How to Avoid Bad Reputation Problems?

By Pierre Zarokian

Some companies have never been attacked by negative ad campaigns and they have never had their reputation smeared online. They might have never had an immediate disaster related to poor reputation management, or had a sudden catastrophe like British Petroleum; however, people may still think that their company is not very good—that it has rude customer support personnel, or that it makes shoddy products. How did these companies get there?

Companies with Bad Reputations Earn Them

In the 1990’s and 2000’s Dell Computer decided that they could save money by making power supplies that met the absolute minimum specs. It cost them only a few more dollars per thousand-dollar computer to use better ones, but since they were selling millions of computers, they could save a whole lot of money by using cheaper components, and they assumed nobody would notice since nobody usually cares about the power supply.

The problem was that some of the people who bought those Dells were geeky people who liked to add things to their computers like extra hard drives and DVD players, and some of those geeky people were tech writers. If the power supply cannot handle all the things plugged in, it can break and potentially damage the entire system.

That is exactly what happened to many people’s computers, and the tech writers wrote about it—they wrote and wrote and wrote. Forums became amuck with similar horror stories. Now Dell’s brand was not ruined just among the influencers themselves, but also among their readers. Their readers are people who are trust agents when it comes to computers for their family and friends. These readers, through word of mouth, tell people they know who are looking to buy a computer to not buy a Dell. “Yes, it’s $100 cheaper than a slightly slower IBM, but it’s going to break in a year” they would say. “The cases are vinyl for Christ’s sake. Do you have any idea how hard they are to keep cool?”  “The insides use proprietary connections so you have to go to Dell if one piece breaks, and it probably will, since Dell is cheap.”

People realized that they get what they pay for when it comes to computers. Dell did so much damage to their brand by cutting too many corners that their profits plummeted, and they are now struggling as desktop sales drop and they cannot make a competitive tablet. If they had done a proper cost-benefit analysis, the numbers should have shown them that although cutting corners might raise stock prices for a few years, it would ultimately reduce their revenue because they would not have as many returning customers. These analyses are difficult to do and not all of the data is obtainable, so they went on data they had and clearly underestimated the correlation between making a shoddy product and losing both returning and new customers due to reputation damage. You need to have a good product and good service to have a good reputation.