Losing money and taking a reputation hit is the last thing you want to happen, but it’s how you learn from business reputation setbacks that helps set you up for future success.
For entrepreneurs and business owners, failure is part of the process. While it may appear that hugely successful leaders such as Jeff Bezos and Sir James Dyson have been at the top of their game forever, even they’ve had to overcome their fair share of failures and reputation setbacks in their journeys.
Bezos is now worth an estimated $139.5 billion and is synonymous with the global phenomenon that is Amazon. But, while the Amazon we all know today seems like an unstoppable force, Bezos failed over and over with previous ventures before this success and the brand has weathered its fair share of challenges. Similarly, Dyson went through 5,126 prototypes before launching one of the most successful vacuum cleaners on the market.
The success of people like Dyson and Bezos lies in how they not only handle setbacks and failures that inevitably accompany entrepreneurial business development. But crucially, in how they bounce back and learn from them.
Building and protecting your company – and professional reputation is key
Business failures can range from data breaches leading to share prices plummeting, fines, damaged trust and a decimated online reputation, to launching a misjudged product and seeing it tank with the press and consumers.
Losing money and taking a reputation hit is the last thing you want to happen, but it’s how you learn from setbacks that helps set you up for future success. It’s always true that protecting your reputation is priceless. Money can be made again, but a lost reputation can haunt your name for years to come. Here’s how to avoid making the mistakes that will hold you back from turning failures into success.
Don’t overpromise, or lie
It’s easy to get carried away in a pitch situation. It could involve overpromising the functionality of your product, exaggerating the technology you have access to, or any number of claims that you can’t fulfil. Although this could win you the contract or client, it risks devastating effects when you can’t fulfil it.
Too many years overpromising and underdelivering will lead to a poor reputation and cost you more than the money made in the short-term. Building a stellar reputation takes time, patience and careful growth. Money doesn’t always last, but your reputation does. If you do it correctly, it’s the best investment you can make for your business.
Even when fully established, an error of judgement can still alter people’s perception of your brand. Take Volkswagen, for example. The long-established, successful company ran adverts about clean diesel. Off the back of these the car giant sold more than half a million cars between 2008 and 2015. Behind the scenes, Volkswagen used illegal devices to fool the tester, meaning none of the cars sold fulfilled their promises. Buyers thought they were doing the environment a favour, while their new cars were emitting 40 times more nitrogen oxide than legal levels allow. The fallout is still ongoing, and VW has set aside $18 billion to cover legal fees. Worse than this, their name will always be associated with fraud and lying to customers.
Learn from these mistakes and take time to build confidence and trust in your products, services and people. If you suffer a setback or failure, be accountable and be open about how you plan to make things right. If you’re just starting out, don’t over promise, but do over deliver. Be realistic, but be ambitious too and always listen to feedback.
Prioritise customer perception
In today’s online world, word-of-mouth and reviews can make or break a business, and even bring down an established one. Maintaining a positive online reputation is crucial to your success.
Perception is everything. What people say about you online in reviews and on social media and forums is often an honest reflection of their experience – and if that is negative – it puts others off. Make sure that you have a solid customer service protocol in place. Let people know how they can contact you quickest, whether that’s through social media, email or phone. Be clear about how they can resolve issues with your company, so they get a response rather than taking their frustration out on you via a negative review on Trustpilot or rant on Twitter.
After every sale, follow up with your customers to ensure they are happy. This is a good time to collect feedback, so you can understand how your business is perceived. When you have the feedback, act on it so that your customers can see that you listen. Being readily accessible is the best way to mitigate any angry outbursts from customers – reducing the likelihood of negative reviews and increasing positive sentiment – which boosts your online reputation.
If your reputation is being compromised because of negative comments online, rather than being defensive, gather the insight, look for common areas of complaint and address them directly.
Have an online reputation strategy and review management strategy in place to manage this and clearly communicate it with your employees so that everyone understands the importance of customer perception and the part they play in influencing it.
Get it right before you expand
Implementing a successful business model takes time. If you’re dreaming of exploding onto the market in your chosen sector, take care to ensure that you have a sustainable business plan.
While growth is positive, going too fast can weaken the foundations of your business and slow you down later. The StartUp Genome project found that 74% of high-growth start-ups fail due to scaling too early. Whether it’s getting carried away with franchise requests, overstretching your ability to make products or deliver services, riding an exciting wave of fast expansion could see you falling hard not long after.
Slow and steady doesn’t sound very exciting, but it’s a solid way to build your reputation, both online and off, while maintaining high levels of customer service and intelligent business decisions. Focus on your company’s foundation before you think about building a business empire.
If you find that your expansion plans haven’t gone to plan, and your reputation is being affected, regroup.
Communicate effectively – and be authentic
Lack of effective communication internally can damage a business exponentially externally. It’s just as important as being authentic with your customers and clients. Studies say that the onus for responsible, effective employee communication lies with direct managers. No matter how large or small your business, a key priority must be communicating with your teams. And that’s true in times of success and crisis. No one wants to read negative things about the company they work for in the media first. Nor do they want to be the last to know about good news.
Be open and involve teams in your hopes, dreams, purpose and their part in success. If you’re not transparent with your team about everything, closed communication can lead to mistrust, anxiety and an assumption that something’s going on behind the scenes. Performance can suffer, and people can leave. Simply communicating openly about finances, short and long-term goals, strategic decisions and financial matters builds trust with employees that will pay off in the long run. The best leaders are transparent with their teams, inspiring employee loyalty and honesty. And when and if there’s a crisis you can engage and involve teams and leverage this loyalty to help rebuild confidence and perception.
A fascinating example of a well-established organisation rising from the ashes can be seen with the Ford Motor Company. When Alan Mulally took over as CEO in September 2006, Ford was having its worst year in history following a $12.7 billion loss. When Mulally retired in July 2014, he had turned the company reputation around, thanks to open, authentic communication with stakeholders, customers and, importantly, his team. From personal pitches to the biggest banks in the United States, to transforming the team structure within the company, Mulally shows exactly what authentic communication can do.
Make it, don’t fake it when it comes to your reputation
A temptation for entrepreneurs and business owners, is to portray a certain image on social media and in online communications. An image of success does not necessarily help you achieve real world success.
Google is a great example of a company that has developed a unique open culture internally. They’ve had their problems, most recently with the mass employee walkout over the handling of a sexual misconduct hearing, but even that was taken by the CEO as a catalyst for improvement. Google CEO Sundar Pichai personally emailed all employees supporting their decision to walkout with a pledge that the company will do better.
Information travels fast, and the markets can instantly spot those faking it, rather than making it. Perception of your company and brand depends to a large extent on your online reputation, and authenticity must be a priority. Customers, clients and investors are wise to the ease with which social media can show a false reality.
At the end of the day, people value authenticity. Tell your story – the highs and lows, lessons learned and how you’re striving to be better. Keeping it real will allow you to better connect with audiences, reach your goals faster and with more longevity.