Brand reputation paramount for leadership award winner
Word of mouth referrals more valuable than slick marketing, says Simon Challies.
Tuesday, December 20 2011 || News || BY Fiona Rotherham, Businessday.co.nz
Formerly chief financial officer for the company, Challies said he was initially shocked at being asked to take over as managing director. Several years on, he admits to quite liking calling the shots.
"Looking back I probably had ambitions from a long time ago - from when I first started investing in public companies while still at school. It was bubbling away in the background."
The fresh-faced though shiny-domed Challies last week won the New Zealand Shareholders' Association annual Beacon award for leadership, following in the footsteps of Air NZ boss Rob Fyfe, jeweller Michael Hill and Mainfreight founder Bruce Plested.
The association said the South Island-based company's profits had grown from $6.2 million in 1999 to $100m today.
Last month, Ryman forecast a full-year profit target 15 per cent ahead of the previous financial year. Since listing it has paid out $200m in dividends and now has a market capitalisation of $1.3 billion, over 12,000 shareholders, 2600 staff, 5400 residents and 24 retirement villages throughout New Zealand.
Challies seems a humble sort of guy. When accepting the award, he said he's simply followed the path set by the company's founders where "brand reputation" is paramount.
A quick Google search shows differing opinions on what brand reputation actually means. But the consensus seems to be it's about ensuring your company's reputation among all its stakeholders - customers, suppliers, investors - matches any slick marketing of your brand.
In a world where the rise of social media means any customer can instantly comment about you online, brand reputation has become increasingly important.
An article in the MIT Sloan Management Review said many executives talk about corporate reputation and brand as if they were one and the same. The authors opined that focusing on reputation at the expense of brand can lead to product offerings languishing in the market. Neglecting reputation can be equally dangerous, resulting in a lower stock price, difficulties attracting top talent and even product boycotts.
Local branding guru James Bickford of Interbrand reckons there should be no difference between brand and reputation. He thinks building a brand and a company reputation is a holistic enterprise, started internally among your employees and who you partner with rather than in external messaging.
It's all about what your staff say about your company to their neighbours during a weekend barbecue or to their family over dinner, Bickford says. That will translate to how well they deal with customers, which in turn leads to word of mouth recommendations on your brand.
You get more out of word out of mouth referrals, Challies says, than any slick marketing.
Ryman may be the country's largest retirement village operator and third-largest aged care provider, but it spends comparatively little on marketing.
Challies thinks brand reputation is about valuing long-term relationships. "It's what we do. The team is conscious to be seen to be fair in what we do and always leave a bit on the table [for someone else]."
Even when the founding shareholders - Kevin Hickman and John Ryder - floated the company in 1999, selling down a chunk of their shareholding, "they still left a lot on the table.
''That reflects how we deal with people, that we're not out for the last dollar," Challies says. Since the 1999 float, Ryman's share price has risen by 896.3 per cent, from 27c to $2.69c.
Ryman recruits based on its focus on brand reputation, hiring people who are "action orientated". According to Challies, "they're less strategists and more doers. They have to make things happen."
Surely that is the essence of brand reputation; it's what you actually do, not just what you say.
