Why You Should Give a Damn About Your Bad Reputation

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By: Kimberly Shrack

No matter how boss the song, companies should not take advice about their reputations from Joan Jett. As it turns out, there are implications to having a bad reputation other than a little gossip and attracting the wrong kind of guy. No, in the corporate world, the implications are a bit more direct — i.e. a big hit to the bottom line.

A study out of Weber Shandwick shows that consumers make purchase decisions based not only on the goods and services they will be buying, but also based on company reputation. Here’s what they found:

70% of consumers avoid buying a product if they don’t like the company behind the product.
45% of consumers discuss how companies treat their employees; 43% discuss news about a scandal or wrongdoing at a company.
What people say (88%) and online reviews (83%) and search results (81%) are very influential on consumer opinion about a company.
60% of market value is attributable to reputation.

These findings have several implications. First, they demonstrate that companies can no longer get away with treating their employees poorly because they have rollback prices. Consumers care about their fellow man, and even the deepest discounts won’t bring in the customers if you don’t offer your employees health insurance. Second, these results remind us of something we already know: people talk. A lot. Especially consumers. And guess what? They are talking about you, good or bad. And that talk can have a real impact your bottom line.

This brings us to the “no way” stat of this study: executives estimate that 60% of market value is attributed to reputation. That means no matter how good your reputation is among investors and analysts, if the consumers think you’re crap, then the bottom line will show it.

This study demonstrates yet again the necessity of PR having a strong role in the C-suite. If reputation has such a strong effect on the bottom line, and this reputation is primarily based on discussions among consumers, then logic says that the company needs to find a way to ethically and effectively communicate their positive, reputation-building actions to the consumers they are targeting — and who better to do that than us? PR has always deserved a place at the head table, and this study shows us quantitatively why.

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About the Author

Kimberly Shrack is a PR pro based in Philadelphia, specializing in writing and content development. She has worked in communication for a variety of industries including technology, travel, art, and healthcare. Follow her on Twitter at @kjshrack.

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