Business Reputation
Photo by Count Chris
What you should know about business reputation
By Robin Anderson
When you are just getting started, no one knows about you or your business. So it is very likely that your company’s reputation is closely tied to the reputation of you and your founders. For anyone in search of building their company - employing people, or gaining funding, having a positive reputation is imperative. That never goes away. As you grow your company, having a good reputation will become even more important as it leads to more customers, better employees, more investment and a better bottom line.
Reputation is defined as ‘the beliefs or opinions that are generally held about someone or something.’
“Your brand name is only as good as your reputation.”
Importance of having a good reputation in business
There is a direct correlation between reputation and the bottom line.
How do you earn a good reputation? You do the right thing even when it is challenging for both individuals and your company. It demonstrates integrity. A good reputation will lead to positive future opportunities, to more business. It is important that you lay the groundwork to build your reputation as a company through your mission and your vision. Everything should embody those messages. Even your outward facing communications to the public, such as your online presence, is important as it contributes to your overall reputation because 97% of people look online when they want to learn more about a business.
Consumers do their research. Online reviews is where consumers look for recommendations prior to a purchase. Online reviews carry a greater weight for decisions than advertising. A positive online reputation is a major factor when considering where and what to purchase. In fact,
“91% of consumers trust online reviews as much as personal recommendations.”
Benefits of a good reputation
One of the best benefits of having a good reputation is the word-of-mouth sharing from your customers. It’s free marketing! Positive online reviews from customers who are happy to share their experience strengthens your social proof, increasing customer loyalty. It leads prospective customers to perceive your company and products as providing more value which allows you to charge a premium (think Apple), resulting in a reduction of your costs and increase in your profits. Who doesn’t want that?
In addition, a good reputation leads to attracting better people as employees. People want to work for companies that have a strong reputation and have values similar to them, making them feel as though they are part of a more noble mission. When those qualities intersect, this leads to higher employee retention and productivity.
Factors that go into building a good reputation include having a mission for your company that extends beyond your company walls. Finding a way to improve the environment, be more sustainable, or elevate a social cause that relates to your company, is integral to your corporate social responsibility charter. You will find this strengthens your brand and builds trust which enhances your business reputation.
Reputational Damage
A business’s reputation is one of the most important assets you have. While you work hard to build that good reputation, it is very easy for that to change.
“It takes many good deeds to build a good reputation, and only one bad one to lose it.”
Reputational damage is the loss to financial capital, social capital and/or market share resulting from damage to a firm's reputation. This is often measured in lost revenue, increased operating, capital or regulatory costs, or destruction of shareholder value. Negative news regarding your reputation can have up to three times larger effect on your business than positive news.
Cost to overcome is challenging and high. 90% of consumers will not purchase from a business with a bad reputation. Bad reviews, bad news - it will be reflected in your financial statements as a reduction in profits due to a loss of sales and customers. It can then make it harder to retain employees and recruit new, ultimately affecting operating margins.
How to Respond to a Reputation Problem as a Company
You can’t control what others say about your product or company. However, there are things you can do to minimize the effects of negative news or reviews. How you respond, how quickly you respond, will determine how detrimental the effects are to your reputation. Manage your reviews and customers feedback by taking responsibility and proposing a solution. This demonstrates your ability to listen to your customers and potentially change the conversation.
60% of customers expect owner responses to reviews within 48 hours or less. If you have been neglecting those negative reviews - start responding now and respond retroactively. Then commit to daily responses to all new reviews.
Brand Citizenship
One of the best things you can do to strengthen your reputation is to build a strong presence with your customers, employees and investors. Social awareness is important to GenZ and Millennials. Align your business with your customers' values. Demonstrate those values by contributing to society. Look for opportunities to extend your resources in a manner that benefits others through goodwill.
“...people want brands to start with a me-first orientation and then to span across a me-to-we continuum of brand citizenship. Brands must first deliver value to individual consumers (me) and then, depending on the brand’s purpose, move outward toward delivering added value to society: the collective we.”
Having a good reputation is good for business. Don’t take it for granted that it will just happen. Be purposeful and make it happen, then ensure it continues through everything you do for your company, employees, and customers, everyday.
Need help building your company’s reputation? Contact us for a free 30-minute consultation.
Fun Fact Friday
Warby Parker - Buy a Pair, Give a Pair Program.
Warby Parker, known for disrupting the eyecare industry, has distributed over 10 million pairs of glasses to someone in need, making eye care accessible to those with little to no options for obtaining glasses. Known as the Buy a Pair, Give a Pair Program, for every pair sold - a pair is distributed to someone in need. This improves the quality of life for the recipient and has resulted in an increase in math and reading scores for students, productivity for businesses, and income for the individual.