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Business Reputation Management: 5 Reasons Why It Pays To Invest In Your Company’s Reputation

business reputation management

35.3% of the total market value of the world’s largest companies depends on their reputation.

The fact that your business reputation directly affects your bottom line shouldn’t be news to you. However, the exact nature of business reputation management can be confusing.

In this article, we will present a comprehensive guide to managing the reputation of your business in 2020.

Read on to find out what managing your business reputation means, why you should invest in it and how good or bad reputation management can affect your business growth and success.

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What Is Business Reputation Management?

Business reputation management is monitoring, influencing and improving the public opinion of your brand, company, products or services.

It can be focused on either your target audience or on the general public and can be conducted via a variety of mediums.

In 2020, most reputation management happens online, especially for SMEs and digital-oriented businesses, which is why it is also known as online reputation management.

In broad terms, reputation management for businesses consists of three core practices:

  • Subduing reputational crises
  • Analyzing and responding to the customers’ feedback
  • Creating and maintaining a consistent, favorable public personal of your brand or business

Business reputation management: 35.3% of the total market value of the world’s largest companies depends on their reputation.

How Does Business Reputation Management Work?

Business reputation management usually includes the following tactics.

Tactic #1: Crisis Management

69% of global business leaders have faced a corporate crisis in the last five years.

While these crises can be different in nature, many can have a negative impact on business reputation.

Controversies and PR crises can cause public outcries which, in turn, can lead to products or services getting boycotted or “canceled.”

This is why crisis management is a fundamental reputation management tactic.

Business reputation management: 69% of global business leaders have faced a corporate crisis in the last five years.

Tactic #2: Press And Social Media Monitoring

46% of UK businesses have been affected by negative press coverage.

As such, press and social media monitoring is an important element of reputation management.

By researching the perception of your business in the press and social media outlets, you will be able to find the problematic aspects of your business and improve them accordingly.

Business reputation management: 46% of UK businesses have been affected by negative press coverage.

Tactic #3: Review Management

94% of consumers will avoid your business if you have bad reviews.

Reviews are an important part of your online business reputation.

Addressing and responding to the reviews of your customers will help you identify the strengths and weaknesses of your business.

94% of consumers will avoid your business if you have bad reviews.

Tactic #4: Fake Information Suppression

82% of people encounter fake reviews of a product, service or business online.

Regardless of whether false information portrays your business in a positive or negative light, it can still damage your credibility.

Identifying and suppressing fake information about your business is essential to establishing your audience’s trust.

Business reputation management: 82% of people encounter fake reviews of a product, service or business online.

Channels For Business Reputation Management

The best way to categorize the channels for business reputation management is via the Paid, Earned, Shared, Owned media model of public relations.

Channel #1: Paid Media

Paid media includes all the channels where you must pay for having information about your business, products or services featured, such as:

  • PPC ad platforms such as Google Ads or Facebook ads
  • Sponsored social media posts
  • Influencer marketing
  • Ads in traditional media outlets, such as print or TV

Within reputation management, it’s difficult to only use paid media to build and keep the public perception of your brand.

However, it is a great tool for boosting brand awareness and pointing your audience in the direction toward other media channels you prefer.

Channel #2: Earned Media

Earned media channels are the ones where your brand or business earns coverage free of charge. These include:

  • Online reviews
  • Media coverage
  • Features in blogs
  • Word of mouth

When it comes to reputation management, earned media channels are as impactful as they are difficult for you to control.

In earned media, your business reputation is entirely in the hands of your audience. This is why these channels are often the most credible and trustworthy ones in the eyes of consumers.

Channel #3: Shared Media

Shared media is simply another term for the social media presence of your business. Depending on the nature of your business, you might choose to be present on different channels such as:

  • Facebook
  • Instagram
  • Twitter
  • LinkedIn
  • Yelp
  • TripAdvisor
  • Booking.com

Shared media channels are best suited for setting up a direct contact and engaging with your audience.

Channel #4: Owned Media

Finally, the owned media channels are the ones that you control. Among them could be:

  • Websites
  • Blogs
  • Landing pages
  • Mobile apps
  • Press releases

Owned media channels are crucial to business reputation when it comes to crisis management and authoritative communication with your audience.

5 Reasons Why You Should Invest In Business Reputation Management

Here’s our roundup of the five top reasons you should invest in managing your business reputation in 2020:

Reason #1: Your Reputation Impacts Customer Decisions

85% of customers rely on online reviews as much as on personal recommendations when making a purchase. (ReputationX)

The online reputation of a business, product or service plays a vital role in the consumer’s decision-making process.

As the stat above shows, whether your target customer will convert depends largely on your online reviews.

While reviews are not the only building block of your business reputation, they are a good indicator of it.

Negative online reviews might be caused by underlying issues with your products or services. Identifying and solving these issues can help improve your reputation and boost your sales as a result.

85% of customers rely on online reviews as much as on personal recommendations when making a purchase

Reason #2: A Solid Reputation Will Help You Stand Out From The Competition

87% of consumers cross-shop for every purchase they make. (McKinsey)

In this day and age, customers are more empowered than ever in making purchasing decisions.

Operating in any competitive industry means that you should take every opportunity you have to outperform your competition and attract customers.

Establishing and maintaining a reputation that outshines that of your competitors is one such opportunity.

87% of consumers cross-shop for every purchase they make.

Reason #3: It Will Help You Retain Your Customers

70% of customers whose complaints are resolved will do business with you again. (LiveAgent)

The reputation of your business has many building blocks. One of them is the quality of your customer service.

Creating a client-centric culture that prioritizes top-notch customer support will boost your reputation in this aspect.

And that, in turn, will not only attract new customers but also help you keep your existing ones.

70% of customers whose complaints are resolved will do business with you again.

Reason #4: A Great Reputation Means Access To Great Talent

75% of people wouldn’t work in a company with a bad reputation. (Glassdoor)

The reputation of your business influences not only your revenue and client relations but also your operations.

Apart from the revenue and the public perception, your reputation also determines the talent you have access to.

A solid business reputation will attract and retain not only loyal customers but also loyal, qualified employees.

75% of people wouldn't work in a company with a bad reputation.

Reason #5: Your Reputation Can Make Or Break Your Business

87% of executives believe that reputation risk management is more important than other strategic priorities. (Deloitte)

Sometimes, businesses don’t emphasize the importance of their reputation enough and that can lead to tragic outcomes.

There are plenty of examples of companies that were ruined by reputational crises.

That brings us to the next section.

87% of executives believe that reputation risk management is more important than other strategic priorities

3 Examples Of Poor Business Reputation Management

Poor business reputation management can do serious damage to a company.

Here are a few examples of just that:

Example #1: United Airlines

The United Airlines Flight 3411 incident needs little introduction. Even though it is quite recent, it already serves as a textbook example of how poor reputation management can tangibly hurt a business.

The entire scandal around the recording of a passenger being forcefully removed from a flight cost the airline almost $1 billion in value at the time.

However, it wasn’t just the incident going viral that caused this damage. It was the response of the company’s leadership.

Following the incident, CEO Oscar Munoz wrote an open letter in which he tried to excuse and justify the actions of United employees.

The letter caused public outrage and ridicule that, to some extent, eclipsed even the incident itself.

Lesson to learn: When it comes to a business reputation crisis management, understanding and connecting with your audience is crucial. An insensitive, uninformed response will only make your circumstances worse.

Example #2: 21st Century Fox

The 2017 sexual harassment scandal surrounding TV commentator Bill O’Reilly is another striking example of poor reputation management.

Once the news of O’Reilly’s sexual misconduct unfolded, Fox’s ratings and reputation took a major hit. As much as 25% of the show’s viewers wanted Fox to cancel O’Reilly’s show altogether.

While O’Reilly’s misconduct served as the original point of damage to Fox’s reputation, the networks’ actions also caused quite a stir.

Fox reportedly knew about O’Reilly’s misconduct but kept him on the network regardless. In addition, once the scandal unfolded, neither O’Reilly himself nor the network admitted any wrongdoing.

Lesson to learn: Concealing facts that will lead to a reputational crisis can be as harmful as the facts themselves.

Example #3: Nestle

The controversy around Nestle’s online response to the Greenpeace-backed criticism in 2010 is yet another textbook case of poor reputation management.

Following reports of Nestle sourcing palm oil for their products from unsustainable, unethical suppliers, activists flooded the company’s Facebook page with outraged comments.

Given the circumstances, Nestle should’ve tried to subdue the outlash and show empathy when communicating with the audience.

Instead, their social media team only escalated the controversy more by deleting comments or leaving snarky responses.

To this day, Nestle’s case remains one of the best examples of how to not manage your social media presence.

Lesson to learn: Social media has the power to ruin the reputation of your business once and for all. So when faced with criticism, don’t just try to shut your audience down. Instead, listen to what your critics have to say, communicate with them and make the necessary improvements.

3 Examples Of Stellar Online Business Reputation Management

Even though controversies and reputational crises tend to get more attention, there are quite a few examples of reputation management done right.

Here are just three of them:

Example #1: Nike

The social media element of reputation management can be tricky to master.

Social media is instantaneous and empowers your audience more than any other channel to share their complaints and criticism.

Nike has a great reputation for timely, effective social media reputation management.

They have a dedicated Team Nike support account on Twitter that responds to comments and feedback in almost real-time.

Lesson to learn: Your social media followers expect you to interact with them and respond to their feedback. Creating a dedicated account for that purpose will make the interaction more straightforward and establish your business as client-centric.

Example #2: Snowbird

Negative online reviews can damage your business – unless you decide to turn them into a digital marketing strategy.

This is what the Snowbird ski resort did. They took a creative approach to reputation management and based an entire marketing campaign on some of the worst reviews they had.

Such an approach takes not only a sense of humor but also a good understanding of your audience. If done right, it will convey honesty and self-awareness – fundamental elements of a good reputation.

Lesson to learn: Sometimes, the best way to deal with criticism is to own it. By acknowledging the shortcomings of your business, products or services, you will build an honest and intimate connection with your audience.

Example #3: KFC

Another great example of reputational crisis management is KFC’s award-winning “FCK” campaign.

In 2018, the UK division of the fast food chain faced an operational disaster that forced many locations to shut down.

KFC’s response to the public outrage that followed was sincere, humble and endearing.

The simple, tongue-in-cheek campaign not only made up for the reputational damage but strengthened their brand as well as customer loyalty.

Lesson to learn: Once again, honesty and transparency save the day. If the reputation of your business took a hit because of an event you couldn’t control, simply admit it and look for ways to move forward.

Takeaways On Business Reputation Management

Reputation is an important asset of any business and should be managed as such.

Reputational crises, negative online reviews and media controversies can do serious damage to your brand identity and bottom line.

That’s why it’s important to build up and maintain a good business reputation across Paid, Earned, Shared and Owned media channels.

Investing in business reputation management will not only help you avoid the damage but will also help you convert and retain customers, hire top talent and stay on top of your competition.

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