Forget conventional wisdom when it comes to managing corporate reputation. In fact, transparency matters the least in building stakeholder trust (employees, customers, suppliers, investors) and can actually erode trust, according to a fascinating new study by Harvard University’s Michael Pirson and Deepak Malhotra, published in the summer issue of MIT Sloan Management Review. (”Unconventional Insights for Managing Stakeholder Trust.”)

The authors studied four different organizations to find out what matters and to whom. Highlights:

• Transparency is over-rated. In fact, transparency can diminish trust depending on what is disclosed. Also, it has little relevance in terms of building trust.
• Integrity is important, but. Stakeholders close to a company (employees and customers) need to feel that the company genuinely cares for their personal well-being. Integrity alone doesn’t cut it if people feel the company is being fair but “callous.”
• Trust is built on different types of competencies. Employees and investors look for management competency. Customers and suppliers more concerned about technical and quality competency.
• Shared values is hugely important to all stakeholders: All stakeholders want to associate with organizations with values they identify with.

“We have found that that although value congruence matters most to employees, it is also an important factor for every other stakeholder group we studies. In other words, stakeholders of all types are interested in associated with organizations with whom they can identify — and with whom they perceive a match in values.”

This study has interesting implications for marketers and corporate communications professionals.

• Trust means different things to different stakeholders.
• Marketing needs to focus more on two key trust-building factors: the company’s genuine interest in their customers’ success and well being, and the company’s technical ability to deliver quality products and services.
• What beliefs? It’s essential to clearly articulate the company’s values and beliefs. (Maybe even help uncover them. ) In my experience few organizations — especially marketers — focus on these beliefs, or even know what they are. But as this study shows they are critically important to building affinity and trust with customers.

Getting management to buy into innovative marketing approaches can be tough.

Here are six facts to support change, based on performance data that Copernicus Marketing Consulting has collected from more than 500 marketing programs (consumer and B2B products and services.)

1. 84% of programs are resulting in declining brand equity and market share.
2. Customer satisfaction averages just 74%.
3. Most acquisition efforts fail to reach break even.
4. No more than 10% of new products succeed.
5. Most sales promotions are unprofitable.
6. Advertising ROI is below 4%.

For more, see the Harvard Business Review article, “Don’t Blame the Metrics” by Kevin Clancy and Randy Stone.

I feel both exhausted and encouraged from this week’s Conference Board conference on Measuring Marketing Effectiveness. Exhausted because the data shows that despite so much talk for so many years about the need for measures and ROI , we marketers have made very little progress over the past 10 years.

A 2007 ANA study found that just 11 percent surveyed said they are very satisfied or satisfied with their ability to determine marketing ROI. A soon-to-be released Conference Board study found that none of the companies surveyed feel as though they’ve “arrived” at figuring out a good way to measure marketing.

Exhausting, too, because creating approaches that provide insights and guide planning - vs. simply measuring tactics — is hard, scientific work. Companies with successful measurement systems, like Eli Lilly, Unilever, MetLife, said it takes at least three to four years to begin making real progress.

The only measure that may matter?

What was encouraging, however, is that marketing measurement innovators believe one approach is particularly valuable: measuring customer preference or perceived value, which are leading indicators of revenue, profits, and cash flow. (In other words, a measure that helps you manage and satisfy the CEO and CFO AND see glean insights to help manage vs. simply measure marketing.)

Don Sexton, professor of marketing at Columbia University believes that this is the most effective measure, yet is missing from nearly every list of marketing measures. (FYI: Don is releasing a book on the topic this fall.)

Other takeaways:

Relationship preference matters as much as product preference

Mark Kershisnik of Eli Lilly believes (has has the data to back it up) that equity can provide a measurement of both investment and performance, and the way to measure equity is by assessing product brand preference AND relationship preference.

I found this especially interesting as so many marketers focus exclusively on product preference, yet customers make decisions, particularly in the B2B landscape, on relationship factors like trust, likability, innovation.

Most common measures are meaningless: lagging indicators vs. leading indicators

Most of the common marketing metrics are, well, useless. Awareness, mind share, perception, recognition, recall, share of market, loyalty, purchase intention, cost per click, etc. may be easy to measure, but they don’t connect to business value nor do they provide indicators of what to do differently to improve performance. They are lagging indicators measuring past performance rather than leading indicators that can help diagnose where to improve brand and relationship preferences and how to monitor progress of achieving marketing objectives.

Focus on just a few things

Many marketers try to measure too many things - 30 or 40 factors. It’s impossible to properly assess that many factors - or have the resources to work on improving that many factors. Many of the speakers recommended focusing on just 3 - 4 product preference factors and 1 -2 relationship preference factors.

Getting on the same page crucial to success

All of those firms with successful measurement strategies have educated their entire leadership team so that everyone has a shared definition of marketing, marketing value, measures and metrics.

The CFO’s mantra

Kamal Sen, director of business analytics and strategic planning for Unilever in Asia, Africa, Middle East and Turkey, offered what the CFO really cares about

• Sales is vanity.
• Profits are sanity.
• Cash is reality.

J.Crew’s CEO Mickey Drexler is a great example of a CEO who lives conversational marketing, passionately listening to customers and incorporating their ideas into the business strategy.

In his Saturday N.Y. Times story, “A CEO Sells the Store,” Joe Nocera wrote:

“Visiting stores, quizzing the staff, critiquing everything in sight — and most of all, meeting customers, is at the core of how Mr. Drexler runs J. Crew. It’s also what makes him happiest.”

The story also talks about how Drexler personally follows up with customers he meets in stores. He’s intent on hearing their ideas — positive and negative. The customer is his muse, his energy, his grounding.

While CEO of the Gap Drexler lost touch with the customer, as many CEOs do, and lost his confidence. At J.Crew he’s intent on doing what he does best — visiting stores every day; reading, responding and acting on customers’ emails; and asking customers for input. He told Nocera:

“People want to be listened to and they want to be respected. Besides this is how you learn what is on their minds. What can be more important than that?”

Probably nothing. While most clothing chains are struggling, J. Crew’s 2007 revenues were up 14% and the company is profitable.

I think I’ll have to check out J. Crew’s new line of suits….and tell Mickey what I think. I know he’ll listen, and that’s a most powerful marketing strategy.

How do you change the perception of museums being boring places for intellectual, rich people — and still not alienate your core market? Maybe take a page from MoMA — page A5 of today’s Wall St. Journal to be exact.

• The full page ad thanks a sponsor, Target, for supporting free visitor nights. (There goes the price issue.)

• Referring to a new Helvetica exhibit the ad says, “Just thinking about Helvetica totally makes us want to get down and party.” Get down and party? (There goes the stuffy museum image. And who knew type was considered art?)

• And then the party really kicks in. “We’ll clear out a dance floor and check out the finest collection of modern art in the world. We’re going to rock out to Philip Glass all night long and gab to somebody we just met about how much Expressionism inspires us. (Museums aren’t just for art — there’s dancing, a chance to meet new people on Friday nights, and you’re likely to get inspired. Talk about adding “new features” to your brand. )

Here’s the full text. Accessible. Conversational. Strategic. Nice.

Thank you.

This is a message from MoMA to thank Target for their generous support of Target Free Friday Nights and to commemorate the arrival of our millionth free visitor this past Friday evening. It is set in 29-point Helvetica Roman, widely considered the official typeface of the twentieth century. Helvetica conveys an undeniably modern aesthetic clarity and is in fact the subject of an exhibition at MoMA. Just thinking about Helvetica totally makes us want to get down and party. Maybe its the triple Chococcino talking here, but suddenly we feel like screaming, ‘Thanks a million Target!” while mingling outside in the Sculpture Garden. Okay folks, here’s what we do: Meet us up on the third floor and check out the finest collection of modern art in the world. We’re going to rock out to Philip Glass all night long and gab to somebody we just met about how much Expressionism inspires us. Then,if the mood is right and all our planets are aligned, we’ll show our new friend what Expressionism really means. It happens every Friday from 4 - 8 p.m.