Reputation Management Becoming Necessary for Company Success

Today isn’t the same promotional world you’re used to growing up in (or if you’re young enough, your parents). The days where having a big advertising budget translates into big profits simply isn’t true anymore, or at least not without other factors coming into play.

While raising brand awareness, segmenting a target market and positioning strategy are all crucial to selling a product or service, the world where companies can make their customers believe anything that’s advertised is simply no longer the case.

Just like a company can find out as much information about its customer base as it wants, customers are also open to researching the good and bad about any company they want. This gives the business owner an opportunity to either accept the challenge that comes with engaging in a two-way dialogue with their customers or assume that if they ignore bad feedback, that the problem will go away.

A recent example of such a mistake is when former CEO of BP Tony Hayward received backlash from the oil spill in 2010 and responded, “There’s no one who wants this thing over more than I do. I’d like to have my life back.” This response put the company into an even more dire PR situation than the spill itself.

While most businesses don’t have to deal with catastrophes such as these, they do have to deal with complaints of problems such as bad customer service. It’s certainly not easy criticism to hear, but at a time when the phrase, “what have you done for me lately” plays a large role in determining the public perception of a company, most wounds can be fixed. After all, those same review sites that expose the company to those wounds, can also serve as a way of improving a company’s perception.

A CEO or at the very least, a PR representative who takes the time out of his busy days to read their reviews on Yelp and offer a simple apology or a coupon in hopes of getting that customer back goes a long way, especially when done in public.

When my parents were my age, a company could control the message being put out about the company because communication methods were so limited that it was much easier for a brand to position itself the way it wants to. Now, the customer plays a much larger role in determining the reputation of that brand, which forces the company to constantly change and reassess how it communicates with its audience.

The companies that best understand this are giving incentives out via Foursquare or ask for positive reviews on sites like Yelp. It’s because telling your friends that you are at a certain restaurant or hotel has a certain personal connection and is more believable than looking at a newspaper ad where the company says its the best.

That’s not to say powerful, multi-million dollar Superbowl advertisements such as the example below don’t make an impact.

It also doesn’t mean that companies shouldn’t strive to have recognizable symbols like this

or that.

What it does mean is that when your grandma tells you the service at the nearest auto shop is the best she’s ever had or your best friend is telling you that he just bought a pair of headphones that have amazing sound, you are much more likely to go with that brand because it was personally recommended.

In the next few years, the companies who end up thriving are going to be the ones who know how to utilize reviews, whether its from John who’s just down the block or from someone a thousand miles away, to market their brand towards your needs. Either way, a company that manages its reputation effectively is going to be just as successful as a well-paid PR specialist or a marketing slogan.

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