Public relations professionals are always watching the reputation impact of ethical business as part of corporate social responsibility (CSR) programs. A new study covered by the Wall Street Journal (Does Being Ethical Pay) shows how we can better quantify the brand reputation impact CSR programs.

The article outlines a study to see if and how consumers reward ethical behavior in terms of pricing power. Will they pay a price premium for high ethical standards? How much do they punish low standards. You can read the results of the study here. When doing so, keep in mind three takeaways from this article and research.

1. People will pay a premium for ethical behavior. This is critical for public relations teams to consider in making recommendations. Are we recommending a CSR program that will have a positive impact on the brand in the eyes of consumers? If so, a study such as this one can quantify that impact of a CSR driven reputation program.
2. Consumers may severely punish companies when unethical behavior is uncovered. The study shows that consumers may penalize companies even more for unethical behavior than they reward them for ethical behavior. In other words, defensive CSR may be even more important and profitable. So even if your CEO is not a huge CSR fan, there may be an opportunity to quantify the cost of skipping a CSR audit and potentially facing consumer wrath should unethical behavior get out.
3. High ethical standards (CSR programs) need to be clearly communicated. This is a key learning is implied in the article but not clearly articulated. In the study, consumers were well aware of when a company engaged in ethical behavior and rewarded them for it. In the real world, you can’t expect consumers to find out about good or bad behavior, CSR programs and ethical standards; consumer must be told. Companies often have a strong focus on upholding the highest ethical standards but don’t clearly communicate how these standards are implemented in a way that affects their customers.

This last learning means there is a potentially huge opportunity for companies to uncover substantial hidden value in their brand in a way that translates into a clear financial impact. The opportunity for public relations professionals is to use CSR audits to determine where communicating high ethical standards will enhance the brand reputation in a way that has a quantifiable financial impact. In other words, make sure there is no bad behavior then do a better job of communicating relevant good behavior, and customers will buy more and pay more.

About Ephraim Cohen

Ephraim Cohen, currently the co-owner and partner at The Fortex Group designs and implements business to business communications programs for organizations marketing at a corporate level. Ephraim has also designed and implemented several systems for real service level guarantees and budget measurement systems for public relations programs. His articles on business to business communications have been published in magazines such as Communications World and PR Tactic and he has been quoted on business in national business publications such as The New York Times, The Wall Street Journal, Investors Business Daily and News.com, among others.

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