In the wake of London's decision to not renew their operating license, Uber's new CEO, Dara Khosrowshahi wrote in an email to employees that, "There is a high cost to a bad reputation."

Whether your audience is a regulatory body or consumers, a bad reputation can have a real and serious impact on the bottom line.  In our most recent Research Bite, we asked U.S. consumers what types of scandal are most likely to make them abandon a brand.  Instead of attempting to develop and test an exhaustive list, we chose a few broad categories of scandal that have dominated the news cycle recently.   

Here's what we found:

Toplines

  • Consumer-facing issues bother consumers more than back-end issues 
  • When consumer-facing issues (defective products and abusive behavior toward customers) were removed, unfair labor practices became the top issue 
  • Despite a polarized political environment, political gaffes by CEOs register lowest for consumers as a reason to abandon a brand

The key takeaway is that consumers have the most intense feelings about scandal or issues that impact their own experience with a brand. It is important to note, however, that the health of a brand and reputation is the sum of all parts; some parts carrying more weight for certain constituencies than others.  That is why it is critical for reputation management to be a critical business function.