The Price of a Bad Business Reputation

According to a 2017 consumer review survey, the majority of consumers trust online reviews. The survey has tracked consumer sentiment surrounding reviews for seven years, and the implications are just as important for massive companies as they are for micro mom-and-pop businesses.

Because so many consumers are putting faith in reviews, negative reviews can have devastating consequences for your company’s bottom line, as well as your ability to hire and retain talent.

How negative press affects sales

Most consumers read online reviews before or during the buying process, and 86% of customers would not consider using a business with less than three stars. These facts raise serious concerns about the vulnerability of a company’s reputation.

It makes no difference whether negative complaints are made by actual angry customers or fabricated by a competitor if people aren’t able to discern the difference. While most of us are willing to forgive and forget when a few mistakes happen, repeated negative reviews will quickly erode consumer trust in your brand.

The actual financial impact of a bad business reputation is obviously impossible to pinpoint given company diversity, but one back-of-a-napkin estimate suggests that it’s more than $537 billion in the United States alone. While this figure indicates the severity of the problem, what does it really mean for small businesses?

Product Sales

Using the previously mentioned statistic that 86% of customers would abandon a business with fewer than three stars, you can quantify the impact on your own company. Assuming you sell ten $20 products each day, if you lose 86% of these sales, you’ll miss out on $172 in sales daily (200 X .86), which would result in up to $62,780 in lost sales per year (172 X 365).


The Harvard Business School studied the impact of a one-star increase in a restaurant’s Yelp rating and found that it led to a five-nine percent increase in revenue. If a company jumps from a one-star to a three-star rating, they could experience an increase in revenue of 18%. This implies that a restaurant with $1 million in annual revenue stands to lose $180,000 every year due to a poor online reputation.


Construction companies are particularly vulnerable to reputation problems. A single customer making defamatory statements online resulted in a $750,000 lawsuit to recover lost income.

Reputation affects hiring and retention costs

According to one survey, 71% of workers in the United States will not apply to a company with a poor reputation. This situation can be further complicated if bad employees are causing your reputation troubles, and your bad reputation is preventing you from attracting more qualified talent.

Sometimes, negative press has nothing to do with customers and is the result of an employee scandal. When a crisis of this nature happens, your employees may begin defecting.

While you might be able to retain valuable team members, you could end up paying them 20% more because of your reputation. Replacing employees won’t save you any money either, as recruiting, hiring, and training costs can add up.

Protecting your online reputation

Warren Buffet once said, “It takes 20 years to build a reputation and five minutes to ruin it.”

Though bad press may be unpredictable, proper crisis planning can help lessen the damage to a business’s reputation. Follow these six golden rules to build a digital fortress around your company’s reputation:

  • Stop negative reviews — Don’t let customers leave angry. Give them an outlet for critical feedback, or they may make their grievances permanent on the internet.
  • Monitor your mentions — Google Alerts can keep you informed and help you act fast if a customer posts a critical review or article about your company.
  • Start using social media — Social media allows you to tell your own story. Create profiles and regularly post content to fortify your digital footprint.
  • Seek feedback — Happy customers are usually willing to write reviews, so don’t be afraid to ask. It takes twelve positive reviews to offset one negative review.
  • Use press releases — Press releases about sponsorships and charitable contributions can gain traction with local media, bolstering your online presence.
  • Plan for a crisis — Don’t wait until your reputation is at risk. Draft a crisis management plan to prevent errors and help your team control a situation rather than worsen it.

Most businesses pride themselves on having a golden reputation, so they rarely think about the need to protect it. Unfortunately, this is a vulnerability that shady competitors and toxic customers can exploit. As simple as it seems, protecting your good reputation can be the difference between an early retirement and a going-out-of-business sale.

Price of a bad business reputation

These views are made solely by the author.

Jonas Sickler

At Reputation Management, Jonas Sickler creates and manages digital marketing campaigns. His experience ranges from major consumer websites to product launches. Jonas' expertise is rooted in helping brands grow their online presence to build brand awareness while also protecting their online reputation.

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