So what are the advantages of having a high standing? Certain groups are in charge of a particular function of society, so being renowned in these circles will make your life easier in general. For example, if you have a high reputation with the Merchant Guild, you'll have more advantageous buying and selling prices at all shops. In all cases, though, earning reputation with a group will allow you to take part in quests that are ever-more intrinsic to that group's existence. Continuing with the Merchant Guild example, at first you may just be performing a delivery as a test if you can even be trusted. When you're tight with the Merchants, you could be asked to guard a caravan that, if it doesn't make it to its destination, could ultimately cause the guild to disintegrate.