In business, reputation is everything.
Everyone from high-level business executives to low-level mobsters knows how important reputation is.
If you want to succeed in business, you need to be obsessed with maintaining a positive reputation. I’m about to show you how and why.
What is Reputation Management?
There’s a field of marketing called reputation management. The term “reputation management” is really just a euphemism for damage control.
Most reputation management activities involve cleaning up an already sullied reputation (vs. protecting a spotless reputation).
For example, a customer leaves a negative review on Google, and the reputation management team steps in to try to make that review less visible to people who search for the company.
Makes sense, right? You don’t want people who search for your company to find a bunch of dirt because they will be far less likely to become customers.
There are dozens of reactive strategies you can use to clean up a mess you’ve already made. Today, I want to discuss some proactive approaches to reputation management. “Proactive reputation management” is really just a form of good customer service, but it will protect you from having to deal with nasty cleanup strategies in the long run.
The Nature of Reputation
Before we dive in, let’s focus on one key property of your reputation:
It’s a lot easier to protect your reputation than it is to repair it.
Think about this concept at the human level. If someone cheats you once, it’s going to take a lot of work to get them to trust you again (if that’s even possible). It would have been much easier for the cheater to avoid cheating in the first place.
The same is true in business. It’s much easier to avoid activities that will damage your reputation than it is to clean it up.
The Value of Reputation
Your reputation can have exponential impacts on your business.
Think of every customer as a leg of a much larger network. That customer has friends, family, and acquaintances that they can reach through a variety of communication channels. They can post on social media, engage in in-person conversations, and post on review sites.
Take the following company review profile as an example – would you want to use this company’s services?
If your company has a positive reputation, your existing customers attract new customers. If your company has a negative reputation, your existing customers will deter new customers.
It should also be noted that negative messages are louder than positive messages. I’m sure you’ve experienced this firsthand if you’ve considered trying a product. You may read hundreds of positive reviews only to be deterred by a few negative reviews.
I’ve worked with companies who have spent tens of thousands of dollars trying to clean up negative reviews. It would have been much easier to try to avoid having an upset customer from the get-go. Of course, you can’t make everyone happy, but you can take a proactive approach to reputation management.
The Case for Proactive Reputation Management
Proactive reputation management is the process of deliberately managing your reputation before a problem arises.
Most of us already do this in our personal lives. We strive to be good human beings so we don’t make any messes that need cleaning up. We treat others with respect in order to avoid altercation (and to be a good person, of course). We nurture our relationships to build goodwill and avoid hurting the people who matter to us.
Business is no different.
In marketing, reputation management is often thought of as a clean-up process. I’m going to show you how it’s actually an operational process designed to avoid the dreaded “angry customer.”
Angry customers are major liabilities for businesses. They can harm your reputation by posting negative reviews online or by deterring other customers through word-of-mouth anti-marketing. They can drain your support resources and lower the morale of your support team. They can damage your financial reputation by processing chargebacks or opening payment disputes. The list goes on…
Let’s take a look at some best practices.
Congruent Marketing Messaging
I want you to put yourself in the shoes of a customer for a minute.
Imagine you are buying a digital marketing course. You are considering two products:
- Digital Marketing 101
- How to Launch Your Multi-Million Dollar Marketing Empire
Let’s assume both of the actual courses are identical (with different titles). What’s the biggest difference?
Course #1 implies that it will offer a digital marketing education. Course #2 implies that it will make you a millionaire.
While Course #2 may sell more copies, it is also more likely to leave a trail of disappointed customers. If a customer expects to become a millionaire, the course is unlikely to deliver. There is a disconnect.
Let’s look at a physical product through the same lens. You have two products:
- Apple Cider Vinegar Pills
- Miracle Weight Loss Pills
Same product – different implications. Product #1 tells you exactly what you get. Product #2 makes a bold claim.
This isn’t to say you need boring product names. The point is that your marketing messaging should provide customers with realistic expectations. As marketers, we often get carried away. Our job is to hype up a product, and we can certainly talk a big game, but can we follow through?
Pricing is another component of marketing messaging. If I charge you $10,000 for digital marketing services you’re going to have much higher expectations than if I charged you $1,000/month. While I’m sure most businesses would favor the higher revenues, they should also focus on maintaining realistic customer expectations.
If your marketing messaging triggers unrealistic expectations, you will run into issues in the long run.
Consumers evaluate a handful of criteria before making a buying decision, but pricing is always at the forefront of any decision making process.
Companies should strive for ethical pricing strategies. Remember, business is about facilitating mutually beneficial exchanges, not tricking customers into paying you.
Unethical pricing is glaringly obvious. I’ve discussed it multiple times on this blog. Here are some examples:
- UpWork removed critical features from their free service and moved them to a paid plan.
- Instapage forced a 400% price increase on existing customers.
These are both examples of companies trying to squeeze every dollar out of a customer instead of facilitating a mutually beneficial exchange.
I’m sure you’ve experienced this in your personal life as well.
I recently got off the phone with a company that wanted to charge a $199 cancellation fee for a subscription service. This fee was likely buried in the fine print of a contract that no one reads. Can they legally charge it? Yep. Should they? Probably not.
A cancellation fee is a made-up expense designed to squeeze a few extra bucks out of a departing customer. You end up with inflating your top-line revenue at the expense of your company’s social capital. You don’t need any fancy research to tell you that a customer who pays a $199 cancellation fee is unlikely to be an advocate of your company.
We’ll talk about this further in an upcoming section, but the point is simple. Business exchanges should be mutually beneficial. Customers willingly part with their hard-earned dollars every day. Focus on creating win-win exchanges instead of ripping dollars out of your customer’s pockets.
Why would anyone business want an angry customer?
This may sound like a rhetorical question, but I find myself asking it quite a bit.
I’ve run a handful of businesses and I’ve learned that an angry customer is never worth it. It doesn’t matter if the customer is right or not – an angry customer is a headache you don’t need.
When possible, do what you can to ensure satisfaction. This may come in the form of a formal satisfaction guarantee, a refund policy, or internal customer service policies. Do whatever it takes to avoid the dreaded angry customer.
Take a look at this satisfaction guarantee from OptinMonster that just makes sense:
This should really be a no-brainer, especially for lower-priced products. Your business reputation is worth more than any single sale. For example, let’s say you sell $30 t-shirts and a customer complains about the quality (despite your no-refund policy). You have a clear decision to make. Is it more valuable to have $30 in your bank account or a positive brand reputation? I would always choose the latter.
By no means am I saying that the customer is always right. There are customers who are irrational or who may abuse a satisfaction guarantee. You can decide what is best for your business.
The point I’m trying to make is that you should always weigh the value of a sale relative to the cost of an angry customer. Which one will have a bigger impact on your bottom line in the long run?
Proper Support Channels
Everyone wants to be heard.
Communication is crucial in business. Proper communication channels can save you tons of money in the long run.
Problems arise in business, and when they do, companies can either shine or make the situation worse.
I’ve worked with companies that I like even more after dealing with an issue because of how well they handled it. I’ve worked with others that exacerbated the issues with poor support. I talked about this concept in a post where I discussed the “customer service gap.”
I’ll offer a recent example. I don’t want to mention any names, but I had an issue with a domain provider that rhymes with “GoDaddy.” My account was hacked and close to a dozen of my websites went down.
I called support where I had to enter a bunch of information before being transferred to a real person. After entering all of my information, I entered the queue and was put on hold for 30 minutes. I then spoke to a representative who had to consult with his superiors multiple times over the span of another 30 minutes. An hour and a half later, I was told they would get back to me later in the day.
The day went by and I heard nothing. 48 hours later my sites were still down and I still couldn’t get in touch with anyone who could actually help.
Eventually, I was able to get the issue resolved, but the damage had already been done. I spend thousands of dollars on domains and hosting every year, and this company lost my business due to subpar communication channels. Which do you think would be more expensive: finding another client worth thousands of dollars or ramping up your support?
Support may seem like a frivolous expense until you start losing customers. Make sure your customers have easy access to quality support at all times. Your bottom-line will thank you.
Businesses often talk about the “lifetime value (LTV)” of a customer. The LTV is the value of a customer to a business over the extent of the relationship. For example, if the average customer spends $100/month and sticks around for eight months, he/she is worth $800.
What many companies forget is that ex-customers are not dead to the business. Like other ex-es, they may return at a later point. Make sure the breakup is cordial if you ever want to revive the relationship.
Earlier I mentioned a company that charged a $199 cancellation fee.This is common practice amongst gyms, cable/phone services, and other subscription services that rely on a long customer lifetime. These companies penalize customers who try to exit the agreements early. Is this fair game? Maybe, but it’s also a great way to ensure your ex-customers never come back.
Take a service like a gym as an example. People are known to stop and start gym memberships regularly. We make New Year’s resolutions in January and realize we prefer snacks and Netflix more by March. The gym knows this and they hit customers with that cancellation fee in March. But what happens next January when the customer is ready to repeat the process? If you broke-off the relationship with a steep cancellation fee, the customer is unlikely to return.
Take a look at Equinox Gym’s cancellation policy that only allows cancellations if you move 25 miles away from a gym or can’t work out for six months (both of which require hard proof).
It’s really no surprise that the company gets bad marks on Yelp:
As you’d probably guess, there are quite a few reviews that look something like this:
I’ve seen plenty of companies engaging in shady breakup practices, including:
- Steep cancellation fees
- Overly difficult (and confusing) cancellation processes
- Removal of previously purchased services
My advice – end the relationship on good terms. If the customer doesn’t want to be a customer, let them go. Don’t penalize them for it. If you keep your ex-customers happy, they may come back on the future. Upset them and they will become anti-customers.
Long-Term Vision (Value the Customer)
Let’s be honest. Most of us didn’t get into business to make $50, $100, or even $1000. We have much bigger aspirations.
Yet, many business owners forget this when they run their businesses. They trip over dollars to pick up pennies.
If you really want to run a sustainable business, you need to need to have a long-term vision. Your customers are a critical part of that vision. Without them, your business cannot thrive.
Start to focus on the value of a customer instead of just the value of a dollar.
A single unhappy customer can bring down an entire business. Do everything you can do avoid a situation like this. It’s not just the right thing to do; it will make you more money in the long-run