Unmasking the Dark Side: Exploring Reputational Damage 

November 17, 2023 Marketing

In this era of constant web usage, your business’s reputation is critical. Most consumers now research, discover, and shop for products and services online. And most business executives identify brand reputation as a top strategic risk area for their organizations, even more than the economy, competitors, and other factors.

That’s what makes online reputation management so important. One negative item online can threaten a business’s bottom line. And when bigger problems that could damage your reputation hit, your business’s viability could be in jeopardy without a solid reputation management strategy in place.

Online Reputation and Its Impact

An online reputation is a combination of published beliefs and opinions that characterize your business. This reputation is often the first experience prospective customers and potential hires have with your business. It can also influence investors, employees, and other stakeholders. It can impact talent hiring and retention, sales and growth, and even a company’s status among elected officials with the power to regulate.

It was Benjamin Franklin who best summarized the importance of a good reputation, saying, “It takes many good deeds to build a good reputation, and only one bad one to lose it.” Unfortunately, that’s true. A negative review can begin to eat into your revenues, while a crisis can threaten your business’s existence. Some studies have shown that negative items about reputation are up to three times more relevant than positive items, showing the power of a few negative mentions or reviews when it comes to defining your business’s reputation.

This explains why it’s so important to monitor and manage your business’s reputation online. These are high-stakes events that require a long-term strategy and commitment to address them. You can protect your business’s online reputation by partnering with experts like Status Labs, who create online reputation management strategies, or assigning an employee full-time to the task.

The best way to stay ahead of problems and respond to them when they arise is by making reputation management part of a broader online strategy for your business.

What Reputational Damage Looks Like 

Reputational damage can be seen in lost revenue, shareholder value, social capital, and market share. Your company’s reputation is considered an intangible asset, but the impact on your company is very tangible.

Your business’s reputation can be damaged in a variety of ways, including ethical or legal violations by stakeholders, safety problems, bad product or service quality, misleading practices, customer data breaches, and negative online reviews. When your company is cast in a negative light online, this is damaging to your reputation. It doesn’t have to be true. It doesn’t have to be your fault. It’s just a negative post about your business online that impacts your operation.

When a company’s reputation is damaged, the consequences can include reduced sales; a decrease in customers; financial losses or bankruptcy; fewer talent prospects; greater hiring costs; higher employee turnover; and increased liquidity risks.

How Reputational Damage Occurs

It’s not just bad customer reviews or negative news articles that can damage a business’s reputation. Reputational damage can also occur through social media channels, where customers share their experiences, opinions, expectations, and disappointments in posts that can quickly spread.

That’s what makes the creation of an online reputation management strategy so important. When these posts occur, there must be a quick response or resolution to a problem. Customers trust online reviews left about businesses, whether or not they’re a fair and accurate representation of an experience. They also give credence to how businesses respond to these reviews or complaints.

You will never be able to control what others write about your business. But you can manage your online reputation with experts like Status Labs when someone says something negative. It’s important to develop a long-term ORM strategy. This will build positive online content and give you the tools needed to react to negative content.

Your response to reputational damage influences the extent of damage suffered. A strong reputation can dilute the impact that negative news has on your company.