When businesses start out, building a visible brand reputation is key to gaining attention and spreading positive recommendations about goods or services. A compelling brand reputation helps you stand out from the crowd and create strong bonds with customers.

As great as your products may be, in reality the way customers speak about your brand in online reviews and on social media will have a major impact on your ability to grow. 

Why Your Brand Reputation Matters

Recent data shows that in September 2023, 58% of US adults surveyed said a company's reputation is a major factor in purchasing a product or service. 

A few years ago, this reputation would have relied on word-of-mouth recommendations. These days, a brand’s online reputation is vital when it comes to surviving and thriving in the marketplace. 

Your brand reputation is made up of the ways customers perceive your goods or services and how you perform as a brand. In general, a brand’s reputation is shaped by factors including brand history, customer service, advertising and employee behavior. 

It will come as no surprise that brands have been made on their reputation and can also suffer losses if that reputation starts to go south. As 91.1% of customers prioritize customer experience when they consult online reviews, it’s clear the way people feel about a brand really matters. 

As a result, online reputation management is an essential aspect of any smart marketing plan and should form the basis of successful customer service. This ensures that customer service teams have more flexibility when responding to consumer issues and can tailor responses to suit individuals. 

In contrast, when a brand’s reputation has been impacted by negative customer reviews, this may create lasting damage that could be a challenge to repair. If appropriate lines of action are not followed, customers may struggle to trust a brand which could affect sales. 

A recent study found that 69% of consumers would feel positive about using a business if its written reviews describe positive experiences. If a company has a larger number of negative reviews that have not been resolved or even been acknowledged, this can hurt a brand’s online reputation and may dent profit margins.

5 Signs Your Brand Reputation Could Be At Risk

When business is going well, it can be easy to view any red flags as slight bumps in the road. However, ignoring warning signs, no matter how small, can be costly for businesses. 

There may be patterns developing within your customer base that you are not currently aware of, which could influence how consumers see your brand. Try and be vigilant about spotting and dealing with red flags before they become unmanageable. 

Here are five danger signs that your brand should monitor so you can create purposeful strategies that deal effectively with any growing issues.

1. Negative online reviews and increased customer complaints

When you suddenly notice that there has been an increase in negative reviews and customer complaints, there may already be significant friction. Tracking online review trends and responding quickly to customer issues with helpful advice will better support brand reputation management. 

According to recent data, customers may be impacted by negative reviews. Nonetheless, 32% of customers are willing to use a company again if an issue has been resolved successfully. 

Performing a brand management audit is a golden opportunity to turn around negative reviews and increased customer complaints into a chance to show people how efficient your brand is at resolving issues with speed. 

Businesses that want to stay on top of their online presence should learn how to improve online reputation through transparent and interactive review processes which help to boost customer satisfaction levels.

2. Social media backlash

If customers publicly share a critical personal experience that they have had with your brand, this may potentially spread more quickly than you anticipated. Managing a social media backlash once it has gone viral is virtually impossible. 

However, if you have a considered social media plan in place, you can pick up criticisms early and nip them in the bud with a tactical problem-resolution strategy. 

This is why social listening and online review management are so integral to brand reputation. Your teams are present where your customers are, communicating with them to nurture relationships and to rapidly pick up any issues.

3. Declining sales or diminished market share

Data suggests that your brand could lose up to 80% of potential new customers due to a less than glowing reputation.

Research shows that multiple negative reviews have the potential to reduce sales by 70% if negative comments are not handled sensitively with a speedy resolution.

If your brand is looking to increase market share and improve sales, then online review management has to be a priority so you can better connect with your customers and help them solve any problems.

Happy customers who feel you have heard them are far more likely to share this good news online with others, strengthening your brand visibility and raising awareness about your helpful customer service.

4. Class actions or other legal issues

It’s likely that at some point or another a business will have to deal with a legal issue or, in some cases, a class action. There are many forms of business litigation, such as contract disputes, data breaches or misrepresentation. 

Any legal dispute may cause damage to your business, so carefully planning for this eventuality is key to successful resolution. An ideal scenario is to settle any business conflicts through direct communication or mediation. 

Preventing costly legal disputes is necessary in order to protect your brand reputation and limit customer impact. Unsurprisingly, most customers are cautious about purchasing from businesses that have been involved in legal proceedings. 

From a brand reputation perspective, clear communication programs are best in terms of restoring your brand image. Develop a comprehensive risk assessment process to reduce any possibility of business conflict. 

5. Employee dissatisfaction or high turnover

If your employee turnover rate is higher than average, it’s time to take a look at your employee training and performance management programs. When some of your team are unhappy, this can have a viral effect on everyone.

Additionally, customers notice when employees don’t appear to be enjoying their job and customer service can dip in quality if your team isn’t committed to delivering high standards. 

Developing a tailored employee training program helps teams master working together for customers. Review periods can also help your employees flag issues before they start to cause problems. 

Real Cases of Brand Reputation Damage

Sometimes, a brand puts their reputation at risk unintentionally or due to the mismanagement of a situation. It may just be one incident, like a poorly thought-out joke on social media, that jeopardizes your brand’s reputation. 

It is crucial to stay informed around customer feedback so you can address any issues quickly and efficiently. Some of the following companies have faced serious brand damage as a result of issues within their company or complications with their products. 

When product defects result in life-threatening risks

Boeing, the airplane manufacturer, is being investigated by the Department of Justice following a door plug blow-out on one of their planes flown by Alaska Airlines in January 2024. This follows a previous investigation in 2021 after two deadly crashes involving Boeing planes. 

There is no doubt that this kind of legal investigation can have serious implications for businesses and their ability to survive. 

When businesses intentionally cheat

In 2010, Nestle faced a campaign from the environmental non-profit Greenpeace regarding their use of palm oil in their KitKat products. This was because Greenpeace claimed the production of palm oil leads to the destruction of rainforests.

Once these claims were shared on social media, Nestle struggled to manage the issue as they did not reply to any claims, deleted comments and wouldn’t answer questions on the topic. The company’s social media management lacked insight and resulted in negative customer perspectives about the brand.

When bad promo campaigns ruin your reputation

In 2017, Pepsi ran an advert featuring Kendall Jenner offering a police officer a can of Pepsi at a protest. Critics saw this as a trivialization of protests, particularly the Black Lives Matter movement. Pepsi had to pull the ad as feedback suggested the company should be more ethical in their creativity. 

Limit Brand Reputation Risk

No brand can make perfect decisions all the time. Some decisions may seem the right one at the moment, then turn out to be the opposite with the benefit of hindsight. 

But there’s no doubt that brands who clearly and regularly communicate with their customers and listen to their needs are able to manage their brand reputation responsibly. 

This can guide them to empower their business and gain new opportunities while nurturing those all-important customer relationships along the way. 

Legal disclaimers:

  1. While every effort has been made to ensure the accuracy of this publication, it is not intended to provide any legal, medical, accounting, investment or any other professional advice as individual cases may vary and should be discussed with a corresponding expert and/or an attorney.
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