Well over half of consumers will pay a premium to the company they believe has the best reputation, even if they can buy a product or service cheaper elsewhere, a new survey published today (Monday) by the CBI reveals.
Excellent customer service was cited by almost half of all survey respondents (48%) as the characteristic that most helps a firm build its reputation. Another third (36%) said that products and services always living up to expectations mattered most. Seven per cent said a good reputation was down to being a good employer while four per cent attributed it to brand appeal.
The survey, conducted by YouGov1, reveals the ten companies UK consumers say have the best reputation. At the top of the list of unprompted replies is Marks & Spencer, which gained almost twice as many mentions as the next highest, John Lewis Partnership - itself closely followed by the Virgin Group.
The next three highly rated companies were Tesco, Sony and ASDA.
Among the 58% of consumers willing to pay more to their most highly regarded company, 43% would pay up to five per cent over and above a cheaper price, almost a third (29%) are happy to pay six to ten per cent more, while a one in six (16%) would pay more than a ten per cent premium.
Commenting on the findings, Richard Lambert, the CBI's Director-General, said:
"What comes through in our survey is that great reputations rest or fall on delivery. Whether the promise is of quality, fun, value or luxury, the 21st century customer is savvy enough to sniff out and avoid the shoddy or disappointing."
Overall, a large majority of the public (82%) felt that companies must work harder at restoring their reputations.
However two-thirds (64%) said that, as long as a company behaves responsibly and delivers good service, they don't mind if it makes a big profit. And just under half (43%) felt that if company chiefs perform well they deserve to be rewarded with a high salary (against 27% who disagreed). Most people (86%) believed that companies perform an important role in creating jobs and wealth in the UK.
The survey suggests that people are inclined to trust companies best when they know more about them. Fifty seven per cent said they sometimes act as an advocate for their company, talking positively to others about its products or services. Thirty eight per cent said they trust the company they work for more than other firms, compared to only 11% who said the opposite.
Poor customer service was thought by two in five of respondents to the YouGov survey (42%) to most damage a good reputation and a third (30%) said that products not living up to expectation were most to blame. Scandals, such as fraud or criminal acts were considered by 17 per cent to be the most important factor. Only seven per cent said big payments to executives did the most damage.
For a distrusted company to rebuild its reputation, 45 per cent of consumers said the best thing for it to do is come clean and publicly apologise. A further third (28%) believed a company's best policy was to compensate customers, while 11 per cent said a change of management was required. Eight per cent would be most persuaded to change their view after reading positive stories in the press.
The banking and finance sector was cited by a third of consumers (36%) as most in need of restoring its reputation. This may have increased due to the recent troubles of Northern Rock. Almost a fifth (19%) of consumers said transport providers, such as bus, rail, coach and ferry companies most needed a reputation boost.
About a tenth of consumers cited media/entertainment providers (11%) as being most in need of restoring their reputation, which may reflect the recent controversies over phone-ins and royal coverage, and a similar figure (10%) said estate agents most needed to brush up their act.
Mr Lambert concluded:
"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."
1. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,960 adults. Fieldwork was undertaken between 12th - 14th November 2007. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
The CBI is the UK's leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. The organisation is also the UK's official business representative in the European Union, which generates more than 50 per cent of regulation affecting British firms. With offices across the UK as well as in London, Brussels, Washington and Beijing, the CBI coordinates British business representation around the world.