What is Reputation? Here’s What It Means For Your Business

The saying is true: Your reputation does precede you. But what is reputation? And how exactly do you define it?

The Cambridge English Dictionary defines reputation as: “the general opinion that people have about someone or something.” Whether you have a good reputation or a bad one is up to you. It’s important to focus on your company’s reputation because it could make or break your business.

The Impact a Reputation Has on Your Business

No matter if you’re dealing with a major PR crisis or a single negative review, you must be diligent in managing your reputation. In the world of social media and online reviews, one small complaint can quickly become common opinion with enough firepower behind it.

Let this sink in: 8 out of 10 internet users in the USA say negative information they read online made them change their minds about purchasing something. That’s eighty percent of business you’re losing to negative online reviews.

A good reputation, on the other hand, can improve your business just as much, if not more. If you can retain customers, studies show people will continue to spend more money with you as time goes on. Positive online reviews also outweigh the negative comments, acting as damage control.

Some other benefits of a good reputation are:

• Distinguishes you from competitors
• Attracts loyal supporters
• Creates growth opportunities

Think about the businesses with good reputations—Apple, Google, Patagonia—their success stems from their fantastic reputations!

There’s no doubt that reputations are important to uphold. Sometimes, though, it’s not so simple. What if a competitor is trying to badmouth you? What if there is a small miscommunication and one angry customer starts spewing falsehoods online? Even if what’s said about you isn’t true, the general public does not know that. 

88% of adults either agree or strongly agree that it would be very difficult to remove inaccurate information about them online. So, how do you “fix” your reputation before it becomes irreparable?

Taking active steps to manage your reputation can help mold public opinion.

Is Subjective Reputation Quantifiable?

In the world of business, reputation is often considered a subjective matter, open to interpretation and personal opinions. However, dismissing negative reviews as merely subjective can be a costly mistake with tangible effects on a business’s bottom line. Let’s dive into the ways to quantify the impact of reputation, from the risk of revenue loss to measuring return on investment (ROI) in reputation management campaigns.

The Ripple Effect of Negative Reviews

A single negative article on the first page of search results can send shockwaves through a business, potentially leading to a 22% loss of revenue. This startling statistic, revealed by Moz, underlines the influence that online reviews have on consumer behavior. Negative online content can steer potential customers away, affecting not only sales but also the overall perception of the business.

Calculating ROI in Reputation Management

Quantifying the impact of reputation management efforts involves a nuanced calculation. To measure the overall ROI, add the lost revenue with the potential revenue earned and then take away the campaign cost. You then divide by the campaign cost and multiply the result by 100 for the percentage. This formula, highlighted by Reputation.ca, provides businesses with a concrete way to assess the effectiveness of their reputation management strategies.

It should look something like this:

Lost Revenue + Earned Revenue – Campaign Cost / (Campaign Cost) x 100 = Percentage of Overall ROI

For a deeper dive into ROI measurement, Forbes also offers insights in their article on how to measure the ROI of online reputation management.

Brand Equity: Placing a Value on Reputation

Brand equity, while often associated with big brands, provides an interesting perspective on placing a valuation on reputation, even for local businesses. The price premium method is one way to measure brand value. This involves calculating the price difference between a branded product and a generic one and then multiplying this difference by the total branded sales volume. This method, explained by Clootrack, demonstrates how the perception of a brand can directly impact its financial value.

Here’s what this formula should look like:

Price of Your Product – Price of Generic Product (Total Branded Sales Volume) = Brand Value

In a nutshell, the impact of reputation on a business is not merely a matter of perception; it has real, quantifiable consequences. From revenue loss to ROI calculations and brand equity, understanding the numbers behind reputation is key for local businesses looking to scale.

Tips to Improve Your Business’s Reputation

If you want your business to have a good reputation, there are a few key areas you can focus on. Below are our best tips for establishing a good reputation.

Tip 1: Communicate (And Stick To) Your Story

Much like people, businesses can easily be misunderstood. Make sure your mission is clearly defined internally and communicated effectively externally. What values are your company passionate about? Try to appeal to customers on a human level. People who align with your values will become your ideal customers. When people know what to expect from you, there will be fewer moments of what feels like “betrayal.”

Tip 2: Gather Online Reviews

There’s your side of the story, and then there are your customers’ sides. Gathering online reviews can feel like letting the floodgates open to criticism. However, getting customer feedback is imperative to company growth. 

Feedback is how you improve. At the very least, getting feedback will give you insight on how to improve your reputation. Further, those positive reviews will boost you online. To make it easy on you, Broadly created online reputation management software that automates the review process. This way, you can gather and respond to reviews with ease. You can free up your time while managing your reputation.

Tip 3: Use Social Proof

Reputations are widely built on trust. One savvy way to increase the public’s trust in your brand is to use social proof. Show off the positive reviews you receive. For even more positive results, you can promote these reviews on Facebook. You can also include information about your expertise in the industry. “Proudly servicing the Cleveland area for 35 years” gives you a lot of heft.

Tip 4: Improve Customer Service

Poor customer service is a surefire way to kill your company. Some brands have earned bad reputations because of their poor customer service. And, many times, these reputations are too far gone to recover. Keep stellar service at the top of your to-do list and see how it rewards you. There are many automated ways to improve customer service without hiring extra manpower. 

Install web chat on your site to help customers while they are in the buying mindset.

Tip 5: Be Honest

Trust is not built by lying. If your company does mess up, it is always more honorable, in the public’s opinion, to own up to your mistakes. Covering up a mistake is a fast way to earn a bad reputation. Though it’s not always pretty, it is best to be honest when PR mishaps occur. Similarly, keep customer communications clear in times of confusion and chaos. Nobody likes to be left hanging.

Clearly, your company’s reputation is much more comprehensive than the dictionary definitions. Your reputation either brings you buckets of new business or it can turn away potential customers. Earning public esteem is not without work, but it is worth it! Plus, with new innovations and automation software, online reputation management is becoming easier day-by-day.

Want to see how Broadly can help you build your online reputation and stand out from your competition?