In the last few months at least two high profile, large companies have been having a torrid time thanks to issues that have made the headlines.
Uber, the app-based taxi hailing company first of all was refused its operating licence renewal by Transport for London (TfL) over passenger safety concerns. It then lost an appeal against an employment tribunal ruling that it must treat its drivers as employees and give them basic worker rights such as holiday pay and the minimum wage.
Uber’s chosen path in both cases was to lodge immediate appeals against the original rulings.
At around the same time, the budget airline Ryanair announced a huge reduction of flights, not once, but twice, due to its “messed up” planning of pilots’ holidays. Initially Ryanair compounded the problem by a lack of clarity about what it would do to compensate affected an estimated 400,000 customers.
The CE of the Civil Aviation Authority expressed fury at this lack of clarity and argued that the airline would be breaking the law if passengers were not re-routed via another airline or otherwise compensated, something Ryanair’s chief executive had initially refused to do.
Time will tell what effect the fall-out from these incidents will have on their respective businesses’ profits, although neither is likely to be wiped out completely, but they should remember what happened to Ratners the high street jewellery chain. It went bust after Gerald Ratner’s reference to his earnings being cheaper than a prawn sandwich. His customers didn’t like being treated with contempt and voted with their feet.
Another example of mismanaging reputation was Bell Pottinger, a PR firm that thought it specialised in reputation management. It caused its own destruction through an ill-advised PR campaign on behalf of clients that stoked racial division in South Africa such that once its activities became known, no one would do business with them and they went bust within a couple of weeks of the story hitting the press.
While one might question the original crisis, more pertinent is the reaction and handling of the situation and its effect on their reputations. Reacting swiftly to a crisis in the digital age is imperative especially as consumers are prone to expressing their displeasure on social media by which messages can spread like wild fire.
SMEs need to pay more attention to reputation management
A survey two years ago by Zurich found that only a small proportion of SMEs monitored their customer reviews and social media sites closely.
How many of us check online reviews of a restaurant or hotel before booking or of a product such as a television before buying one. Checking reviews, and not just those for service or product quality is now becoming more common as we can check up on people as well as businesses before even meeting them
Notwithstanding what happened to Ratners, larger companies can deploy resources to deal with a problem but for smaller, local businesses, favourable customer reviews are vital for survival.
It may be difficult for a SME to monitor its facebook, twitter and other pages and posts as often as advisable and it would be easy for a bad review to be missed.
However, there is plenty of evidence that prompt action and positive responses by a company can make a significant difference in avoiding longer-term damage.
This is one area where it is worth paying to outsource such monitoring to an outside expert, but at the same time the SME should give them very clear and detailed guidelines on what is and is not acceptable in handling complaints and negative reviews.
It is unrealistic for any business to expect to satisfy all its customers all of the time and to never make a mistake, but it should at least have robust reputation management systems in place to handle things promptly if something does go wrong.