You can charge a premium for products and services known for quality and excellence, but your company would have to pay a high cost for doing bad business and losing reputation. Loyal customers will support your corporate reputation if they believe you are trustworthy. However, you do not have any assurance of customer loyalty because they will not be oblivious to negative reviews about the brand.
A bad reputation equals loss of money
So, what exactly is the amount you have to pay for should you end up with a damaged brand reputation?
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A huge chunk of market value comes from goodwill and brand equity, investor confidence relies heavily on corporate reputation, and the repercussions will mostly be felt in branding and monetary matters.
Hence, the share price of an organization can suffer badly if the market loses confidence in you. The effect of a lapse in judgment on your bottom line could be financially devastating.
Investing in recovering your image
It is almost too easy to post a public apology for wrongdoing or poor crisis handling. However, it takes time and a huge amount of money to convince the public you are still worthy of their trust and patronage.
Every company decision maker knows that it takes at least ten positive reviews to undermine the effects of one negative review. Unhappy customers have a way of spreading bad news quickly, so your brand’s reputation can turn to ashes overnight. But, what’s worse is that you might not be even aware of it until it’s too late.
Dealing with lapses
Positive reviews and an intact reputation boost revenues, while negative reviews lead to additional spending on your part. Your reputation is at risk when one consumer is treated poorly or experiences a regrettable encounter with the brand.
As such, reputational risks must be handled promptly and effectively. Realize that a majority of customers will choose not to engage with your company if they have one reason to believe you are not reliable—that is if you have a bad reputation.
Preserving brand integrity
Every company is vulnerable to brand damage, but if you make sure that ethical lapses do not occur, then your company’s reputation will remain intact.
Weed out possible roots of illegal activity and fraudulent practices that may stain the company name. In doing so, you are strengthening your company from within, and improving its capacity to produce higher profits. You are also showing loyal customers that the organization is fully committed to providing excellent products and services.
Every organization wants to attract new customers and keep the ones they already have. People will patronize your brand if you are trustworthy and reliable, and having good corporate reputation gives you a huge competitive advantage. The bottom line is that bad reputation is too costly, and there are no guarantees that you can regain what you’ve lost.
Check out this infographic from APEX Global on some tips on navigating this issue