Reputation isn't as powerful as you imagine

I think reputation is one of the most important assets that a company controls. Let me explain why.

The two most important factors that determine the success of a product are: (1) the perceived value that the product delivers to customers; and (2) the costs to the producing company for delivering this value.

Imagine a vertical line, anchored by value at the top and cost on the bottom. The difference between value and cost indicates the advantage (or disadvantage) of your product relative to a competing product.

Now consider reputation (brand) in relation to this difference between value and cost. A positive reputation directly and indirectly increases the perceived value of a product. It increases product awareness, signals quality, and instills confidence among buyers. A reputation and brand can even invoke a deep emotional response (e.g., Disney). In addition to these direct effects, a reputation enhances a company’s ability to attract other resources that have an important bearing on customer value. For instance, a reputation affects a company’s success with recruiting talent and forming relationships with key suppliers and partners, which in turn affect product development, manufacturing, distribution, and so forth – i.e., the key elements that ultimately drive customer value.

As an example, consider Google in Search. The Google brand is the world’s most valuable, according to Millward Brown Optimor (2010). As a result of the Google brand, consumers are more likely to use Google Search over Microsoft Bing, even if these products are roughly comparable from a functional perspective. At the same time, Google’s reputation over other technology companies has enabled it to attract some of world’s top engineering and marketing talent. This talent, which underlies its product development efforts, has enabled Google to continue to enhance its products over time, and in turn the company’s reputation.

While a reputation has the potential to affect perceived value, there are often no direct costs with building a reputation because it’s typically a byproduct of delivering and communicating customer value. A reputation can even reduce costs because it may substitute for other expenditures (e.g., marketing, recruiting expenses). If you deliver significant value to customers, you not only enhance your reputation with those customers, but you also have an influence on their network and their network’s network through word-of-mouth marketing. And if you continue to deliver significant value over time, your reputation will be further amplified, having a broader impact on product adoption as well as your company’s other activities, such as the ability to attract new employees. Finally, unlike physical assets, which depreciate and must be replaced at a cost, a reputation can increase in value over time, so long as you continue to provide superior value to new and existing customers.

Returning to the Google Search example. When Google Search first launched in 1997, users of the product quickly realized the superior value it provided relative to competing products, such as AltaVista. Because of this value, many of these initial users not only continued to use Google Search, but spread the word to their family, friends, and colleagues. As the adoption of Google Search increased, and as Google built and enhanced its Search and related products over time, it cultivated the most valuable brand in the world, with an estimated value of $114 billion (Millward Brown Optimor, 2010). Most striking is that Google created this reputation without performing extensive marketing or providing direct customer service to consumers. Google’s reputation is largely a byproduct of the value that its products deliver to customers. Furthermore, Google’s reputation has served as a substitute for other expenses, such as marketing and direct consumer interaction.

In closing, the two most important factors that impact a product’s success in the market are the perceived value that it delivers to customers and the costs to the producing company for delivering this value. A positive reputation has the potential to substantially enhance the perceived value of a product. A company can leverage a superior reputation to attract more customers and/or charge a premium price for its product relative to a competing product. And because a reputation is often a byproduct of creating customer value, there are often no direct costs for developing a reputation. A reputation can even reduce other key costs, such as marketing or recruiting expenditures. Because a reputation increases value, without a commensurate increase in costs, it can substantially improve a company’s margins and profitability.

So the reputation of the asmartbear blog didn't net many sales...but reputation of one of employees did.

So reputation IS powerful then, as long as you have one that's catered to your market.

> the blog belied my attitude, perspective, and credentials.

"Belie" means "misrepresent, show to be false". Hopefully the opposite of what you meant.

Actually, sounds to me like if you do marketing wrong (or your product is crap), it doesn't matter what your reputation is.

However, get all the rest right, and I still think your reputation gets tremendously.

Failure to use something effectively doesn't mean it's crap.

I think reputation matters, but this is a very hard switch to make.

I like and need everything Jason is offering. I'd trust him with my wallet, my house keys and my web site.

But moving my site isn't easy. Media Temple has done very well by me. McVeary @ mt has a great reputation too. And moving is a pain in the butt when there isn't a severely painful need.

What I would like is to stay put, but get some help with the management of my site. Just like I pay Sucuri $20/month to protect my site from viruses, I'd like to pay someone to figure out how to properly cache my site and avoid bad plugin and so on.

I'm ambivalent about the message. I generally respect A Smart Bear and I enjoy reading that blog, but I think this post conflates "reputation" with "target audience." I do think reputation can be powerful with some particular niche, but if the niche doesn't line up with what you are selling, that reputation is meaningless. Reputation is sensitive to context. If Tiger Woods says "Golf clubs from the XYZ corporation are the greatest clubs on the planet" then one assumes the XYZ corporation will see a surge in sales. But if Tiger Woods says "Pessac-Léognan White is the greatest white wine on the planet" then sales may not surge very much for Pessac-Léognan White, because Tiger Woods is not known to be a wine expert. That does not mean that reputation isn't powerful, only that its power is highly dependent on context.

He hasn't waited long enough to conclude this.

I don't need a WP host now but when I do I'll think of his site and try it.

This made my day, since it also illustrates that lack of reputation is not as disadvantageous as you imagine.

I think part of the issue is that Smart Bear readers probably aren't the best market for WPEngine. It's a cool concept, but look at their pricing here:

http://wpengine.com/select-plan

And features here:

http://wpengine.com/features

We make Wordpress fast, keep it secure, scale, curate plugins and themes, very easy backups, no lockin, and easy to edit. Outside of the last point, all those features are better geared for a newbie than someone who can handle technology.

Scaling, plugins, design, themes, backups, and exporting your data are relatively easier for the Smart Bear audience than the average user. I'm not sure it justifies $50/month at the lowest price point for the convenience if you already have the skills in that area. Ideally, they'd become the go-to platform for people who are already established in some way, but don't want to struggle with the technology too much. Like, a famous chef goes to start a blog, ideally when the chef asks someone for how to do this, that person says, "Oh, you want WP Engine, it's the easiest." $50/month is chips for someone established who decides blogging is a valuable part of their business. But for someone that can handle sifting through documents and research, the price point isn't really worth the features. That might be why the WPEngine didn't get as many sales from the launch notice as anticipated - the feature set seems most valuable for people with less computer-savvy.

With this product, reputation is neither the problem nor the solution. The amount of people who are willing to shell out 50 bucks/months to get their WP blog hosted is small:

Pretty much the only feature on your hosting site NOT available to someone renting their own server space (for less money) is CDN. I would hazard a guess that the number of blogs that need this is very small and those who do generally have companies behind them to make their own setups, under their own complete control.

I don't think this is a bad service, mind you, not that it matters. It's a great set of scalability and reliability features for that price. But the target audience in acute need of that service is low. In order to scale this, you need to reach far more people than those 17000 who subscribed to your RSS.

well I can think of a number of things why that didn't work:

1-you have to consider how effective your mailing list is. Out of those 18,000 emails...normally, how many would get opened in the past? how many would follow the links in the email? 18,000 emails mean nothing, if only 100 people actually read them.

2-you have to consider your audience. I would imagine most people on that list don't actually need that service. It's like pitching a book about C++ to your mailing list for soccer moms.

3-like someone mentioned, the service or the sales page may very well be crap. You can't know what your customers actually want. Sometimes you can go full retard in your copy, and you'll triple your sales.

So I wouldn't dismiss reputation just yet.

Even the SEO advantages he gets from his popularity will make a huge difference.