Branding for your company has never been more important than in the age of the internet.  One bad piece of PR can go viral and be all over the world within days, affecting your business’s reputation and your stock value in a big way.  Good reputation management can save a business from completely failing.

In contrast, good PR can boost stock prices and increase your customer base. It’s important to look into what affects your brand and what you can do to improve your reputation if you find yourself at the center of negative consumer backlash. 

Factors of Reputation 

When it comes to a company’s reputation in relation to its stock losses and gains, there are many factors that come into play. Impacts on business reputation include:

  • Quality of products and services 
  • Employee satisfaction
  • Community and environmental responsibility 
  • Leadership
  • Competitiveness
  • Innovation

For companies, these are some of the things people consider when deciding how to approach stock market strategies. It gives potential investors clues as to the viability of a stock. 

Key Examples

Does your industry depend on reputation management? Whether or not your reputation will affect you depends on what industry you are in. Your customers are your lifeblood so disregarding them and breaking their trust is a surefire way to ruin the image of your brand.   

Crash and Burn 

  • Volkswagen shares dropped drastically after the EPA announced fines saying they cheated on emissions tests. They dropped as much as 15 points in the span of a day.
  • The failing of Arthur Anderson, Enron’s accounting firm, after their conviction. 
  • United Airlines suffered a $180 million drop in shareholder value after their Guitar Incident with David Caroll. He created a song about the incident that went viral that still affects the company’s image.  

The Comeback Kids 

  • In the early 90s, Johnson & Johnson had to recall 31 million bottles of Tylenol due to tampering. Their stock dropped; however, the company proved to consumers that it cared about their well-being, and the following year their market share climbed 23 percent. It was as if nothing ever happened. 
  • In 2013, Target suffered a data breach that cost them $148 million. They overhauled their security standards and by 2015 sales in-store grew by 2.3 percent and online by 40 percent. 

Cost of Bad Reputation Management

A bad business reputation can cost a company in higher operating costs, poor margins, devalued stock prices, employee turnover, and the cost to acquire new customers, just to name a few. 

The loss of business due to a bad reputation is around $537 billion annually.  Businesses must spend up to seven times more to attract new customers versus selling to existing ones. Bad reviews greatly affect companies and it takes a lot of good reviews to bounce back from one negative one. 

 It is estimated that around 80 percent of customers will change their minds due to a bad review. Ninety-five percent of people say that they usually tell at least one other person about a negative customer service experience. Unsatisfied customers are also more likely to share bad experiences on social media and review platforms versus how many customers will share a good review.   

Reputation Management Matters 

To sum up, garnering a bad reputation can and will affect the value of your company.  Whether you’re a part of a multibillion-dollar industry or a small company, managing your business’s image is important. 

Investing in reputation management can be a wise choice in maintaining and boosting the image of your brand.  Looking for a company to take you to the next level? Consider V12 marketing.  We will help you combat negative press and boost your overall business reputation leading to improved customer retention and increased sales.