This video explores several of the internal and external influencers to reputation, such as social capital and track record.
- If you bought a suitcase and the handle broke or you went to a new hairstylist and your cut was shorter than you expected, what would you do? Well, likely you'd return the suitcase for an exchange or a refund. You'd never go back to that salon. On the other hand, if your bank let your confidential information leak to hackers or made a mistake in your account, you'd likely feel more intense feelings of fear and uncertainty about whether you could ever trust them again. You might even begin to question all financial institutions, not just your bank.
Perception and emotions directly impact reputation. While your bank may have breached your information, not all banks are guilty of carelessness. The breach may have been outside of their control or it could even have been a mistake you made in letting your information get into the wrong hands. Reputations are impacted by internal and external forces. For instance internally, you have employees who can speak favorably about their employer to prospective recruits and customers or they could drop hints about impropriety, creating suspicion in the marketplace and thereby hurting the company's good name.
Another impact is track record. How has your company handled the good times and the not so good times in the past? Have you responded with transparency and collaboration? Customers will often overlook a broken suitcase handle or even an overbooked plane flight if they were treated well in the remediation process. Reputations are also impacted by forces outside the company such as social capital. A company with a negative reputation online might find themselves the target of online bullying by frustrated customers demanding change.
Similarly, a company with positive followership online where customers set up fan clubs and promote the company will see their reputation and credibility enhanced. Consider how companies like TOMS Shoes who for every pair of shoes bought donates a pair to someone in need, how they've built loyal fans online and in person. TOMS' customers love what the company stands for and they're excited to promote the values and mission of that company to their friends, thus driving sales.
Social capital might be the new measure for customer engagement and reputation. There's also environmental ranking. How are you ranked within your industry? Are you seen as a leader or are you an unknown? Environmental ranking can positively impact your reputation. Consider this. Let's say your company is a spinoff from a larger more well-established brand which has very high environmental ranking. As a new company, you can leverage their reputational assets to your advantage while building trust as your own brand.
On the other hand, if the larger company is seen as weak in the industry, it could be hard to claim a strong relationship and reputation with customers without a complete revision of all branding and marketing, positioning yourself as a new and separate entity. Today, reputation management specialists have to plan for everything from a mundane IRS audit to the extreme such as hacking of sensitive client information. As we proactively protect our company's image, we consider the impact of endorsements, evangelism, online reviews and customer experience as they impact how our reputation is solidified in the minds of our customers and potential customers.
Planning for the worst means having a system to respond and react, practicing the skills and communication needed in mitigating a crisis should a reputation risk become a reality.