We can now communicate far faster, with far more people, than has ever been possible before. With bad news spreading fast, reputations can be lost in just a few hours. The effect of this is not restricted to personal relationships and reputations, but has also spread to the corporate world. How, then, is social media reshaping corporate reputation?

A strong corporate reputation has long been recognised as essential

Academics and companies alike agree that a good reputation is vital for businesses. It has been directly linked to increased profits over time and ability to attract better staff. It is also associated with better press coverage—which of course further enhances the company’s reputation, creating a ‘virtuous circle’. Bad reputations, by contrast, or reputational damage, have been known to bring down companies.

Reputation is formed by communication—and social media is all about communicating. Reputation depends on what you say and what you do—and also what other people say about you. Social media, as we have said, has fundamentally changed how we communicate. We used to be largely passive recipients of information from companies. Social media has now made broadcasters of all of us.  It has made it much easier for criticism of an organisation to spread rapidly, and therefore for reputations to be damaged. It has also, however, made it much easier for businesses to communicate directly with customers.

Social media has enabled conversations

One of the great things about social media is that it allows two-way communication, or conversation. Customers can engage directly with businesses, and vice versa. This allows issues and opinions to be discussed, and countered with facts where necessary. Customers have also been quick to realise that companies may respond faster to a question on social media, because of the potential reputational damage of not doing so. Social media use also, however, allows relationships to be built with customers over time. It facilitates an ongoing exchange of information on a much more personal level, but publicly. The sheer openness of the dialogue helps to build trust. 

Social media has also allowed companies to listen to customers and manage their reputation proactively. People tend to communicate on social media as if they were simply talking to friends. In many cases, of course, they are. However, unless their privacy settings are very tightly controlled, these communications are also often public. This means that organisations can listen to what people are saying about them, their competitors and their business—and then respond. One of the key aspects to reputation is listening and responding to customer views, so this facet of social media has been a major enabler of proactive reputation management. 

Bad news spreads fast when we are morally outraged

There is something interesting about the way that we share bad news on social media. A recent study found that we are more likely to spread and share information on social media about a problem with a company if we feel some kind of moral outrage about it. The researchers suggested that this might be seen as a way to try to control the behaviour or problem. 

We are also more likely to spread bad news if it does not fit with the company’s reputation. In practice, this means that we are more likely to share if the company had a good reputation, and a particular event or action is inconsistent. Paradoxically, where a company already had a bad reputation, we don’t both to share anything about a problem. A retailer that holds up its customer service or business model, for example, is more likely to be discussed on social media if it does not meet its own high standards. 

Social media is a way to assess opinion

Critics of social media often point out that it tends to show us only views that fit with our own. It therefore tends to magnify our views, such as moral outrage with the company concerned. However, there is another possibility. People may be using social media to assess whether they are right to be outraged. They can measure the level of controversy by whether people they respect weigh in on both sides of the argument. If the controversy level if high, the news is less likely to spread so fast. Social media can therefore both magnify and dampen down criticism.

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