Bad reputation has huge repercussions for businesses—from brand image to monetary effects. A brand who is in the glory days of their business can go crashing down with just a spark of bad reputation.

Just like what happened to known fashion designer, Kenneth Cole in 2012 when he tweeted and promoted his then new line of clothes as protests persisted in Egypt that year. The backlash was astounding and even lead to Cole posting an apology on Facebook.

United Airlines also had to experience it the hard way. Musician, David Carroll, released a song titled “United Breaks Guitars” sharing his experience of damaging his precious guitars due to United Airlines’ manhandling. His video spread all over the internet and got 15 million views on YouTube. The bad publicity cost the United Airlines $180 million or 10% of their weekly stocks.

Simply put, brand reputation determines your customers’ trust to your company. It is important because this will drive your customers whether or not they will buy or continue purchasing your products and services.

In the infographic below, know the costs of a damaged brand reputation and what you can do to save your business from this brand tragedy.

Common Causes of Damaged Brand Reputation

Bad Customer Reviews/Customer Service Failures

A truckload of bad reviews about your business spells disaster. There are a lot of reasons why, but this mainly roots from a maltreatment of your customers or a bad experience with your product or service. According to Grade.us, 80% of customers won’t buy from a negatively reviewed business.

If this grows bigger, this could make your business lose investments, and worse, lose your business all in all. According to a study by Cone Communications, four out of five customers will head the other way when they see that your business has been negatively reviewed. This counts 80% of your potential customers and that’s huge enough to shake your business structure.

 

Ethical Lapses

In this day and age, any illegal business activity can spread out like wildfire especially if this is against what the company stands for. One misjudgment by an employee can affect the whole business’ brand reputation.

This could lead to serious crisis management like loss of financial resources and paying of reputation debt. Based on a study by Corporate Responsibility Magazine (CRM), ethical lapses like public disclosure of environmental scandals, public exposure of criminal acts, failure to recall defective products, and public disclosure of workplace discrimination could be the most damaging reasons for a bad business reputation.

 

Low Employee Satisfaction

Eventually, a low employee satisfaction can affect your hiring. Attracting top candidates can be a struggle for businesses with a bad reputation.

 

Brand Reputation by the Numbers

It takes around 10-12 positive reviews to counteract a single negative review.

84% of 269 executives said that the CEO should handle the issue when there’s a reputational risk.

In assessing reputation through media, 20% of the stories told by news portals should be positive while the negative ones shouldn’t exceed 10%.

Every star increase in an online review leads to 5-9% increase in revenue.

In line with that, there’s an 18% difference in revenue between three-star reviewed businesses to a five-star reviewed ones.

 

What Should You Do?

Solve the reputation issue

Listen to your critics. Track everything they’re saying and classify them into groups. From this, you can solve them by brainstorming a solution. One thing critics hate is their issue being ignored by businesses especially if it’s massive.

Be involved or elevate your corporate social responsibility (CSR)

While it may not completely return your brand reputation to a hundred percent, your customers and employees will appreciate a company that makes an effort to do something positive in this world.

In a survey by CRM, 72% of candidates would like to work for a company that prioritizes CSR.

Go back to what makes your customers happy

When in a crisis, a business should reset at least mentally. Remind yourself what made these customers come to you in the very first place. Increase customer satisfaction by starting with a better customer service.

 

After reading what a bad reputation can do to your business, there are enterprise risk management trainings which your business could enroll at such as the APEX Crisis Communication Planner. In the set of sessions, know the 101 of crisis management and settle it once and for all how to deal with this negative backlash brought to your business.

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