It takes years of work to build a strong, positive reputation. But even with all the time you’ve invested, a single negative review can blow it away instantly. Such is the nature of reputation damage and the devastating risks it poses to you and your business.
Your reputation is a critical component of your brand. Protecting it is paramount to your business’s continued success and growth.
In today’s blog, we’ll explore the following:
- The importance of reputation risk management;
- Ways you can shore up your defenses against the negative impact;
- And how to reduce the damage to your business if a crisis occurs.
I | The Importance of Reputational Risk Management
Recognizing the detrimental impact an attack on your company’s reputation can have is essential.
A bad review’s negative publicity can turn off potential patrons and cost you your current clients. If the problem escalates, there might be legal filings.
A good reputation sets the standard for quality.
Companies with solid reputations attract premium customers. These customers will pay almost anything for products and services they deem high quality from companies they trust. This trust builds customer loyalty.
These advantages arise from the public perception of the value your business reflects. This reflection, however, is contingent on the word on the street over which you have little control.
All you can do is always put your best foot forward and control the elements you can. Maintaining the standard of your products, services, and company image are within your authority.
Never underestimate the risks.
Think of your reputation as a straw house and social media as the Big Bad Wolf. Social media sites quicken the spread of negative publicity and widen the audience pool of those who see it.
Stories about company’ indiscretions’ light up fast and go viral in a matter of hours. Nothing will break your heart or bottom line more than social media users dragging your business through the mud. Some may be genuine customers with concerns, while others chime in only to fuel the fire.
Such is the digital, interconnected age we live in. It’s both a blessing and a curse.
Unfortunately, no matter how well you handle a problem, you can’t always avoid unfavorable consequences. In situations like these, you can set yourself up for a comeback. Scandals that don’t kill your business can make it stronger if you learn and grow from your mistakes.
Make it part of your business continuity plan.
Once you start a business, prepare for the worse by conducting a risk assessment. If you skipped this step, it’s not too late to revisit it and shore up your defenses before the onset of a crisis.
Contingency plans work best when set in advance.
II | Steps for Preventing Reputational Damage
1. Start with a good defense.
Protecting your business from reputational threats starts from its inception. Even if you’re a sole proprietor, you need a lawyer, business advisor, or consultant.
Together, your legal and business council act as your compliance team. They’ll help you organize your business affairs while remaining compliant with your state’s regulatory requirements. Be it licenses, permits, and other commercial documents.
Skirting the law, even with a minor offense, is a sure way of triggering negative publicity.
2. Conduct a comprehensive risk assessment.
Integrating risk assessment into your strategy and business planning is essential.
During the consultation with your lawyer and advisor/consultant, ask about external risks. You will, of course, conduct your research, but seeking professional advice is valuable. They’ll recommend preventive measures and guide you in creating a business continuity plan.
Note: A business continuity plan outlines how your operations will continue during unplanned disruptions.
Document the potential scenarios that may lead to negative public perceptions. Go from general incidences like client complaints about poor service to more specific cases prevalent in your industry. Outline responses for all the problems you underline in your report.
If you’re already in business, check for red flags in your company.
Your actions affect the public perception of your business, no matter how small. Conduct periodic assessments and reevaluate internal controls versus old and new threats.
3. Monitor what your customer base is saying.
Staying ahead of a crisis will give you an advantage. Monitor what customers are saying on and offline. Create a controlled space where they can interact with your business. Reply to comments and feedback from dissatisfied customers promptly.
If you have employees, ask them about customer complaints they’ve received. Analyze the feedback for worrying trends and potential risks.
Some businesses provide suggestion boxes. Customers and clients can anonymously offer you feedback about problems they encountered. You can take corrective measures with this feedback before it becomes known to the broader public.
Monitoring feedback from customers will also help you meet customer expectations. Avoid overpromising, as this will backfire if you fall short of promises. Not living up to your word puts your company at risk of negative criticism.
4. Set up internal controls for crisis management.
Make quality a top priority, starting with effective policies and procedures as internal controls. These measures will inform product creation and service delivery. They will also lessen the likelihood of events that may cause reputation damage, like product failure.
Center the focus of your business on providing quality customer service and products consistently. Quality and consistency will boost your brand reputation and build customer trust.
Once you’ve implemented control processes, identifying and addressing problem areas will be easier, faster, and more effective.
5. Keep your employees happy.
Disgruntled employees represent one of the top causes of reputation damage. Those presently employed with your company and past employees.
Both groups have intimate knowledge of the inner workings of your business. They know the good, the bad, and the ugly details to which outsiders aren’t privy. There’s no guarantee they’ll keep their discoveries private, especially if it involves unfavorable working conditions.
Employee satisfaction should be at the top of your list. Happy employees, content with their working environment, offer a better customer experience.
Treat your employees fairly and with mutual respect, reflecting the company values you portray to the public. They are in the best position to call you out if you don’t.
6. Protect your data from digital attacks with a reliable cybersecurity plan.
Hackers are always looking for weak points they can exploit. They can gain remote access to confidential client and employee information. Cyber-attacks cause billions of dollars in damages every year. No industry, no company size, whether small, medium, or large businesses, is exempt.
Secure your data.
- Encrypt and back up all sensitive information.
- Conduct regular audits and bolster all cybersecurity systems. Use newer technology solutions for added protection.
- Create cyber protection policies and build a company culture of security awareness.
- Restrict the administration rights of employees to lessen the chances of human error by introducing harmful agents into your networking system.
III | How to Combat a Reputation Crisis
If the worse happens, act swiftly. Communicate clearly and authoritatively. Delays can intensify the problem, as they may convey complacency. Customers are looking for decisive action in a crisis.
The Magic of Positive Communication
Communication can prevent damage and lessen the effects.
Your customers are always watching. How you communicate builds an image. Remember, reputation is about perception.
Even if some of your messages get lost in translation, customers will see your sincerity and how you live up to your corporate values. The same values you advertise to solicit their business. Ensure all aspects of your messaging align during the good and bad times.
Customer service, consistency in quality, resiliency in a crisis, transparency, and good governance at all levels come together to form your public image.
Never underestimate the severe effects of reputational damage. Without effective management, your business may take a long time to recover from an adverse event.
Conclusion
Reputational damage is the most significant risk many businesses are unprepared to tackle. Consider potential threats from the start of creating your business and how you’ll combat them.
- Avoid any compliance risk by adhering to regulatory requirements. Seek professional guidance in this and arm yourself with all the information.
- Include reputational damage in your risk management strategy. Outline preventative and curative measures in case of an adverse event.
- Monitor customer complaints and attend to the concerns of dissatisfied customers. Don’t ignore customer complaints. Negative reviews spread fast on social media channels.
- Set the standards for quality with internal controls.
- Keep your employees happy by practicing the core values you promote with customers internally. A disgruntled workforce is a reputational risk you should avoid.
- Create a cybersecurity plan and protect your and your client‘s information from malicious digital attacks.
Your corporate reputation is a core business asset. Protect it.
