How many of us really stop and think about the true importance of reputation in business? This concept of ‘corporate reputation’ is often only associated with larger corporations and organisations. In truth, the smaller your business, the more your corporate reputation matters.
A knock to the reputation of a large corporation may wipe millions off the share price, but for a smaller business, it may shut it down. This is particularly true in small local markets, where corporate and personal reputations can be of equal importance.
“Corporate reputation can be described as the overall estimation in which an organisation is held by its internal and external stakeholders, based on its past actions and probability of its future behaviour.” (www.cuttingedgepr.com)
For many organisations, reputation is one of their greatest assets and they work hard to maintain it and build a ‘bank of goodwill’. This ‘bank of goodwill’ is the positivity stakeholders hold towards a business. In times of negativity, such a ‘bank’ may encourage stakeholders to remain loyal and protect reputation.
Larger organisations may generally weather reputational damage better than their smaller counterparts – often possessing such a market share that it’s difficult to avoid doing business with them. Other times a brand can be so desired, consumers simply just don’t care.
Take Nestle, for example, which has been described as one of the ‘most hated companies in the world’ thanks to its long history of child labour, unethical promotion and mislabelling (to name but a few of its violations). Despite the company’s horrific reputation, it still remains one of the world’s largest food companies.
Compare this to smaller local businesses. For these, it can be difficult to compete with bigger companies and the growing online market. It is often, in fact, thanks to their good reputation that they continue to compete and remain viable in the market.
When I think of my own local town, I could tell you the reputation of most of the businesses who trade there. Those who are too dear, those who supply the best cup of coffee, and those who are simply nice to visit and provide some old-fashioned banter with your goods.
How many of those businesses are actually aware of their own reputation though? How many of them take the time to ‘step outside the building’ and listen to what people have to say? In this digital age, ‘stepping outside the building’ can take many different forms.
The good old tried and tested method of clipboard (or tablet) in hand and pounding the pavements is sure to yield valuable results, but you can also carry out your research without ever actually leaving the building. There are numerous free online surveys available that can be shared via email or social media.
Or of course, a business could just ask their customers directly -what would help to make your experience a better one? It seems absurd the amount of businesses who fail to ask their customers what is they want. How many businesses close down because they fail to do this?
Of course, you can never fully control reputation, but you can try to manage it. A business’s reputation may vary from stakeholder to stakeholder, according to their experiences in dealing with the business or what they have heard about it from others.
How reputation affects stakeholders:
Customers If a business is well-regarded by its customers, they will prefer to deal with it ahead of others. These customers will influence other potential customers by word of mouth & online recommendations – a happy customer tells a friend, an unhappy customer tells the world.
Suppliers A good reputation increases trust of ability to pay and to provide fair trading terms. If a problem occurs in a trading relationship, suppliers will be more inclined to give the benefit of the doubt where a business has a reputation for fair dealing.
Employees Businesses who have a reputation of treating staff poorly tend to attract a certain type of people to work for them – this directly impacts on customer experience and satisfaction.
So, what are the benefits of a good reputation:
- Customer preference in doing business with a company when other companies’ products and services are available at a similar cost and quality – especially important in small local markets.
- Ability to charge a premium for products and services – Helps to compete with an online market
- Stakeholder support for an organisation in times of controversy – When the well-regarded Cork restaurant Son of a Bun was recently hit with a HSE temporary closure order they received huge support from their stakeholders, both when they were closed and when they re-opened, and came out the other side reputation intact.
- Improves a company or organisation’s value in the financial marketplace.
We may not be able to control reputation, but here are some tips for managing it:
- Establish trust – Keep your word.
- Be Responsive – Let customers know they are important to you.
- Crisis Management – Resolve errors and mistakes quickly.
- Offer value – Don’t rip people off.
- Confidentiality – Respect people’s privacy.
- Stay relevant – Move with the times in terms of technology, stock, services.
- Communication – Be professional in your correspondence with staff, suppliers and customers. Maintain a good online presence.
- Community Involvement – Sponsorship, volunteering, etc.
And remember…
however much you may value your reputation, one thing is certain – there is a high cost to pay for losing it.
Karen Twomey is a freelance PR and Online Communications Consultant with Communications Hub Tel: 0877642576