You might not be able to quantitatively value customer loyalty, but companies both small and large are discovering that you can put a price tag on your Internet reputation.
The financial crisis of 2007 permanently changed the way the corporate world operates in many ways. One of these is that businesses are now spending as much money on reputation protection as they are on digital PR.
The business community has gradually shifted away from risky marketing ploys in favor of corporate reputation management as part of a broader reputation risk management framework. Rather than rock the boat or revolutionize their product offerings, many large companies have instead chosen to focus on to building goodwill among stakeholders.
This makes perfect sense, as a good business reputation has now statistically been found to boost stock prices. Calling it “the new science of reputation management,” Business Week cites research that shows companies are beginning to use their online reputations as assets to gain investors, customers, and increased market share.
Protect your online reputation by learning how large companies protect theirs
How a company is perceived can ultimately lead to its success or failure. Three important lessons can be taken from businesses that have managed to survive in our reputation-driven economy:
1. Risky policy changes are slowly being replaced by initiatives to gain public trust
When you own a small privately held business, you can run it however you see fit. Large companies, on the other hand, have to report to shareholders and investors. Intense pressure to realize a profit has led many companies to make frequent changes in order to increase earnings on the short term. Understandably, this can have negative long-term ramifications for the business.
Rapid changes do not automatically increase the bottom line, especially when they include missteps like imprudent expansion, unstable user policies, decreased customer service, product quality degradation, or fee inflation. Damaged reputations and a decrease in public trust are the inevitable results of such outdated thinking. Therefore, in running your business, look to the example of the reputation-focused companies that have found ways to prioritize customer relationships over the long term.
2. Open and honest communication with the buying public has replaced hidden business deals and agendas
Every large company has its secret to doing business, but with the popularity of social networking, the tendency to hide decisions and policies behind boardroom doors has changed.
Companies are now more open and honest in hopes of maintaining a consistent reputation. These businesses have found out the hard way that today’s savvy consumers simply won’t tolerate anything less than full disclosure. Attempting to avoid discovery of the truth can not only severely damage a company’s reputation, but also result in lost investors and market share.
3. Responding badly to an internet reputation management crisis can be more damaging to the company’s reputation than the crisis itself
You’ve seen public relations at its worst when you’ve watched high-profile individuals attempt to cover up public transgressions. Traditional PR firms use a reactive approach to reputation management, attempting to use smoke screens and delude the public until the event blows over.
This approach no longer works for several reasons, most importantly because the public is now connected to the outside world in more ways than just TV. News spreads quickly online, and social networking websites like Twitter and Facebook often break news more quickly than news outlets. Savvy companies have begun focusing on proactive brand reputation management as opposed to using PR firms to deal with negative feedback and digital PR crises.
So, as you can see, there is no putting a price tag on corporate reputation management.
Succeed in the current economy by focusing on corporate reputation management
Large businesses that put risk in the backseat and steer their companies with brand reputation management at the wheel are those that are succeeding. A leading pharmaceutical company is a prime example of this trend. Rather than attempt to avoid negative publicity over a drug recall, the company averted a reputation crisis by admitting to their mistake and publicly detailing how they planned to fix the issue. They know, as do other companies focused on reputation management, that a solid online reputation is money in the bank.