The importance of reputation management: 5 Mistakes to avoid

By some estimates, bad reputations cost US businesses over $500 billion a year (Commpro). With that figure in mind, the importance of reputation management should be clear. It’s not all about estimated losses, though. The importance of online reputation management goes far beyond that. A brand’s reputation influences everything from market share and sales to company value.

Learn the importance of reputation management for your agency by downloading “Why reputation management matters: A churn study.”

Your reputation is how other people perceive you, even if they’ve never met you or interacted with you. For brands, reputation is more important than ever in the consumer-driven digital marketplace. When anyone can make their opinion heard, you need to pay more attention to what they’re saying about your clients’ brands online.

Why does reputation matter in 2023?

Brand reputation has both tangible and intangible impacts. For businesses, these range from customer trust to sales, consumer loyalty, and market share. Online spaces have created more “touch points” than ever before: blogs, social media sites, review sites, and so on.

This environment is one where consumers can easily discover and discuss brands. This drives brand recognition—but beware! Recognition can have a dark side. People might be talking about your client’s brand, but they could be talking for all the wrong reasons.

Reputation by the numbers

It’s easy to say “reputation management is important.” Concrete statistics paint a clearer picture of how important it is. Let’s take a look at some online reputation management statistics:

• Reputation drives up to 47 percent of a company’s valuation (PRWeek)
• Brands with good ratings on Google see more traffic and more phone calls (Search Engine Watch)
• 91 percent of customers say they read reviews (Qualtrics)
• 93 percent say reviews influence their buying behavior (Qualtrics)
• 88 percent of customers say they will buy again from a high-trust brand, even through a mistake (HBR)
• 88 percent of customers say they trust recommendations from reviewers as much as personal contacts (Business2Community)

In sum, a good reputation can convince people to buy. That good reputation can also impact loyalty. In short, it convinces people to keep buying. Social media conversations can influence sales. If an influencer says good things about a brand, it can translate into more brand trust.

Trust is the reason customers are more likely to buy from brands with good ratings and good reviews. Reviews increase the customer’s faith in a product or service. Most customers say it takes 100 reviews to convince them that a brand is trustworthy (Sitejabber).

On the other hand, people are less likely to buy from a brand with bad reviews. One survey showed 40 percent of customers wouldn’t buy from a business with a 1- or 2-star rating (Finances Online). Hearing about other people’s poor experiences decreased their confidence in the brand.

You might think the answer is to discourage reviews altogether, but customers value transparency. Customers see brands that manage their reputations as more engaged and more transparent. This, in turn, leads customers to feel these brands are more trustworthy—they don’t have anything to hide.

Reputation by other measures

The importance of reputation doesn’t end with higher sales or company valuations. There are other, less quantifiable impacts for a business.

Brand recognition is less tangible than sales numbers, but it matters a lot. People can’t buy from a brand they don’t know about. If they can never remember a brand name, customers will likely end up buying from someone else. Reputation can help put a brand on people’s radar.

More importantly, reputation influences how people feel about a brand. Is it trustworthy? Is it high quality? Those feelings then influence their buying behavior. A poor reputation makes people want to steer clear. By contrast, a good reputation makes people feel good about interacting with a brand.

A company’s reputation even influences its workforce. A good reputation can entice people to apply for positions in the company. Sometimes, employees are the biggest brand advocates and vice versa! On the flip side, almost 70 percent of people won't work for a company with a poor reputation (Glassdoor).

The importance of reputation management

Reputation influences how a brand performs, since it affects how people think about the brand. Everything from how much your company is worth to how much you sell, to who you hire hinges on reputation.

Managing clients’ reputations puts you in control of the brand narrative.

Let’s look at an example. It’s easy to think that you shouldn’t encourage reviews, because people might leave bad ones. It's harder to get satisfied customers to leave reviews, but that’s where local online reputation management (ORM) services can help. ORM helps you find the customers who are happy and convinces them to leave that 5-star review.

The number of happy customers (and good reviews) should outweigh the bad ones. Even with negative reviews, the importance of online reputation management is clear. Good reputation management lets you turn negative reviews into opportunities. There’s no need to be afraid of them, because they present a chance for your team to deliver on brand promises. There may not be such a thing as “bad” publicity—provided you manage it the right way.

The importance of reputation management is also clear in the social media arena. Tools that track mentions let you keep your finger on the pulse of consumer sentiment. A reputation builder can let you gather feedback from customers directly.

With all this data, you can go beyond discovering how customers feel about a brand. You can see what’s working and where you have work to do. In short, tools and policies come together to influence how people see the brand.

Why does ORM matter?

Online conversations can influence how people see a brand offline.

Imagine someone hears a radio ad for a brand on their drive to the office. When they arrive, they decide to Google the company. They discover negative reviews and a poor rating on Google.

Chances are this hypothetical person isn’t going to buy from or work with this brand. They might even tell their colleagues or friends about the poor rating.

If you’re not engaged in ORM, it will be easier for people to form poor opinions about your client’s brand. Your brand might appear alongside irrelevant content, spam links, or even inaccurate information. Something as simple as a fake review can impact both a client’s bottom line and its brand reputation.

Since Google contains a wealth of information, almost anyone can stumble across competing or misleading information about a brand. The importance of online reputation management, then, lies in helping future customers find accurate information about the brand. This influences what they think about the company.

The impact of poor information on Google isn’t just conjecture either. In one study, 80 percent of companies increased company value by improving their reputation (PRWeek).

Online reputation management pitfalls and how to avoid them

The importance of reputation management is hard to overstate. That makes it all the more important to get online reputation management right.

There are many pitfalls that even well-intentioned marketers fall into. Let’s look at some of the most common ones—and how you can remedy them.

1. Underestimating the importance of online reputation management

As we’ve seen, there is a wealth of evidence pointing to how important reputation management is. Yet many people still don’t believe it affects their business.

In fact, many people feel their brand reputation will take care of itself. Although your team won’t have to spend time on managing a client’s reputation in this case, this cavalier attitude hurts more than it helps. Branded search results might end up full of spam links and misleading information. Fake reviewers or even competitors could spam the client’s reviews and ratings.

At best, letting reputation “manage itself” can create confusion for customers. Something as simple as outdated business information on directories can impact an online reputation. If customers aren’t sure which phone number is accurate, they may decide they’ll call someone else.

Business leaders sometimes forgo ORM because they feel their brand is “too small." They might believe ORM is only for the big fish. Yet even small businesses need reputation management. A poor reputation could be preventing them from tapping into growth that could let them go up market.

Finally, some business owners think not being present at all is the best way to manage an online reputation. If they’re  not on social media, why would anyone be talking about their brand anyway?

Conversations can and do still happen, even if business owners don’t see them. The only difference is whether business owners are there to take part in the discussion. Not being on social media can also decrease customer trust in a brand. What happens if they have a hard time finding the brand online? They might give up and go with a competitor who is available on social media.

Agencies need to make the case for the importance of reputation management and offer services that will help maintain and improve clients’ reputations.

2. Taking the DIY approach to reputation management

This next approach is a half-step better than doing nothing at all, but it can still cause problems. Business owners who DIY ORM often haven’t realized the importance of reputation management.

The DIY approach only works if a business owner can meet the following conditions:

• Their team has the expert skills to deal with SEO, social media, reviews, and managing listing sites
• They have the time to do this on a consistent basis
• They have the technology to do so at scale

Unfortunately, most teams rarely have both skills and time. Teams may have the skills but not enough time. In a lot of cases, a team has neither the time nor the skills.

That leads to a haphazard approach to reputation management. A team might reply to reviews sometimes, but they also might ignore reviews for weeks on end if they’re busy. If they don’t have the skills, then they might use “quick fix” techniques to improve SEO efforts or bump up reviews. These techniques are often damaging to a reputation over the long term.

If your team has the expertise and the time to manage their reputation, then the DIY approach might work, but reputation management software is still valuable, almost necessary. For most small businesses, teaming up with an expert reputation management firm like yours is a better plan. They get consistent reputation management and monitoring from the experts.

3. Ignoring reviews (both positive and negative)

It can be tempting to simply ignore reviews, especially if the company is getting a lot of them (and, if ORM is working, that should be the case!). As any reputation management pro knows, you ignore reviews at your own risk. That goes for both the negative and the positive ones.

It can be tempting not to engage with bad reviews. After all, this was someone’s opinion, and they had a bad experience. They’re allowed to express frustration, right? You might worry about making the situation worse by responding in an inappropriate way.

Ignoring an upset or frustrated customer is poor practice, just like it would be in a physical store. Instead of ignoring a negative review, your team needs to engage with it. A negative review is a golden chance to make things right for the customer. It's also a chance to restore their trust in the brand.

It doesn’t hurt that almost half of customers say they’re inclined to buy from a brand that engages with bad reviews (PR Newswire). These people see the team out there addressing the reviewers’ concerns. That can often convince them that the brand delivers great customer service.

Minding your Ps and Qs

What about positive reviews? Do you really need to write a response every time someone says something nice about their experience with a brand?

Yes! Remember that it can be difficult to motivate happy customers to leave reviews. If they get nothing out of it—not even a quick “thank you”—they’ll be even harder to motivate next time. You can think of it this way: by leaving the company a review, that customer did something nice for the brand. The least you can do is send them a nice “thank you” note to show appreciation.

Most of the time, it’s tempting to skip responses because there are so many of them. Writing unique responses can take up a lot of your team’s time. Price your reputation management services correctly to ensure you have the bandwidth and budget to respond to all reviews, which can vary based on the size and popularity of the client’s brand. This can ensure that you respond to reviews in a timely manner—without relying on canned responses.

4. Not requesting feedback

Some brands are content to ignore customer reviews. Others tend to ignore customer feedback. Some go a step further and even discourage feedback.

This harms a company’s brand. Without customer feedback, after all, you can’t hear what people are saying about the brand. In many cases, customers will offer plenty of insight into what they love about the brand. They’ll also share what they wish would change.

Listening to that kind of feedback can help brands improve their products and business practices. It’s another reason you should make sure you engage with all negative reviews. A reviewer could offer some great ideas for what a client could do better. You should encourage reviews as a result.

Using the right tools, like reputation management software, is key to managing feedback effectively. A tool like Customer Voice can help you gather customers’ insights, so your clients can serve them better and keep their trust. A review management service can further help you track and respond to reviews.

5. Forgetting to set goals for reputation management

Finally, think about what your client wants to achieve with reputation management services. Do they want to increase market share or boost the company’s valuation? Maybe they want to increase conversions and sales.

Any of these goals is possible with a better online reputation. Setting a goal, though, helps steer your reputation management team’s activities. In short, having a goal helps them devise a better strategy.

With a goal in mind, it’s also easier to see if your reputation management activities are working the way you expect them to.

Frequently asked questions

Reputation management is a critical task in the digital age. It's also one that’s more demanding than ever. We looked at why brand reputation matters today, as well as the benefits of a good reputation (and the cons of a bad one). Then we looked at some of the common pitfalls business leaders and agencies are up against.

Why is a good reputation important?

A good reputation has a positive impact on everything from market share to company value. A good reputation makes people more inclined to work with or buy from a brand.

What are the benefits of a good reputation?

A good reputation translates to many benefits, including higher sales, better customer loyalty, and higher company valuations. It can also improve the customer pipeline. A good reputation even influences who applies to work for a business.