Warren Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” Why is reputation so important? A good reputation is what keeps customers coming through the door. A bad reputation, on the other hand, can cause deep damage to — or even the complete collapse of — a brand. Think of Chi-Chi’s, the once-popular Mexican restaurant chain, which according to Journal Times, finally folded in North America in 2004 after a hepatitis A outbreak caused by contaminated salsa. The brand’s unstable financial situation put it in a precarious position, true, but it was a lack of trust in the brand that ultimately toppled it.
Most organizations are well aware that they are not immune from such a fate, so it’s no surprise that they are preoccupied with protecting their image. According to TripAdvisor, it’s such an essential part of brand management these days that more than 90 percent of hoteliers say it’s key to the future success of their business.
That said, it’s not an easy skill to master, so we’ve staked out November as Reputation Management Month here at Benbria. This blog series covers what reputation management is all about, why it’s so important, and what hoteliers can do to protect the public’s trust in their brands against overwhelming odds. In our first post, we’ll get into the history of reputation management and how it came to be what it is today.
A Brief History of Reputation Management
When we talk about reputation management today, we generally speak of online reviews and people’s commentary about brands on social media. For most of us, the term is now almost inextricably intertwined with the internet and online activity.
But that wasn’t always the case. Since the dawn of modern capitalism, business and reputation management have always gone hand in hand; once upon a time, reputation management was synonymous with public relations. The Public Relations Society of America defines PR as “a strategic communication process that builds mutually beneficial relationships between organizations and their publics.”
Public relations was about controlling the flow of information between a brand and the public, be it through articles print publications, television appearances, or interviews on the radio. The whole idea behind public relations was to get publicity for free rather than having to pay for ads; it was about pre-emptively shaping the brand’s image in the eyes of the public with the assistance of the mainstream media.
It was also about issuing an official, public response whenever something occurred that painted the brand in a negative light. The thing about public relations is that it was never really a dialogue between the brand and public. Information tended to flow in one direction, and brands didn’t have to worry much about what individuals were saying about them.
How the Digital Age Changed Reputation Management
As the internet became a fixture in the average family’s home, brands found themselves face-to-face with a new problem: individuals could now communicate with hundreds of people around the world in the space of a heartbeat. Soon, websites such as TripAdvisor and Yelp cropped up, enabling these individuals to broadcast their opinions about businesses to anyone who would listen. And in the ensuing years, the public certainly has listened — TripAdvisor now receives more than 350 million unique visitors every month.
And so — even though public relations remains an central part of most corporations’ marketing departments — reputation management became about minimizing the influence of negative online reviews on potential customers. Brands do this by monitoring social media, review websites, and blogs to see what others are saying — and then taking action to minimize its effects on people who may be reading.
Today, reputation management is vital to the survival of brands. Some posit that online reviews and word-of-mouth recommendations are now more valuable than traditional forms of advertising. Nielsen found that 92 percent of consumers are more receptive to recommendations from their friends and family than they are of all other forms of advertising.
How Travelers Use Online Reviews
Besides word of mouth recommendations from friends and family, online reviews play a tremendous role in how travelers choose where to stay. After price and location, it is perhaps the most important factor in the decision-making process, according to TripAdvisor research. More than half of guests will not book at a location unless it has reviews, either.
In short, travelers want to see what others are saying before they take the plunge, even if what others are saying is sometimes unflattering to the hotel. Indeed, there is evidence from Econsultancy that some negative reviews can be beneficial — 68 percent of travelers trust reviews more when they are a mix of positive and negative. This is perhaps because they know there is no such thing as perfection, and they can forgive a hotel that slips up every now and again.
What travelers look for when they visit a review website is more complex than simply positive reviews. They also analyze the negatives, weigh the balance between positive and negative, and assess the volume and tone of management reviews.
Why Hotels Must Take Reputation Management Seriously
Based on the statistics above, hoteliers must not underestimate the impact that online reviews can have on their current guests and ones they hope to attract in the future. Nor should they underestimate the power of their own response to a negative review.
According to TripAdvisor, 78 percent of visitors say that seeing management’s responses gives them a favorable impression of the hotel, as it shows they care about their guests. Additionally, the same TripAdvisor report states that more than half of visitors ignore extremely scathing reviews when they’re looking for a place to stay.
This is why it is absolutely crucial that hotels invest in social tracking software, dedicate one or two staff members to monitoring social media and review sites, and promptly respond to whatever negative comments they find. When a hotel responds to a dissatisfied guest, it shows them it cares about their experience, and it shows potential guests that the hotel is not only prepared to take responsibility when something goes wrong, but also to resolve the issue.
Furthermore, research from the Cornell School of Hotel Administration discovered that for every one-point star increase a hotel receives on review websites, they can raise room prices by 11.2 percent without suffering a loss of market share. So there is a tangible financial incentive for encouraging positive reviews besides making the hotel look good in the eyes of guests.
Here at Benbria, we help hospitality brands manage their reputations using our mobile guest engagement solution. Our technology provides the tools they need to proactively master the art of reputation management by communicating with their guests and resolving any issues that arise before they leave the property. For more tips, advice, and information on reputation management, we’ve written a few articles that might interest you: