ORM Guide

Effects of reputation on a business

just about everything you say or do in the digital sphere can affect the public’s perception of your company

If the concept of an business reputation management seems pretty all-encompassing, it should. After all, just about everything you say or do in the digital sphere — particularly if you don’t take steps to control who has access to it — can affect the public’s perception of your company. Whether a small outfit like Oasis, or a big one like Wendys, business reputation management is imporant. 

But really, who cares? There’s just so much digital noise out there, right?

As it turns out, lots of people care. And, as we’ll see in a moment, search engines and social media make it surprisingly easy for people who care to learn more about you, your company and its employees. (This can be a good thing, too)

83% of consumers read user-generated content before
choosing a bank or other financial institution

Your online reputation is on display for anyone with an Internet connection, but you need to be especially tuned into the perceptions of:

  • Prospective customers

    Negative perceptions drive away business, simple as that. A recent BazaarVoice survey found that 83% of consumers read user-generated content before choosing a bank or other financial institution, for instance. A Socialnomics study, meanwhile, found that 90% of consumers — that’s 9 in 10! — trust such content over any other source of information.

  • Prospective employees

    Scrutiny goes both ways. Job applicants research potential employers before they take the next step, keen to avoid working for a sketchy business — especially one that’s been accused of underhanded labor practices.

  • Potential business associates

    Though there are exceptions, most businesspeople are risk-averse. Few want to be associated with even a whiff of controversy, let alone a business with a seriously impaired reputation.

  • Investors and public shareholders

    Fairly or not, negative press correlates directly with negative investor sentiment. If you’re looking for capital to spur your growth, reputation problems could obscure legitimate promise. If you’re already public, they could put pressure on your share price. Target, not exactly a fly-by-night company, lost more than 10% of its market value in the immediate aftermath of its 2013 data breach, and took another big hit when it publicly revealed the incident’s cost

Is it only a matter of time before your business reputation is damaged?

You’re under a powerful digital microscope, and pretty much everyone wants to peer through the lens. Is it only a matter of time before something goes wrong?

Target’s data breach cost $148 million in lost revenue

Not necessarily. But if a problem does arise, or an issue that’s been lurking in the background suddenly makes itself known, here’s what you can expect to happen:

      • You’ll lose business

        Target’s aforementioned data breach cost $148 million in lost revenue, according to a public filing. NBC lost $4 million during the U.S. blackout of the 1980 Moscow Olympics, to which it owned exclusive TV rights. Early estimates place the cost of Home Depot’s data breach at $50 million. The list goes on.

      • You’ll lose out on top talent

        A 2012 CareerBuilder survey found that more than 35% of job seeksers use social media to screen prospective employers, and the figure is undoubtedly higher now. The proportion of applicants who screen prospective employers’ search results, which requires far less effort, is likely to be much higher as well. A reputation issue increases the likelihood that a seemingly perfect candidate will pass you over for a firm with a more polished image.

      • You could miss out on opportunities

        50 foundations recently divested en masse from publicly held fossil fuel companies, citing their perception as poor environmental stewards. The Rockefeller Foundation alone cashed out nearly $50 million in holdings. If your business faces a reputation issue, your shareholders and business partners could bail.

      • Your competitors will pounce

        You jump at the first sign of your competitive advantage, and so will your peers. When word of a potential reputation problem gets out, you can expect your competitors to play it up, disseminating content — legitimate or otherwise — that contrasts your supposed negatives with their supposed positives. Depending on how long it goes on, this could loosen existing customer loyalties and make it difficult to form new ones.
      • You could face a legal investigation

        Not every online reputation problem results in (potentially costly) legal trouble, but the threat is there. If there’s even a whiff of financial malfeasance in your background, expect an IRS audit: 2.5% of all small business owners are audited in a given year, and the likelihood is far higher if anything seems amiss. Likewise, an old arrest report or long-buried news item could be enough to trigger a criminal investigation, which is a serious business reputation management headache even in the absence of charges.

35% of job seeksers use social media to screen prospective employers 

Making or breaking your online reputation 

Now that we have a working definition of your online reputation and a good sense of how it can affect your business, let’s take a look at how it’s actually built and influenced. We’ll also peek ahead at the basics of online reputation management services, offering some insights on what you should and shouldn’t do to influence your company’s digital image.   

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