Consumers Pay Premium for Great Reputation
A new poll by the CBI has found that more than 50% of consumers are happy to pay a premium for goods or services from a business with a great reputation, even if they can buy cheaper elsewhere.
Today’s survey results show that 48% of respondents cite excellent customer service as the main feature of business reputation. A further 36% said that the fact that companies were meeting consumers’ expectations about products & services also ranked highly.
Reputation was important due to businesses being a good employer, according to 7% of the answers, and brand appeal attributed only 4%.
Ranking the businesses that had the best reputation, consumers came up with:
- Marks & Spencer
- John Lewis Partnership
- Virgin Group
The top three are followed by:
Of the 58% of consumers willing to pay a premium for products & services from a reputable company:
- 43% would pay as much as a 5% premium
- 29% are happy with a 6-10% premium
- 16% would be willing to pay more than 10%
Richard Lambert, the CBI’s Director-General, acknowledged that business reputation was based on whether companies could actually deliver on their promises and that in addition to quality, service and value, environmental credentials and social responsibility are gaining credence on the agenda.
He singled-out M&S, the UK’s most reputable company in this survey, for their combination of great products, excellent customer service and their recent 5-year environment & ethics campaign, "Plan A", saying the initiative had boosted the retailer’s reputation considerably.
In other questions regarding business and pay:
- 64% of those questioned admit that they don’t mind companies making big profit just as long as the business delivers good service and behaves responsibly.
- 43% of respondents said that high salaries were a fitting reward for the chiefs of well-performing firms, whilst 27% were against.
- 86% believe that companies play an important part in creating wealth and jobs in the UK.
As for the issue of lacking good reputation, 82% of people believed that companies should put more effort into restoring their reputations with 36% of consumers pointing fingers at the banking & finance sector in need of most work. Transport companies such as bus, coach, ferry and rail operators came in second with 19% of the vote.
The banking sector may have suffered a fall in reputation due to the recent sub-prime lending fiasco where Northern Rock was involved.
Similarly media & entertainment companies have lost their shine recently with 11% of consumers recalling the phone-in scandals and estate agencies following up with 10% of the figure.
In the case of which aspects most damage the reputation of a business:
- 42% said it was down to poor customer service
- 30% attributed this to products not living up to expectations
- 17% blamed criminal acts, fraud & scandals
- 7% cited big payouts to top executives
As for what to do in the case of mistrust with a company the results were:
- 45% said the company should publicly apologise
- 28% believed in compensating the consumer
- 11% wanted a change in management
- 8% would change their minds on poor reputation after seeing positive stories in the media
The survey concludes that people are more inclined to trust a business when they have the full facts about them. A good reputation earns customer loyalty with 57% of those questioned saying they promote products or services they’ve brought from a particular company.
This view is echoed by Richard Lambert who said:
"It is clear that companies can never be complacent. A great reputation takes a lifetime to build and seconds to lose. But the picture painted by our survey and report shows encouraging signs for businesses willing to go the extra mile and demonstrates that a good quality reputation is worth its weight in gold."