Why is Reputation Important?

8 min read

Why is Reputation Important?

Updated on 09/03/19 1:19 PM PST by Kent Campbell

If you're here, you probably know exactly why reputation's such a big deal in 2019. You want you or your company to have access to the best opportunities, and a bad reputation can prevent that. A great reputation will open doors to fantastic opportunities and (if you're a business) unhindered access to your ideal client base. Here are just a few other benefits of a good reputation:

  • More business opportunities
  • A better selection of prospective employees
  • Higher company value
  • Lower marketing costs

People want to make the best choice, and they base their selection on the person or company that seems to be superior. Whether applying for a job or attracting business opportunities, a good reputation affects your bottom line.


Reality vs. perception

One of the many aspects of reputation deals with how others perceive you. Another way to think about it is that character is how you actually are, and reputation is how others think you are.

One is objective, the other subjective. The character of a person is different than his or her reputation, and this holds true for brands as well.

91% of consumers trust online reviews as much as personal recommendations

The rewards of having a good online reputation are greater revenues, better relationships, and more opportunities. Consumers care about a company's reputation and purchasers' reviews.

Reviews are so important, in fact, that businesses can't survive in 2019 without them. We all do it. We read reviews to determine if a company is worth buying from. A recent survey found that 91% of consumers trust online reviews as much as personal recommendations. 

Curating sentiment

Curating a positive reputation is different than simply leaving it up to the random opinions of others. Advertising and PR are examples of how brands try to curate their own reputation. Coca Cola tries to associate itself with young healthy people through advertising.

Today, most people understand the reputation of a brand through the lens of search engines and social media with a certain amount reserved for the physical world. Online reputation management works to actively affect how a person or company is perceived by channeling positive information about a brand in a way that increases positive sentiment, while causing negative sentiment information to lose visibility. 

Why active is better than passive

As the internet grows, your business or brand will be seen and judged. And if this is not attended to, it can be taken advantage of by competitors, and some consumers may write complaints and leave negative reviews in the process. But properly cared for, your reputation can flourish with new and better opportunities arising because of it.

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.” Warren Buffet

Reputation can stem from one person’s judgment via a negative review or complaint, and then this can initiate a chain reaction as it negatively sways the collective judgment of a person or business. This new "identity" (reputation) can become overwhelming, and be all that consumers focus on.

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Good reputations mean more money and lower costs

There are also many subsidiary benefits to having a good reputation: businesses that enjoy a high standing may not have to spend a fortune advertising and marketing as their customers will frequently advertise their products and services by sharing with their friends.

Moreover, when it is endowed with a good reputation, an online business may be successful in avoiding lawsuits as a complainant may concede that the company's excellent public reputation could thwart their chances of winning. This may well reduce the company's legal legal costs, which in the case of smaller companies can prove so threatening.

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Another benefit of a positive online reputation is that the company or individual might be given free press articles and reviews for their services or goods. This can often involve publishing information on important company or personal events, as well as the launch of new products. And it is likely to drive the success of the business even more.

At the end of the day, your individual or company's success will always be reinforced by an excellent online reputation, and there is no doubt that having extra resources to ensure that your reputation within you industry is first-class, is the way to go.

What contributes to a business' good reputation?

A business reputation comprises the sum total of what consumers communicate that they feel about the company. They may feel a certain way, but if they don't communicate it then it doesn't affect reputation.

Much like with personal reputations, a positive corporate reputation can result in many benefits for your company. To name a few: 

  • Increased revenue and stock prices
  • Decreased churn rate
  • Increased customer lifetime value
  • Better job candidates and employees

Reputations can change quickly, so that is why it is so important to dedicate time, budget, and thought to building and maintaining your business' reputation. There are so many factors at play, in the form of online reviews, word of mouth, articles, blog posts and social media. These can all have a significant impact on the way your company is perceived - for better or worse.

Search results don't reflect truth

Truth is less relevant to a reputation on the internet than social strength. This is unfortunate because companies who do not manage how they are seen to some degree can be at the mercy of opinions that are not entirely accurate. One of the aims of reputation protection is to promote accuracy. 

Consumers take action and buy products and services on their response to readily available information. And as your company's reputation is based on the information available online, ensuring that you have a sterling reputation and no negative copy or inaccurate information about your company or what you offer, is absolutely essential.

What online channels affect how a company is perceived?

What you can control

Your online reputation involves your company website, business blog, and your engagement with social media. These things you control, but the rest you generally do not.

What you can't

Consumer's social media channels, websites and blogs have an impact as do review sites, video and more. Taking control of, or at least influencing, these media channels can reset the board for a company. 

What people think of your company does not only involve the way in which your customers and target audience feel about your brand. It is also essential to be concerned about a broader sphere that includes your employees, community members, competitors, and others.

Your trade name impacts the way in which your target group interacts with your company, however, the reputation associated with your business impacts the way in which all your encompassing network interacts with your company.

How can I build my business reputation?

You can implement strategies and activities which develop an accurate and positive perspective of your company among third-parties. Remember that the reputation of your company extends far beyond the portion of your brand, services and products you control.

Influencing the influencers

This is where relationships with influencers in your industry are a big help. The better your reputation becomes, the better it tends to continue to grow. But the inverse is also true. The broken window theory applies to reputation as well. When a company has a damaged reputation it can become easy for it to snowball downhill becoming exponentially worse

How can I monitor my business reputation?

Unlike building your company's reputation which centers on the things you want people to write and think about your company, reputation monitoring is concerned with what individuals are saying about it. Keeping tabs on your reputation concerns maintaining a close watch on the platforms that consumers use to engage with other people about your company, and the platforms that they use to engage with your company. This will enable you to make adjustments so that you can maintain an excellent and accurate image of your company and what you offer. 

What does reputation involve?

According to the Davies and Miles corporate reputation review entitled, Reputation Management: Theory versus Practice, reputation in terms of business, involves three things:

  • How others see the business
  • Who the business really is
  • What the business communicates about itself

Managing a business reputation necessitates the alignment of these three elements. When just one of these is out of balance, the company’s entire reputation can come crashing down.

Here is a closer look at the factors that shape a corporation’s reputation.

  • Visual cues: name, logo, and all of the imagery related to your company or brand.
  • Mission, vision, or philosophy: these elements are the guiding light of a company’s internal culture, and generate a ripple effect when it comes to corporate reputation.
  • Behavior of members within the organization: what people are saying or writing. Articles, word of mouth, news, social media, and online reviews.
  • The success of the business: for example, a spot on the Fortune 500 list will contribute to a positive reputation.

Who maintains a corporation's reputation?

The simple answer, everyone.

Clearly, corporate reputation is a complicated machine. So who is in charge of maintaining it?

According to a 2005 study by Rosa Chun, senior lecturer at Manchester Business School, it is unusual to find an internal reputation management department that is directly responsible for managing corporate reputations. Instead, it is often a shared effort, with marketing and communications handling the external perceptions, and human resources managing the internal culture. In addition to this, many companies which understand the priceless value of their reputation, outsource their reputation management to firms that specialize in this field.

Creating, curating and maintaining a positive reputation for a corporation is no easy task, but one of the most important facets in terms of human psychology, is to be consistent. Research by Roger Martin of the Rotman School of Management, has shown that a customer’s loyalty to a company or brand, relies more on familiarity than true, organic “trust.”

Customers love to do what feels comfortable, therefore, companies which are too quick to change their identity in face of a PR disaster may be more likely to lose customers in the long run.

A better approach is often a slow and steady strategy which is focused on rebuilding trust through multiple channels.

The need to curate a positive reputation

The digital era has invited in a whole new way of showing companies and brands to the world, but it is one which is rife with complications. In many cases, a company's reputation is their most important asset, and to that end, it is in its best interests to make it the best it can be. For example, Coca Cola's brand reputation contributes in a large part to its more than 100 billion valuation.

What's your reputation worth?

Kent Campbell
Written by Kent Campbell

Kent Campbell is the Chief Marketing Officer for Reputation X. He has over 10 years of experience in SEO, SEM, PPC, online reputation management, inbound marketing, public relations, and online brand strategy.

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