CT is a measure of stakeholder consensus, or the scatter of their expectations.
It is first and foremost an indicator of risk, as companies with CT measures in excess of 7% are on average at a statistically greater risk of an adverse equity market event (i.e., a market cap loss of 7.5% or more) in the going-forward 12 months. It also provides feedback on the effectiveness of recent operations and communications efforts.
There are a variety of intriguing uses for this data, most of which arise from the principle that effective and sustainable reputational value is the result of conversational engagement over time, not necessarily high RPs. Like any relationship, stakeholders need to be regularly challenged and informed. Reputations need to be nurtured, not simply promoted and defended. CT can prompt conversations about:
- The latest CT score is a 13-week weighted average, so it’s an indication of stakeholder reaction to current events. A high CT represents more scatter or lack of unanimity/consensus on reputational value, which itself can be reason to investigate (was good news, or perhaps a reputation-relevant communications campaign, just delivered)? A low CT suggests stakeholders believe they possess an accurate valuation of your businesses’ value. Is it correct?
- A particularly long CT trend in one direction, up or down, is also the basis for asking questions: Are we engaging our stakeholders actively? If not, why not and, if so, are we achieving consensus conclusions?
- CT can also be used in correlation with RP to explore potential support and/or divergence between assigned reputational value and stakeholder consensus on their sustainability of that value going forward. High RP and high CT could suggest the risk for a serious impact to value, for instance.
Quartile comparisons for CT within your industry category are also provided, allowing for comparisons to consensus movement of your competitors. Two additional metrics are also included: first, an easy-to-read indicator of the overall health of your reputation as of the report date and, second, an expression of how closely it is tied to the perceptions of your industry category overall. Both indicators can and should factor into operational and communications conversations on a real-time basis.