How Reputation Management Fits into the New Economic State
It can be difficult to put a price tag on customer loyalty, but you can put one on your online reputation and the reputation of your business.
The financial crisis began back in 2007 and had a major impact on how many companies operated. One of the key ways their operations changed is that they started to spend the same amount of money on protecting their reputation as they did for online public relations.
We want to look at how the changing economy has impacted the way businesses choose risk and protect themselves and their reputations. Because of this change, it’s impossible to put a value on reputation management.
With any business venture, there is risk, but the current economic state doesn’t permit as much risk to be taken.
Business Week published an article that showcased how many of the larger businesses out there are putting more effort into managing their reputation than they are into promoting new products or updating their policies. They are careful about marketing plans that come saddled with a lot of risk and instead try to continue doing what has worked in the past. What we have seen is that sound business practices and a solid reputation are good for stock prices.
Just how stock price values can change as soon as a new product comes out, so too do the share prices change when online reputation is affected.
There is a science to reputation management, and many companies are starting to tap into their reputation as a way to bring in investors and to get a larger market share. Innovation is beginning to take second position to conversation, at least for now.
If you want to protect your online reputation, you should be looking at how the larger companies do it.
Because of the economic climate we are in, how a company is perceived by others can lead to its success or its ultimate failure. There are a few important takeaways from the reputation management practices of other business that we can use:
1. It is no longer okay to engage in risky policies, as they can erode trust.
As a business, you have to make sure you make a profit at the end of the day. If you are a larger business, then you have shareholders you are responsible to as well. There is a lot of pressure put on making a profit and ensuring that earnings increase from one year to the next.
Businesses are starting to learn that making a bunch of changes very quickly may not be good for their bottom line. That’s particularly true when they start expanding too rapidly, they change their fees up and down without warning or they are simply unstable with their policies. These kinds of mistakes can lead to a damaged reputation and loss of public trust.
2. Communicating openly has taken the place of secret deals
There are secrets that every large company holds close to its chest, but thanks to the advent of social networking, a lot of those boardroom deals are now made quite public.
It’s common for companies to be much more open now in order to keep up their reputations. Many of them have found out through personal experience that it is no longer acceptable to keep everything behind closed doors. They have also discovered that when you try to hide the truth or dismiss it, then it can cause incredible damage to a company’s reputation and the public’s trust in it.
3. An improper response to criticism can hurt more than the actual criticism
Whenever a large business tries to cover up its wrongdoings or fire back at negative press and reviews, it often backfires on them. In the past, PR firms would take a very reactive stance on reputation management. They would often try to cover up problems and hope that everything would blow over soon.
That’s pretty much impossible to do anymore, thanks to constant news coverage, the increased viral spread of information and increased public awareness of what large companies are doing. The smarter companies are focusing less on using PR firms to deal with problems and more on taking a proactive stand on their reputations.
You can’t put a price tag on the value of reputation management anymore.
The only way you are going to succeed in the current economic climate is by placing a stronger focus on protecting your reputation.
The companies that are succeeding today are the ones that are risk averse and that put brand reputation management at the forefront of their priorities. We have seen major drug companies reflect this new attitude. When a drug recall hits, instead of trying to avoid publicity, they faced the crisis head on and apologized for the problem. They also made it public how they were dealing with the problem and making things better for the future. They understand that having a good reputation is the key to financial success.
The way many companies work has changed over the past decade. The ‘90s brought with them an era of quick profits and quicker change. Today’s current business market is a lot slower paced, taking its time to make changes after gauging customer response. That’s necessary if you are going to protect your reputation.