Customer Experience Featured Article

Customers Prefer Companies That Mind Their Reputations

April 23, 2014

We write a lot about what attracts customers to your brand. Is excellent customer service important? Very. Is handling social media properly critical? Of course. Is clever marketing something that can drive you to the top of your industry? Definitely.

Increasingly, however, there is another thing that the general public wants to see before it will do business with your company, and that’s minding your reputation and paying your taxes. In the U.K., some companies have slipped on brand rankings after media exposure about tax dodging.

“Brands that have had their reputations dented by not paying UK corporation tax are faring poorly when it comes to ratings of overall customer experience with those companies, according to a ranking of the top brands shown exclusively to Marketing Week,” wrote Lou Cooper for Marketing Week.

Nunwood’s annual Customer Experience Top 100 for 2013 found, for example, that U.S.-based “e-tailer” Amazon, formerly No. 1 on the list for the previous three years, has slipped several spots after high-profile media coverage about the company’s habit of dodging taxes in the U.K.

Nunwood director David Conway told Marketing Week, “We’ve seen Amazon…drop to fourth place, and much of that is to do with the adverse publicity it received [regarding its tax arrangements]. It goes to show that no matter how good you are at managing your day-to-day operations, you also need to manage reputational risk because that plays a big part in people’s mindsets and how they feel about you as a brand.”

In addition to Amazon, Starbucks has been prominently featured as a tax dodger in the U.K., and that company does not appear at all in the Top 100 for 2013.

Banks also do poorer when the general public finds dents in their reputation, according to Cooper. In the U.K., the Co-operative Bank, formerly in Nunwood’s Top 10, this year dropped out of the Top 100 altogether. Nunwood attributes this no-show on the list to the missing £1.5 billion the bank recently disclosed in its finances: and a taxpayer-funded rescue plan to make up for the shortfall.

“What we noticed last year was a move away from financial institutions, whose reputation in the market wasn’t great, to some of the smaller, more niche operations that people felt would be more trustworthy,” Conway told Marketing Week.

There’s a lesson here: mind your reputation, avoid scandal (not by burying it, but by not engaging in scandalous behavior in the first place), pay your taxes and do go works. Customers will notice. 

Edited by Alisen Downey

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