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Reputation at Risk

Updated: Oct 24, 2018

Can this little-known metric predict at brand disaster?


Almost every company takes customer issues and negative feedback very seriously, and many go to great lengths to address those issues and make things right for their customers.


However, there’s one type of feedback that companies rarely hear about, and it could be the most damaging of all. It’s called ‘reputation at risk,’ and left undetected and unchecked it can have an iceberg-sized impact on your brand.

To better understand reputation at risk, it’s helpful to step back and look at how most companies identify and handle customer issues.


Whack-a-Mole

By far the most common approach involves addressing the ‘loudest’ and most frequent customer complaints. Much of this feedback comes through inbound channels (sales teams, call centers, social media). Many companies collect and consolidate this feedback, then take steps to address the most commonly captured customer issues.


There are two problems with this approach. First, inbound feedback can identify a wide range of issues, and they can change frequently. That can lead to a ‘whack-a-mole’ approach to problem-solving — one that’s expensive and not particularly effective.


More important, our WisePlum research shows that problem frequency is not an accurate indicator of a negative impact on customer spend. Just because customers report a problem a lot doesn’t mean it will keep those customers from buying your products and services. As a result, companies may be using resources to fix customer issues that aren’t really hurting them financially.


The Calculated Approach

Some companies are taking a more analytical approach to determine precisely which customer issues are negatively impacting sales and their bottom lines.

To do that, they’re supplementing inbound feedback with proactive customer engagement — through email surveys, post-sales callbacks, and detailed customer interviews.


The resulting feedback, often more candid and complete, helps companies calculate the financial impact of specific issues that are driving customers away or suppressing sales. Armed with this information, these businesses can focus their resources on fixing only those customer issues that are actually hurting their bottom line.


Reputation At Risk — A Slow Moving Train That Could Derail

Reputation at risk represents a third view of customer issues that companies intent on protecting their brand need to cultivate. It measures how many people (outside of your company) with which your customers will share their negative experiences.


Our research shows that problems that generate this ‘negative word of mouth’ are different from those that suppress customer spend and share. To put it bluntly, these customers may still be buying from you, but could be badmouthing you all over town.


These negative word of mouth issues can be insidious — operating quietly beneath the surface, and nearly undetectable as they slowly erode your brand. And in today’s business environment, many companies are more serious about their brand than ever, even if preserving and enhancing that brand costs them money.


Take Starbucks, for example, who says, “every day, we go to work hoping to do two things: share great coffee with our friends and help make the world a little better.” Imagine, then, if customers weren’t happy with the cleanliness of their stores, or the quality of their coffee — and shared those stories with each other. That doesn’t happen, of course. Starbucks is very sensitive and responsive to any feedback that could impact their brand, as their recent announcement to eliminate plastic straws from their locations demonstrates.


Or take Apple, with their well-known commitment to innovative products. In an interview earlier this year, CEO Tim Cook appears to put the brand at least on par with financial results: “Stock price is a result, not an achievement by itself. For me, it’s about products and people. Did we make the best product, and did we enrich people’s lives? If you’re doing both of those things–and obviously those things are incredibly connected because one leads to the other—then you have a good year.”


What if the word among Apple customers was that a new Apple product was behind the curve of its Android counterpart? What actions would Apple be prepared to take?


Measuring Negative Word of Mouth

More often than not, of course, customers don’t physically talk to each other. Instead, they exchange their views on social media and electronic forums. That gives companies the opportunity to tap into those virtual conversations to better understand those negative customer views.


When working to measure negative word of mouth, companies can’t lose sight of the bottom line. They’ll also need to keep identifying and fixing those issues that are impacting revenue in the short term. Ultimately, though, they’ll need to go further and dig deeper to address the negative word of mouth challenge — isolating and addressing those customer issues that may quietly be doing irreparable damage to their brand.


Kate McLauchlin is a WisePlum contributor.

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