A Good Reputation

As part of a small business you know how important it is to look after your customers, and new research demonstrates that keeping a good reputation can have significant benefit on your sales.

The Confederation of British Industry (CBI) has found that well over half of consumers will pay a premium to the company they believe has the best reputation, even if they can buy the same product or service cheaper elsewhere.

Excellent customer service was cited by almost half of all survey respondents (48%) as the characteristic that most helps a firm build its reputation. Another third (36%) said that products and services always living up to expectations mattered most. Seven per cent said a good reputation was down to being a good employer while four per cent attributed it to brand appeal.

Among the 58% of consumers willing to pay more to their most highly regarded company, 43% would pay up to five per cent over and above a cheaper price, almost a third (29%) are happy to pay six to ten per cent more, while a one in six (16%) would pay more than a ten per cent premium.

Commenting on the findings, Richard Lambert, the CBI’s Director-General, said: “What comes through in our survey is that great reputations rest or fall on delivery. Whether the promise is of quality, fun, value or luxury, the 21st century customer is savvy enough to sniff out and avoid the shoddy or disappointing. Environmental credentials and social responsibility are also becoming increasingly more important to consumers’ purchasing decisions.

Poor customer service was thought by two in five of respondents to the YouGov survey (42%) to most damage a good reputation and a third (30%) said that products not living up to expectation were most to blame. Scandals, such as fraud or criminal acts were considered by 17 per cent to be the most important factor. Only seven per cent said big payments to executives did the most damage.”

For a distrusted company to rebuild its reputation, 45 per cent of consumers said the best thing for it to do is come clean and publicly apologise. A further third (28%) believed a company’s best policy was to compensate customers, while 11 per cent said a change of management was required. Eight per cent would be most persuaded to change their view after reading positive stories in the press.

Mr Lambert concluded: “It is clear that companies can never be complacent. A great reputation takes a lifetime to build and seconds to lose. But the picture painted by our survey and report shows encouraging signs for businesses willing to go the extra mile and demonstrates that a good quality reputation is worth its weight in gold.”