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Company reputation is composed of many elements, and channelled through the whole spectrum of media outlets, but in the digital world, online image is king
We’ve outlined previously how corporate reputation is formed from the multiple perceptions of a company’s many stakeholders, which are in turn influenced by the numerous channels through which they view that organisation. But in an increasingly digital world, there’s no denying that online reputation now plays a central role in shaping these perceptions.
Digital news media with its 24/7 reporting cycle ensures real-time reporting of a company’s highs and lows; while social media empowers consumers, employees, and campaigners to instantly share their opinion of, and magnify its triumphs and failures. For those skimming the surface rather than undertaking in-depth research (the majority of interested parties in today’s time poor, attention deficient society), the first page of Google search results will tell them all they think they need to know about a company. This makes it a key reputational shaper.
What’s being said about a company across the internet creates a virtual image among everyone who engages with it in this medium. While those perceptions may bear little resemblance to the business’ own ‘reality’, they can have a very real impact on its revenue, ability to attract talent, and investor appeal.
When combined, all of these different stakeholder viewpoints aggregate to build an online reputation. Unlike reporting in mainstream media, its makeup includes a high proportion of personal opinions and off the cuff statements, and those expressing their views need be less concerned with maintaining an independent or impartial position.
In the digital world, citizen journalists abound, and media anarchy reigns. Reporting is instant, the reach is global, and negative reviews can leech the strength out of a positive reputation. Online reputation is important because it is impossible to control, difficult to track, and challenging to influence without a sophisticated reputation intelligence solution. And online reputation is powerful because of the influence it has over the people who matter.
But don’t take our word for it: the statistics speak for themselves on how online reputation influences, and is influenced by, stakeholder groups.
The provision of quality products and services was once enough to win customers, but now companies must also offer the perception of the provision of good products and services. Word of mouth is one of the most powerful triggers in consumer choice, and these days it takes the form of online customer feedback more frequently than recommendations from someone individuals know and trust. The anonymous reviewer holds just as much sway.
It’s been widely reported that on average, a one-star increase in Yelp ratings leads to a 5-9% increase in revenue. And here’s why: according to the 2019 BrightLocal Local Consumer Survey, 82% of consumers look at online reviews, with the average customer reading 10 before putting their trust in a business. Almost half (47%) would instantly discount businesses ranked fewer than four stars.
Perception doesn’t necessarily reflect reality, and in online reputation, the negative can often outweigh the positive, with dissatisfied customers more likely to post about their feelings. The Sprout Social Index found that 46% of consumers have used social media to ‘call out’ brands with poor customer service or products. On the upside, BrightLocal found that 97% of those reading reviews also read the businesses’ responses, which opens the door for improving reputation through careful communications.
The online revolution has also given power to the workers, who are in a stronger position to decide whether a potential employer is a good fit for them. Online reputation is therefore key in attracting and retaining talent.
A survey by entry-level recruitment specialists Avenica found that for 33% of candidates, the company’s online reputation was in the top three most important factors in evaluating a job offer. Ranking behind advancement opportunities (65%), base salary (52%), and office environment (42%), it still rated higher than company mission, insurance benefits, vacation time, and pension.
As well as being swayed by it, staff have the ability to directly influence online reputation through employee review sites such as Glassdoor. The site’s own research showed that candidates form opinions and intentions to apply for jobs based on employee reviews, or “worker electronic word of mouth”, and that these carry greater weight than HR awards. Positive and negative reviews directly affected respondents’ views of the companies in question, with those who were shown positive reviews expressing more interest in applying for a job there and, crucially, willingness to recommend it to others as a good place to work.
Never has the cult of personality among corporate leaders been stronger. Businesses have become directly associated with the actions and opinions of their CEOs, and those CEOs have a direct line to customers, investors and employees. Thanks to social media, executives can drop quotable material without having it vetted by their corporate communications teams. Stepping out of the boardroom and into the limelight can have a positive effect if a CEO is admired for their personal position on corporate social responsibility or employee benefits, for example. But it only takes one ill thought out Tweet to shatter that image.
In a global survey by Weber Shandwick, the executives surveyed attributed 45% of their company’s reputation to that of their CEO. Half of those executives expected CEO reputation to increase in importance in the future. And this belief is borne out by research published in the Academy of Management Journal looking at the degree to which leaders affect corporate reputation. It found that highly-regarded CEOs enhance their firm’s reputations, sometimes substantially, and CEOs who receive negative press coverage damage their firms’ reputations.
And it’s not just about image. The Weber Shandwick research found that 44% of market value was attributed to CEO reputation by executives, while the positive benefits of a good CEO reputation included attracting investors (87% of those surveyed), retaining employees (70%) and garnering positive media attention (83%).
These examples reflect just some of the elements that comprise online reputation as built on stakeholder perception. And its importance is only going to grow in an increasingly connected world, where a company’s virtual footprint is just as concrete as its real-world presence.