What is Business Reputation and Why is it so Important?

You may have an amazing product but your business reputation can be the difference between failure and success. As a business owner, you are right to keep a watchful eye on tangible markers of success such as customers, sales and profit, but your reputation lies in the more intangible metrics of success.

This can be considered a form of social or intellectual capital. It’s how people think about you and what associations they make when they hear your brand name or see your logo, such as in your digital marketing campaigns.

Many companies deal with reputational damage reactively, scrambling to fix damage after it has already been done – like Coach’s bid to portray itself as a sustainable fashion brand. Instead, businesses should be working preemptively to safeguard their reputation so that they can see a reduction in damages through fostering a customer relationship and brand loyalty based on mutual trust.

As Warren Buffet famously said: “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”

In this article, we will discuss the difference between online and offline reputation, examples of positive and negative business reputations as well as some crucial tips in establishing and maintaining your image.

What is Business Reputation?

It is how everyone else sees your business. This includes customers, staff, prospective talent, non-customer endorsers, competitors, regulatory bodies and investors or potential investors.

Online Reputation

Your online reputation is somewhat easier to quantify, so let’s start there. Online reputation can be understood by evaluating metrics such as:

  • Social media presence, including likes, shares and followers.
  • Google’s rating and review feature is largely to thank for underpinning the transparent culture around business interactions. Upon Googling your business name, competitors, clients and curious observers can learn tons about previous experiences as well as see your star rating.
  • Other third-party review sites such as Trustpilot, Yelp, and TripAdvisor have also long opened the floor for consumers to share their experiences in the public domain, to the benefit, or detriment of businesses.

“With the majority of people turning to the internet for research and reviews, a strong online presence is essential for attracting and retaining customers. Online platforms provide businesses with a global reach, allowing them to tap into new markets and target a larger audience,” explains Renae Smith, Founder and Director of The Atticism. “Furthermore, online reputation management enables businesses to actively engage with customers, respond to feedback, and build trust and credibility.” The Atticism is a PR and branding agency with projects across the UK, Australia and UAE.

Did You Know?

A 2023 study showed that 98% of consumers read online reviews, with 76% reading them regularly.

Offline Reputation

Your offline reputation can be understood as word-of-mouth. For local businesses, word-of-mouth carries far larger weight than for larger multinationals, whose well cannot as easily be poisoned by the experiences of a couple of disgruntled customers. While we are living in an increasingly online-dominant world, many online reviewers can be quite polarised in terms of experiences. Many reviews are only written in cases of extremely positive or negative service. Offline public perception is just as important as it extends to all the customers falling between the two poles, which is usually the majority.

Beyond word-of-mouth, offline reputation can also be considered how your brand lives in the minds of its customers.

  • What do people think when they see your logo, or hear your name?
  • Are elements of your branding such as name, brand voice and colours recognisable to your customers?

The Importance of Business Reputation

While it’s always nice to be liked, having a positive reputation has many knock-on effects that’ll increase your customer retention and loyalty, profitability and also help you attract a strong talent pool to choose from for your employees.

  • Attract customers, and keep them: The most obvious benefit of establishing a trustworthy business reputation is that you’ll attract more customers. Not only that, but you’ll retain them too. A good product or service can reel people in, but it’s important to demonstrate positive characteristics in order to keep them coming back and telling their friends about your business.
  • Attract a strong team: It’s not just customers who will pay attention to your reputation. With sites such as Glassdoor, employees have quite some power to affect their employer’s reputation by posting their true feelings about the company. This can encourage or discourage future candidates from applying but also tarnish your customer relationship if they find out that your employees aren’t happy. For that reason, keeping employee satisfaction high is a must.
  • Attract investment: you’re more likely to find solid investors if you’ve established your name as a trustworthy market leader. Securing investment means that your business can go from strength to strength.
  • Become a market leader: many industries are highly competitive these days, and it’s hard to have a truly unique product or service. Reputation and branding are the key to distinguishing yourself and elevating your business from ‘one of many’ to a household name.
  • Reduce costs: once you assert yourself in the market as the ‘go-to’ provider, word of mouth will do its thing and you won’t rely solely on your own marketing and advertising efforts, meaning you can probably spend less on it. Also, you may be able to justify charging a little more for your product or service than competitors with worse reputations.
What's One Golden Tip for Business Reputation?

“Deliver honest and reliable customer service,” says Benjamin Atkinson, PR Manager at the UK’s leading reputation management firm, Igniyte.

“The majority of reputational issues for companies and individuals today result from cutting corners in delivering service. Poor service, poor refund policies, ripping people off, having poor staff – these things will lead to online reputational issues. This can be everything from poor customer reviews, traumatic customer stories, or viral complaints about your service and staff deterring potential customers from engaging with your brand.”

How a Bad Reputation Can Affect Your Business

There are a number of ways in which reputation can be tarnished. It’s important to understand the difference between the reality of your business operations and the perceived image that is your reputation. Perhaps the issue sits closer to home, and you have some operational issues to iron out. Alternatively, you might be running a tight ship, with hard-working employees and a great product to offer but if it’s not marketed correctly, you may not see the recognition you deserve.

First, here are the ways that are integral to your business operations.

  • Poor customer service
    It’s pretty simple, everybody likes good service. It takes away from the experience of paying for a product or service when customer-facing staff don’t look like they want to be there. Perhaps they don’t, in which case you may want to implement ways of showing employee appreciation as well as tools that can help them, such as using AI in customer service.
  • Poor or non-existent customer retention management
    Customer service isn’t just about the point of purchase. As well as attracting new customers, it’s equally important to work hard to retain your existing ones with a dedicated CRM system and foster long-term brand loyalty.
  • A bad product or service
    Then there’s the possibility of course, that your product or service is simply just not up to scratch. In which case, that’s a little beyond the remit of reputation management.

Then there are the marketing-related issues.

  • Poor communication
    Spelling mistakes, grammatical errors, the basics. But also, not speaking to your audience. Not using their language.
  • Poor visual identity
    A slow-loading or unappealing website, inconsistent social media presence or brand colours or logo that don’t fit.
  • Poor values communication
    With consumers being more value-driven than ever before, not having solid communications around what your company’s values can be detrimental to your company. In our interview with Maryam Din, who works for storied LGBTQ charity Stonewall, they mentioned businesses can suffer reputational damage if they’re silent on important social topics.
  • False advertising
    It is possible to overdo it and over-promise what your business can offer in the hope of creating a positive impression. This can come back to haunt you as customers may feel that their experience did not align with expectations. The most trustworthy brands are created by remaining transparent and closing the gap between reality and reputation.

Social Responsibility

This one falls a little between the two areas of operations and marketing. It’s been a key trend in establishing a positive business reputation in recent years. With the age of social media, cancel culture and woke culture, it’s now favoured for businesses to outwardly proclaim where they sit on the values spectrum.

It’s a tricky line to navigate and some businesses may wish to avoid this territory for fear of saying or doing the wrong thing and veering into green-washing or pink-washing. Coming back to the reality vs. reputation gap, social responsibility is something that you should not over-promise but if done correctly, can gain you a huge amount of brand recognition, especially from Gen-Z and Millennials.

Businesses are often deterred from implementing strategies surrounding social responsibility due to the financial costs attached, but the long-term benefits often outweigh the short-term expenditure.

On the employee front, you can look into supporting your staff’s side hustle – therefore helping with its financial security – as well as championing diversity, equity, and inclusion in your business. Also, our guide on affordable sustainability can help you implement reasonable changes to your business operations.

Examples of Good and Bad Business Reputation

Good Reputation: Patagonia

An Axios Harris poll recently revealed Patagonia as the company with the best reputation in the US. Let’s break down how it got there.
As a clothing company that predominantly makes clothing for outdoor use, it knows that its customers are outdoor enthusiasts who most probably care for the environment. While it’s not the cheapest brand, it takes quality seriously. So here we’ve already got two core brand values established: consciousness and quality.

In alignment with its values, Patagonia makes high-quality clothing and also has an accommodating returns policy. In the case of damage, it offers options to repair or recycle products. As a clothing brand, it would actually be in its own best economic interest for its customers to not repair and reuse but instead replace by buying more. Yet, Patagonia has correctly identified that its audience value quality over quantity and is not the kind to adopt wild purchasing habits.

Patagonia also donates some of its profits to environmental causes. In 2022, founder Yvon Chouinard gave away his shares in the company to “Mother Earth”, preferring to dedicate the company profits to the environment rather than chasing exponential growth. While it’s definitely a privilege of a large company to have the means to be so philanthropic, the point here is that Patagonia deeply embodies its own values and that of its customers and has as a result, become a shining example of a trusted brand.

This is not to say that social responsibility is the only way to score brownie points with your audience but to demonstrate that it’s important to act in line with your values if you want to be trusted as a business.

Bad Reputation: Tesla

At the other end of the spectrum is Tesla, which has suffered a plummet in its reputation according to the same poll from Axios Harris. The pioneering electric vehicle manufacturer is headed up by Elon Musk, whose clumsy takeover of Twitter and controversial personal views have caused reputational damage to both companies.

The areas in which Tesla took the worst hit were character, trust, culture and ethics. Reports of employee experiences of misogyny and abuse have been surfacing for the past few years, coming to a head when six former employees sued the company for sexual harassment. Furthermore, Tesla also cut prices of its most expensive EV model to drive demand, disgruntling previous customers who had purchased the model for a higher price.

With all this being said, Tesla is still actually seeing growth in sales, albeit at a less rapid rate. Controversy can sometimes work in a brand’s favour, especially if they are going for a cool, dangerous and unconventional image. However, a recent survey showed that people are still buying Teslas despite Elon Musk, not because of him. Tesla luckily has a product that is so attractive that sales will continue even in the face of reputational damage. Smaller businesses may not be so lucky.

How to Repair Your Business Reputation

If you find yourself in the unfortunate predicament of a damaged business reputation, all is not lost. Here are some crucial tips on how to start rebuilding your image.

  • Request reviews: Depending on your business, you may offer a lot of customer service. A great way to boost your online rating is by deliberately requesting customers to review you following a positive exchange via a follow-up email or by mentioning it at the end of a phone call.
  • Respond to reviews: Whether they’re positive or negative, try to respond to every review you receive. It shows you appreciate the positive feedback and take the criticism seriously. Customers will appreciate your gratitude and feel some form of vindication if they’re feeling wronged.
    • “Respond to negative reviews or negative press in an open and consistent manner if it occurs. Don’t try to just bury the issue,” says Benjamin Atkinson, PR Manager at Igniyte, leading UK reputation management firm.
  • Engage with the audience: Similarly, it’s best practice to engage with your customers on social media. By responding with genuine interest, you’ll quickly forge trustworthy relationships that’ll last.
  • Share yourself on socials: An element of establishing a trustworthy brand is by putting a face to your brand. This can work very well as social media content. By introducing your team, showing behind-the-scenes footage or otherwise putting a human touch on business operations, you’ll give your customers someone to relate to.
  • Show you care: as mentioned above, social responsibility is a huge driving factor in the success of contemporary brands. If your brand is not socially responsible, by all means, do not pretend to be. As long as it’s truthful and relevant to your brand, speak about issues you care about and put your money where your mouth is by contributing to worthy causes.
  • Work with a PR team: If you’re running a larger operation, or trying to recover from particularly catastrophic reputational damage, you may want to consult the experts for some help with your image. PR professionals can help you if you need to release a statement or press release and also help drive positive media coverage about your business.
    • “Make immediate and decisive action to mitigate the impact,” says Renae Smith, director of PR agency, The Atticism. “Respond promptly and transparently, both online and offline. Address the concerns raised, apologise if necessary, and provide a clear plan of action. Engage directly with affected individuals to offer resolutions and demonstrate your commitment to resolving the issue,” she explains.
  • Perfect your branding: If you’ve not committed a terrible offence, but are still suffering reputation issues, it may be related to your visual identity. By sourcing professional design help, you can establish a strong logo, colour scheme and social media presence that will help demonstrate your values and stick in the heads of potential customers.

Whether it’s justified or not, your business reputation can take a hit leaving you left outside in the cold with your customers. The most important takeaway is to make sure you’re closing the gap between the reality of your business and the image of your business and value honesty and transparency as this is what makes your business trustworthy.

If working in a client-facing situation, “prioritise consistent and exceptional customer experiences,” says Renae Smith. “Ensuring that every interaction with your customers is positive and exceeds their expectations can have a profound impact on your reputation,” she concludes.

Written by:
Alice is one of Expert Market's resident software experts, helping businesses improve their efficiency or reach, with an emphasis on productivity software, CRM and telecommunications.