Reputational Risks Arising out of Social Media

The pros of using social media are many. Its cost effectiveness and extensive reach have encouraged most organizations (including many tech giants and MNCs) to prioritize the channel for their business strategies. The transition from “strictly no Facebook” to “social media friendly” was a rather quick one for many organizations. Social media helps to augment advertising, branding, promotional and marketing strategies, while providing a two-way channel between the business and its associations, mostly end users.

While the business world explored how far it could go using social media, risks, largely reputational, just kept emerging in great numbers. Being a channel accessible to everybody, social media has been brimming with stories shaping brand images.

Renowned companies find their reputations at stake owing to social messages going viral. For instance, United Airlines had to face great criticism for poor baggage handling and customer services a few years back. All it took was a music video called “United Breaks Guitars”, released by the music band Sons of Maxwell. The song became an immediate hit on YouTube.

The downside of social media is that reputational discredit is very difficult to handle. Usually, the public turns into a swarm of bees, just like in the case of “#MCDStories”, which was the tag for a promotional campaign by McDonald’s to exhibit the heart-warming stories of farmers. The Twitter page was instantly taken over by people to fill in their complaints about bad experiences with the brand.

A major cause of reputational risk in social media is operational errors. Employees can, and do affect the reputation of enterprises. It happened to Domino’s, when a video “Dirty Domino’s?” was uploaded by two of their employees showcasing detestable preparation of food in the shop’s back room. They had their careers ended at Domino’s. They also faced felony charges filed by the company.

Another operational risk that companies often commit is not being prompt in responding to customers. “Dell Hell” was one such situation that caused Dell a great deal of reputational damage. A customer had blogged about the pitiable quality of the Dell product he had purchased and also wrote about the company’s incompetent customer service. The blog created a big fury with even more complaints pouring in from other customers. The readership was so enormous, that the “Dell Hell” blog came ahead of the usual Google results for the search query “Dell”. The scene could have been avoided if Dell had a proactive social media management team to immediately address the concern and keep the customer content.

Here is a checklist of to-do’s before going social with business:

  • Hire an efficient social media manager and team
  • Monitor, capture and manage social media conversations in real-time
  • Train the employees (including the management) and make them aware of the social media strategies and its do’s and don’ts
  • Conduct test campaigns to optimize results
  • Respond to customer concerns promptly
  • Learn to deal with negative comments
  • Don’t spam, instead, use the media to engage in constructive and positive conversations and build relationships
  • Diligently follow the social media policies
  • Prepare a plan to handle social media business disaster

 

Unlike traditional media, the power and control over social media is limited. Businesses are vulnerable in the liberal virtual space. They should know what might go wrong and be prepared for it!

 

 

 

Reputational Risks Arising out of Social Media was last modified: January 7th, 2015 by Mohammed Nasser Barakat
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Mohammed Nasser Barakat

Partner at CAREWeb
(Mohammed Nasser) Barakat, is the BRS Service Line Leader for the ME region. Nasser has an MBA in Professional Accounting and a BS Degree in Banking and Finance.He is a Certified Public Accountant in Colorado State, USA, a Certified Control Self Assessment Practitioner and a Certified Fraud Examiner. Find me on