Where business is concerned, dollars and cents often speak loudest.
Untracked issues can seriously cost your business in terms of customer churn. Mistakes or complaints that go unresolved lead to unhappy consumers, and while marketers focus on acquiring new customers, data shows failing to retain existing ones can be extremely damaging. In fact, Bain & Company reported that in the financial services sector alone, a 5 percent increase in customer retention translates to more than a 25 percent increase in earnings.
However, the more insidious cost of an untracked issue is arguably its effect on business reputation.
The Price of a Negative Reputation
Far from being an abstract or intangible problem, reputation harm has a direct effect on the health and sustainability of a business and its finances, often in more ways than commonly thought.
For instance, beyond lost sales due to a bad reputation among consumers, organizations may find themselves losing money due to difficulty hiring and retaining employees. In a significantly improved job market that provides candidates more options to choose from, businesses with bad reputations must offer higher wages to attract top talent. This is in addition to the costs associated with how poor reputations can cause increased employee turnover.
Research from Harvard Business Review found companies with bad reputations have to increase pay by a minimum of 10 percent in order to successfully convince job candidates to accept offers.
Reputational problems put businesses in a position where the very people they want to hire avoid them, resulting in a loss of talent. Fewer capable employees creates a ripple effect that undermines operational efficiency and ultimately reduces organizational effectiveness
A poor reputation also leads to a loss in investment and opportunity. The former is in terms of the time and money put into building a brand. The work of countless hours and dollars can be undone if a business becomes associated with subpar products, services or results.
As far as squandered opportunity, a damaged reputation translates to a decrease in word-of-mouth marketing from consumers. No one wants to recommend a business to friends or family if it is saddled with a negative reputation.
The worst part, however, may be the difficulty in improving a tarnished public image. While cash flow problems can be resolved through an influx of revenue, restoring a once-sterling reputation is much more difficult.
Consumers are not quick to change their opinions and attitudes once formed, meaning reputational issues can have far-reaching effects lasting years, or even decades, necessitating costly public relations efforts to turn the tide.
Reputation Management Essential to Engaging Millennials
The wide-ranging consequences associated with a negative reputation come into even sharper relief when specific demographics are accounted for.
As reported by the Pew Research Center, millennials have surpassed baby boomers to become the largest living generation in the U.S., totaling 75.4 million individuals. What's more, millennials are expected to outnumber non-millennials by 2030, according to media and marketing firm Adroit Digital.
Among the many attributes associated with millennials is a focus on instant results, owed primarily to growing up with access to advanced technology, most notably the internet. Clearly these expectations do not align with untracked issues being allowed to linger unresolved.
Adroit Digital reported that 55 percent of young shoppers cited recommendations from friends as a strong influencer in getting them to try a new brand. Meanwhile, 47 percent said brand reputation is equally important.
As millennials become the driving force of the buying public, it's vital for businesses to appeal to them. Allowing a negative reputation to develop is not the way to accomplish this.
Beyond millennials, technology has driven up business expectations among all consumers. Survey results from Lithium showed that even as of 2015, 83 percent of customer expectations were either somewhat or much higher than in the preceding three years, based on corporate executive responses.
Defending Against Reputation Damage
While some businesses may spend money on entire teams dedicated to tracking issues manually, or worse yet, go without issue tracking protocols entirely, others are leveraging the value of issue tracking software.
Such solutions allow businesses to oversee issues start to finish, from the logging of an issue to tracking how long it remains in the system without resolution. Reports can even be produced after the issue is resolved to illustrate how a problem was fixed and allow organizations to learn from their mistakes.
While modern businesses face potential reputation damage from multiple sources, untracked issues do not have to be one of them. With the proper tools in hand, business leaders can ensure problems are solved quickly and completely, keeping their hard-earned reputations intact.