisation initially establishes the relationship it must ask itself, does this make sense on the basis of finance and reputation?

If yes, this then needs to be monitored and managed on an on-going basis.  

Whilst the financial relationship can be quantified courtesy of the accountancy profession, reputation appraisal and monitoring may seem to be a pipedream.  That may have been the case ten years ago, but using the latest ‘big data’ computing and in-depth analysis, we do just that. Indeed, it can not only appraise reputations, but also gauge the risks to reputation that will indicate the propensity to inflict damage.  

So before you open the door to any relationship, be in a position to understand the risks and know if it’s more trick than treat.