When brands like Uber get a bad rep, what makes customers forgive?

08 Aug When brands like Uber get a bad rep, what makes customers forgive?

Branded is a weekly column devoted to the intersection of marketing, business, design, and culture.

Just five years ago, Uber’s public reputation seemed like one big car wreck. Everything you heard about the brand back then—from the way it bullied its business into resistant markets and its treatment of drivers to a discriminatory and bro-ish corporate culture under founding CEO Travis Kalanick—was off-putting. In 2017,  #DeleteUber was trending on social media, and some half a million users requested to have their accounts canceled. That year, the cumulative brand damage eventually led to Kalanick’s ouster. His replacement, Dara Khosrowshahi, summed up the challenging road ahead when he commented early in his tenure: “There’s a high cost to a bad reputation.” 

That core point—that a lousy brand rep eventually catches up with, and can doom, a business—has become a truism. Observers of, say, the drumbeat of criticism of Meta and its flagship Facebook product, from its privacy practices to its role in spreading misinformation, have long predicted that the resulting reputation will harm its results—just like Uber or even the Ford Pinto, whose infamous potential to explode in rear-end collisions (thanks to cost-cutting design decisions) nearly burned down Ford’s reputation. Bottom line: Consumers punish bad actors.

Much less remarked on, however, is the flip side of this phenomenon: how forgiving consumers can be. A bad reputation may have a high cost, but it can be overcome. Even a brand that seems profoundly tarnished can be redeemed in time.

Uber, in fact, looks like a case in point. The company just reported its highest quarterly revenue ever: $8 billion, a 105% increase over last year. Its food-delivery arm contributed, but the core rideshare business led the way: Uber attracted more drivers, and reported 122 million riders a month. While it showed a loss, thanks to some of its investments, it was cash-flow positive for the first time. 

It’s been five years since Kalanick’s exit, and Khosrowshahi deserves credit for seeming to steer Uber’s culture onto a less controversial course. “It’s critical that we act with integrity in everything we do,” he declared early on. While one can certainly argue about the details—for one, the company was recently sued on behalf of a class of more than 500 women claiming to have been sexually assaulted by Uber drivers—the reality is that the #DeleteUber movement has faded.

But the brand having put its bad reputation in the rearview mirror can’t be chalked up to the company’s actions alone. Consumers play a role, too. Are they simply forgetful? There is some research on the subject of brand forgiveness that cites the intuitive conclusion that our memory of corporate malfeasance and our intention to punish “decays over time.” 

Here, Uber offers a unique case study because reminders of its bad rep have remained unusually prominent in the culture.  Earlier this year, Showtime released a series based on the company’s history, Super Pumped, that was promptly held up as Exhibit A in pop culture’s current attitude toward Silicon Valley entrepreneurs: “Now, they’re the supervillains,” the New York Times declared. The show, part of a widely noted wave of dramas and documentaries exploring the bad reputations of companies from Theranos and WeWork to Boeing, was an excuse to dredge up and jog the public memory of just how unsavory Uber seems to have been.

And if the dramatized version of its history wasn’t enough, another reminder soon surfaced, based on cold, hard reality: “the Uber files,” a trove of leaked documents exposing the company’s habit of flouting laws during its ruthless early global expansion. “Uber is dealing with the public relations fallout following the leak of thousands of confidential documents,” Fast Company‘s Chris Morris reported in summarizing the leak’s revelations last month. “And it’s not painting a pretty picture of the company’s early days.”

In all, the stream of recaps of Uber’s past have been a brand nightmare; mere forgetfulness can’t fully explain its apparent reputational redemption in the consumer mind.

To tease out a fuller explanation, remember that Uber is hardly the only example of a bad-rep company coming back from a brush with severe brand damage. Boeing, for example, is getting new major orders for its 737 Air Max plane only a couple of years after two crashes involving that model looked like an existential threat for the company. Even more recently, Spotify was on the defensive for bankrolling the controversial podcaster Joe Rogan; but having just announced a strong quarter, the company appears to have completely shaken that off. And while the Pinto is a classic case study in a brand’s fall from reputational grace, part of that case study is that Ford recovered. The market is simply more forgiving than we sometimes assume.

Moreover, the market may be less harsh than we think about “bad reputations” in the first place. Yes, Uber’s business steered through rough patches as it endeavored to clean up its brand image (and, for the record, it’s still no guarantee that its business model will prove out in the long run). But despite squeamish customers, its ridership never outright collapsed. Similarly, despite years of tech press critiques of Facebook, predicting it would surely face the consequences of its reputational mess, parent company Meta remains profitable. (True, it has posted worse-than-usual numbers lately, but that has more to do with changes in the social media advertising marketplace, privacy restrictions imposed by Apple, and the broader economy than with any new turn in the company’s reputation.) 

In the wave of “bad reputation” narratives, the most notorious full-on flameout was Theranos, which collapsed not because of a rejected brand but because it simply could not deliver on the promises at the core of its business model. In contrast to a “bad reputation,” that’s a problem with an astronomically higher cost.

The real lesson of the bad-reputation problem is that there’s plenty of evidence that it’s solvable. Uber is a particularly clear example—as that Times assessment of Super Pumped noted, “The lying, the spying, the lawbreaking: It all paid off.”—and it’s not alone. Obviously that doesn’t mean a bad reputation doesn’t matter, just that a reputation problem can be fixed, over time, and consumers are willing to let a brand fix itself, provided they believe in the effort and still find the product or service truly useful and reliable. In other words, the “cost of a bad reputation” may not be quite as high—or at least, not quite as lasting—as the experts assume.

Source: Fast Company