4-How-PR-Increases-Company-Value-1

How skillfully companies manage key non-financial areas of performance and then communicate related successes to outside constituencies—shareholders, investors—will have a powerful effect on how they are valued. In fact, the more analysts use non-financial measures, the more accurate their earnings forecasts become.

–Ernst & Young, “Measures that Matter”

A well-executed PR program is very effective for meeting goals for revenue growth and increased company value. PR helps accomplish these goals by meeting two primary objectives:

  • PR increases awareness of your company and its products.
  • PR enhances the reputation of your company and its products.

By increasing awareness and enhancing the reputation of your company and its products, the PR program is key to decision-making among target audiences. Target audiences, or “publics,” which include customers, potential customers, investors, potential investors, owners, employees, partners, vendors, opinion leaders, journalists and others in the market, make important decisions about:

  • If, when and how your products should be purchased.
  • If, when and how your company fits into various markets.
  • The quantitative value of your products.
  • The qualitative reputation of your products.
  • The quantitative value of you or your company as an organization.
  • The qualitative reputation of you or your company as an organization.
  • The experience of doing business with your company and its employees.
  • The value of a partnership, affiliation, or other equity arrangement with your company.

Decision Making

PR affects many stages of audience decision making, as identified the the four-step “Mental States Approach.” The quantitative and qualitative decisions audience members make about your company, its products and its people are subject to this four-step process, a.k.a. the “Aida” formula.

  1. ATTENTION
  2. INTEREST
  3. DESIRE
  4. ACTION

To support the company’s goal of revenue growth, the PR program focuses largely on the first two steps in the decision making process, Attention and Interest. Your PR program accomplishes this primarily by its first objective, increasing awareness of the company and its products. The PR program works in concert with your sales program to support the third step in the decision making process: Desire. The fourth and final step in the process, Action, is a function of sales programs, including e-commerce.

To support the company’s goal of increased value, the PR program focuses again on the first and second steps in the decision making process, Attention and Interest. Your PR program accomplishes this primarily by its second objective, enhancing the reputation of the company and its products.

The PR program works in concert with management, and, perhaps, operations to support the third step in the decision making process, Desire. The fourth and final step in the reputation decision making progress, Action, is often a function of operations and management.

Research shows that financial performance and communications performance are inexorably linked. Organizations see bottom-line results in their equity when they executive PR programs to increase awareness and boost reputation.

Corporate equity can be expressed as a combination of tangible components (revenues, assets, liabilities) and intangible concepts (credibility, loyalty, reputation). Reputation is seen by most CEOs as vital to the organization’s overall performance. In fact, 77 percent believe good reputation helps sell products and services.

In addition, companies viewed as “winners” (i.e., better reputations) are much more likely to attract external audiences such as customers, employees and partners. In fact. more than 60 percent would consider selling their own business to companies with good reputations.

Reputation also works as a business multiplier. Organizations counted among the top 10 in corporate equity are much more likely to sell at premium prices, have recommended stock, and attract employees and venture partners.

How do you defend public relations to your management or clients? What language do you use to convince them?