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“The reputation of a thousand years may be undermined by the conduct of one hour” – Japanese Proverb

Every company would have customers, and would be selling those customers goods or services. The customers expect that companies deal with them efficiently, remain courteous, treat them as important, and offer speedy recovery when things go wrong. Not serving customers with the highest standards would lead to dissatisfaction, and disgruntled customers are sure to cause losses to a company. Among the reasons that customers may damage company reputation, poor customer service and experience top the list. It would be prudent and essential for a company to fix shoddy service with courtesy before customers vent their anger in ways that could permanently harm the company. Surveys reveal that in the retail environment for example – for every 100 customers who would have had a poor experience, the company would be most likely to lose at least another 35 prospective and existing customers! This ‘multiplier effect’ can cause some serious damage to company reputation, which could be almost impossible for a company to recover.

Further statistics show that company reputation is the first thing under attack. Only about 6% of customers who experienced problems with a company actually go back to complain. However, at least 31% shared their poor experiences with their friends, family, business associates, and others. Of these 31%, about 8% shared their experience with one person, another 8% told two, and about 6% told more than six people – it is evident therefore, that even if customers do not complain to the company, they surely share their poor experiences with many others. This spreading of negativity is enough to damage company reputation – irreparably so, since complaints snowball and become a tidal wave of negativity even among those people who may not have experienced the company. The surveys further reveals that at least 48% of prospective customers would

Complaints snowball among shoppers who are not directly involved. Almost half (48%) of those surveyed reported avoiding a store in the past because of someone else’s negative experiences, and at least 33% were certain that they would not return to do business with the company. Bad news spreads fast. The power of word of mouth has the ability to damage company reputation, as well as raise a company on a pedestal for a long time. This form of customer communication is a lot like narrating a story – the negativity becomes glorified and more potent as it spreads. The worst part and main reason of the damage to company reputation is that people tend to believe negative information more than positive. The shock value makes the experience worth noting and paying attention to.

The reason why people do not complain to companies is usually a result of the incompetence, arrogance, and unwillingness displayed by companies to listen. Customers believe that the company may not do anything about the complaint, and the problem will persist, so why complain. Leaving the company seems like a better option, but venting anger by spreading the poor experiences is also something customers want to do. This is a double whammy – losing customers and the spread of poor experiences about the company causes serious and irreparable damage to the company reputation. The fact is that those who experience a problem with a company are almost certain that they would have the same problem in the future too and hence rather than going through all the trouble again, they bail.

The mistake that companies seem to have made and continue to make is paying attention only at satisfying customers, without making the effort to understand the reasons for customer dissatisfaction. Companies seem to fear customer views, and are hesitant to seek feedback lest they hear things they do not want to, and maybe even draw attention to the negative thoughts and feelings that customers maybe harbouring.

The fact is that there are several reasons due to which customers may damage company reputation, and if companies remain unaware, they could be in serious trouble. One of the top reasons for why customers may damage company reputation is when they perceive limited and unsound practices around ethics. Such practices become apparent when employees behave in unethical ways, making serious judgement errors, which in turn lead to theft, fraud in accounting, illegal behaviour. Even if a single employee were guilty of such behaviour, it is bound to have a significant and profound impact on the business as a whole. Customers are unlikely to see it as a lapse on the part of an individual, but rather as a ‘culture’ associated with the entire company.  These unethical practices can instantly spiral out of control – getting on to social media platforms and causing serious harm to the company reputation in a matter of a few hours. Existing and prospective customers are unlikely to want to remain associated with a company ‘known for fraud’ – this in turn would cause a drastic crash of profits, as even long-standing customers seek new companies.

Today’s customers prefer companies with stringent CSR policies. People are becoming more aware and concerned about environmental issues and giving back to society, and consciously avoid companies that do not actively support corporate social responsibility. Company reputation is sure to take a beating if a company would have failed to implement CSR policies as expected by their customers and investors. With social media and online information so visible and easily accessible, potential customers can easily ‘check on’ the activities of their favoured companies, which should include those that would be helpful to the planet and to society. When customers discover the brands they prefer have no CSR initiatives, contrary to what the company may claim, negativity would spread fast and furiously. This perceived irresponsible behaviour on the part of a company could damage its reputation swiftly and possibly, permanently.

Treating customers poorly is another paramount reason for why customers may damage the reputation of a company. Companies need to work hard consistently to improve the customer experience and ensure that every customer receives the same service and attention. If the employees of a company act rude and misbehave with customers, refuse to provide solutions for the needs of customers, or behave in other uncomplimentary ways, are sure to invite customer ire. Those customers who feel poorly treated, would surely share their experiences with others, and even ‘post’ their issues on social media. These comments and posts would tell readers and prospective customers that the company does not care about customers, and hence would stay away from the company. Not only does this bring down the sales and profits, it also damages company reputation, sometimes beyond repair.

The reputation of a company is possibly one of the biggest and most important assets. When existing customers say complimentary things about a company, and these comments become public, prospective customers would surely want to connect. This increases sales, profits, and company reputation. It is however, essential for a company to remember that the reputation it painstakingly built, can be easily destroyed by even a single bad experience, and could be impossible to rebuild. As a company, remember to assess consistently the risks to reputation and take special care to avoid service blunders and errors in judgement.

 

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