Warren Buffett once said “It takes 20 years to build a reputation – and five minutes to ruin it.”
Recent events show how easily reputation can be lost. Ever since Volkswagen admitted in September to cheating on diesel emissions tests in the United States, its sales and grand plans for growth have taken a nosedive. Dozens of large shareholders now even plan to sue the carmaker in a German court, seeking compensation for the plunge in its shares due to the scandal. According to Forbes, the greatest risk facing companies is loss of reputation, with up to 75% of their value based on reputation. Protecting reputation is something all businesses, of any size, should think about. Although it can be difficult to prepare to protect something so intangible there are steps you can take to reduce the risk and ensure that if a crisis takes place you can minimise the damage.
Think of the risks that might affect your reputation. It will depend on the nature of your business but could include health and safety incidents, operational crisis and events such as pollution, product recalls and quality control errors. Once you have identified the risks your business could face, analyse them, determine the likelihood of them happening and the potential impact they might have on the business Most businesses can take action to control many of the risks they face. For example training employees to reduce the risk of accidents, and/or ensuring good sign off processes.
Online reputation is becoming increasingly important for businesses and it is important to protect yours. Recent research conducted by the eTailing Group (online merchandising specialists), concluded that 85% of customers research online before deciding whether to purchase from a company. Put a social media policy in place. Establish rules around the way any complaints, made through social media, are dealt with and ensure employees have adequate training before they post on the company’s behalf. Remember that social media can cause a lot of damage. When HMV made 190 employees redundant in 2013, the employees took to the corporate Twitter account to share the news, tweeting about ‘the mass execution of loyal employees’ to its 61,500 followers, before management could step in and change the password. 74% of consumers see criticising a brand through social media as a way to receive better service, according to Lithium (brand monitoring software developers).
Having a comprehensive and professional response prepared can significantly reduce or even eliminate the reputational damage. SMEs need to develop a robust response plan to address the needs of all stakeholders to ensure negative commentary is kept to a minimum.
There are also reputation protection products and advice services you can consider to protect your business. Please contact us for more information.