Brands these days seem to regularly make headlines for the wrong reasons. How a brand handles their mistakes is almost as important as the mistakes themselves. And with the twenty-four hour news cycle, it is less and less likely that a brand’s missteps will just go away.
So what should you do if your brand finds itself in the middle of crisis? How should you react? When is the right time to respond?
In this episode of the Solving for B° Podcast, our experts discuss the role of your brand in a crisis. We offer real-life examples of how not to handle a crisis and some tips on how and when to prepare for the worst.
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*This transcript has been edited and formatted for readability.
How do Negative Situations Affect Brand Perception?
Chris: Hello and welcome to anther episode of "Solving for B° " with BrandExtract. Today I'm joined by Chairman, Jonathan Fisher, and brand strategists, Elizabeth Tindel and Leslie Rainwater. Today we're going to talk about how crises can affect your brand, what you can do to minimize the impact and, in some instances, use these situations to your advantage to make your brand better.
So in preparation for this episode, we went through a few brands that have had a tumultuous year to familiarize ourselves with situations that can have a negative impact.
We thought about brands like Uber, Nike and Toys R Us. But one that stood out to us was United Airlines. They've had a rough year: having a young child overheat on the tarmac, multiple mishaps with pets and even an incident with a passenger that was forcibly removed from an airplane.
So how do these situations ultimately affect audiences’ brand perceptions?
Jonathan: With any brand crisis, there is always an opportunity to rise above it, to effectively perpetuate it or even make it worse. It depends on how the executives react to it and the communications they put out.
United did not do a great job of handling their crises. In one of these cases, the CEO stepped out and said, “Oh, this is terrible. We're going to take care of it.” A few hours later he sent a letter almost contradicting the statements he had just publicly made. This was a case of poor planning.
I saw one report that showed how their stock prices took a hit of about $180 million right after the crisis. Now, the stocks did climb back up. In fact, the travel ban was the biggest hit to their stock reports and the organization.
Most organizations are not going to recover so quickly from that process, so in most cases, it erodes consumer competence and trust. It causes delays in purchasing. It may make an enemy of the consumer, depending on the crisis.
For instance, years ago, I had a lot of issues with Exxon after the Valdez spill and the way it was handled. That was very upsetting to me, so it was a long time before I bought gas from them again.
Chris: I think this is very interesting because many people watched the video of the man being forcibly dragged off a United airplane, and anyone of them could have easily made the decision – right then and there – that they would never fly with United again. Maybe not out of fear of it happening to them, but in efforts to take a stance against it.
Why is Crisis Communication Important?
Chris: It sounds like the immediate response after an event like that – in this case, some lack of cohesion in messaging – speaks to a lack of crisis planning. Why is crisis communication important for a brand?
Leslie: Well, it's actually where the rubber meets the road, right?
When you have your promises and your positioning, there are a couple of ways people judge you by your service. First of all, are you providing great service? And secondly, how do you fix problems when they occur? It’s important to keep this in mind and understand how valuable and important perception is, as it is a matter of trying to foresee crises.
For instance, United really needed a crisis plan. It could have been something simple so that people could understand what happened.
All airlines overbook. But how do we handle a case in which we're overbooked and people don't want to get off a plane? What are we empowered to do and what are all the creative ways we can do it?
It's about thinking it through by picturing all possible scenarios. This is important in terms of how you offer services and handle crises.
Jonathan: I think the strength of a brand is really tested in times of crises. How do you correct the issue? Issues are going to come up. There are going to be manufacturing defects and product recalls, but how does the organization fix their mistakes?
We understand the expression, “We're all human. We all make mistakes.” Correcting an issue introduces an opportunity to build the brand. If I'm enamored with how you fix my issue, whether it's my cable going out, inaccuracies in my billing, whatever it might be, then I'm going to become that much more endeared to the organization.
Elizabeth: Right, and I even think it goes back to how strong and aligned the brand is with their values. This is what really guides the behavior of the organization.
If the brand is not continually reinforcing their values in all levels of the organization, they’re going to have a misalignment and may not be prepared to fix it. Employees throughout the company might not behave as you would like everyone to uphold the brand and its values.
Jonathan: This made me think about the lack of communication that organizations put out on their values. Often, they're just a poster in the break room. Employees don't live them every day. They don't talk about them and they don't communicate them on a daily basis.
My father was a victim of the Wells Fargo credit fiascos. So, months later, after he had passed away, we got a check in the mail from Wells Fargo saying, “We apologize. Here's you're 200 bucks for your report.”
But then I went to one of Wells Fargo’s branches to cash the check because there was no account they could put the money in, and they wouldn’t cash the check. I was like, “Are you kidding me?”
You would think that if they’re sending all these rebate checks out, they would be expecting people to come in and cash them. They shouldn’t be giving them any issues or hassles.
They should have been apologetic during the process. They must live up to what they claim are their newfound values. And yet, in a scenario where they should have had complete control, they handled it poorly.
Elizabeth: I think people forget about the importance of internal communications. They may be doing these fostering activities at the corporate level but forget to truly explain it all the way down to the people at the front line.
It’s not only about telling them what's going on but also explaining the importance of it: how it affects the company, how it should affect the consumers and what the main goal of it is?
Chris: That's an important part of it. These people are, more often than not, your touchpoint with your customer. Some of the most important interactions with your brand are with those customers. So they need to be able to represent those core values.
The Importance of Structure and Communication in Crisis Management
Chris: Could these issues be a result of a lack of structure and communication?
Jonathan: Yeah, there's clearly a lack of training, communication and practice.
One of our client’s business is crisis response. This is an organization that was formed after the BP spill in the Gulf. Nowadays, by law, welling gas companies must have crisis response teams ready to deal with disasters. So they actually practice crises actions on a regular basis.
I think that's a great strategy for a lot of organizations, both in terms of employee training and communication. It is like running fire drills and doing role play.
We do it in sales processes when we're teaching a salesperson, but most organizations forget that this is a really easy exercise that doesn't cost a lot of money or time. And it could actually save them hundreds and millions in reputation, damage, delays, and lost contracts.
Elizabeth: On the flip side of just preparing for crisis communications, there are the reinforcement and proactive positive activities that can be performed all along the way. United is “Fly the friendly skies,” so what if, for years, they had been reinforcing and doing internal campaigns about what it means to fly the friendly skies?
Jonathan: These crises they’ve faced make you think that phrase is more of an ad campaign rather than a true cultural value.
Elizabeth: Did they have activities where the people on the front lines gave tips or maybe have peer recognition for spotting people who went above and beyond in terms of helping?
Jonathan: Were there employee incentive programs?
Leslie: If you create brand loyalty, clients will give you more leeway to mess up than if you haven't been managing it before.
Jonathan: Think of it as credits or chips. You're racking up chips through that positive brand loyalty process over the years so that when it is time to have to spend a few, you still got some left in the bank.
Opportunities that Might Arise from Crises
Chris: Brands are going to make mistakes. This is something we all understand. As humans, there is an empathetic, “Hey, you're going to make a mistake.” But as my dad used to tell me, “It's not the mistake that happens; it's how you respond to the mistake that really shows your character.”
So what kind of opportunities can come out of a crisis situation? What positive, if any, can come out of it, whether internal or external?
Leslie:Well, it gives you an opportunity to reinforce that service promise. It's like, “Okay, this happened. But because we are this brand, this is what we're going to do.” It strengthens the promise because it demonstrates we actually live it. We walk our talk. We live to what we believe.
Jonathan: A crisis doesn't necessarily have to be a failure or mistake; it can be something like the recent hurricanes in Houston, Miami, British Virgin Islands and Puerto Rico. These are all crises and some corporations like Mattress Mack and Gallery Furniture did a really good job rising to the opportunity.
But there were some that capitalized on it in the wrong way. They used it as a sales trick or gimmick. For example, a number of car dealerships were running employee pricing plus rebates.
I had a number of friends who were hit; they lost their cars, went into the dealership and said, “Okay, give me your employee pricing,” and instead, the car dealerships started trying to negotiate with them, “Well, what do you want to pay?” And they're like, “That wasn't what I walked in the door for."
Now my friends are trashing those dealerships online for their false claim around those opportunities. But ultimately, crises create an opportunity to do goodwill, even if it's not your mistake.
Elizabeth: A lot of times there's the impact on the company that actually has the issue. But there are also a lot of opportunities for competitors, and other strategic, or close complementary businesses, to capitalize on it. They can rise to the surface and create an opportunity for themselves by responding in addition to just the issue at hand.
Chris: So it doesn't even have to be a crisis that affects your own business directly. Using the example of United, any other competitor can take their crisis as an internal lesson of their own.
“Hey guys, we want to make sure you have all of the ducks in a row. Let's make sure we have a plan in place, in case something like this were to ever happen to us” or even run an ad campaign to their advantage saying, “Hey look, we're not going to treat you like this.”
Jonathan:United seems to have a bumpy track record of flying the friendly skies. To give an example, in 2009 they broke a guy's Taylor guitar. He wasn't a famous singer-songwriter – I imagine if he was they would have instantly fixed it. He was just an average guy and they wouldn’t replace his $3,500 Taylor guitar.
Well, Taylor took advantage of this. They dove into the limelight and offered to give the guy a guitar. Meanwhile, the guy cranked out a little jingle about how poorly United treated him. In a matter of hours, he had over half a million views on YouTube, and ultimately, several million views.
Brands have to realize the power of social media in today's world; there are many different platforms with which you can really trash somebody.
Chris: Information spreads fast these days.
Jonathan:You must live up to your promise with every fiber of your being: from the way your contracts are worded and negotiated to how your product is fabricated and controlled, the speed of your delivery, the way you answer phones, and the promises made on your website.
I think the secret to branding is understanding how the dots are connected to organizations these days and then realizing the impacts of those touchpoints.
Chris: I'm glad you mentioned social media because sometimes clients ask us the value of it; why do we need to be on social media, what are its uses? Social media can be a really good listening tool. Like you said, in a matter of hours this guy created a jingle and by the next day, there's a story run about him. But it originated on YouTube.
Jonathan:Yeah, many brands don't do a good job monitoring their brand via these platforms.
Using technology can help benchmark the consumer competence in the brand through their communications on and offline, become aware of positive or negative trends that are happening, and even identify early manufacturing defects.
Long before they internally find it, the consumer may find it for them and they have a chance to jump on it before it spreads and there are enough people out there that a lawsuit is pending.
Chris: There are also cases where a competitor sees that and immediately throws a bunch of ad dollars saying, “Hey look! This is the defect they're having and this is why our product is superior.”
Uber's going through a lot of different reports, so Lyft has penetrated the market. Everywhere you look you see new advertisements, big advertising spends. They’re obviously monitoring the situation and sensing vulnerability. Uber lacked a good crisis communication plan and now this other brand is trying to capitalize on that.
Jonathan: Look at the crisis going on with the airlines and the contract negotiations with U.S. Airbus, Canada Air and other brands. They instantly launched Canadian Air for the Canadian market and lost a big media campaign. So they have been dealing with trade wars right now. The brands are having to manage themselves in the midst of contract trade negotiations.
Chris: Yeah, it's the normal course of business.
Jonathan: Yeah, it's quite political in the true sense, but it's amazing that politics and brands are so intermixed now.
Leslie: Regarding social media, I have noticed that business-to-consumer companies tend to be more aware of these channels but some of our business to business clients have not thought about it, and think we can just do a press release to fix everything. They don't really pay attention to the media seed that's needed.
Look at Macondo! It took all the companies involved and almost 24 hours to respond. That couldn't happen now so their crisis communication plan must be thought through within all these different channels for them to be ready.
Jonathan: And now, what you say and do is used in lawsuits. How you handled the situation or how you responded might be used in your favor to lower judgments, mitigate some of those losses or even force a judgment in your hands. Or it can be used against you.
Also, what are some of the values of these products and managing brands? I’m talking about recruiting and retention. If you have a great brand that's doing positive community efforts, I will want to work for that company.
That would be a great job. Brands that have amazing reputations usually don't have to pay the most to get the best talent because people want to be associated with an organization. They're even willing to take pay cuts or take fewer perks.
Chris: That's the value of a strong brand: people will pay more or in this case, take less to come and be a part of your organization.
Jonathan: Leveraging the cause marketing, the goodwill or the crisis response has a huge financial impact when properly handled.
Responding to a Crisis
Chris: Leslie, you mentioned we can't wait 24 hours to deal with a crisis because the public is starving for information. So each brand has to make sure they’re the first to put something out there about what’s going on.
We don't want someone else crafting our brand message, right? But we want to be thoughtful about it because we know that it will be impactful.
Jonathan: We often tell people the conversation is happening with or without you. You might as well jump in and influence it.
You can't control the conversation but you can help manage, steer or influence it. And to Elizabeth's point on internal communications – it is very important to have a plan so that you can be quick to tell employees what you're doing to put out the fire.
Chris: Whether we like it or not, there are usually rogue employees that will jump on social media. They will connect their own dots, so to speak.
So it is advisable to cut that off at the pass saying, “Hey, this is how we're talking about this. This is what's going on.” Being transparent but also being strategic about it.
Jonathan: This is like stage fright for most people. The fear of getting onstage is greater than when they're actually there. In the absence of communication, people will make stuff up in their own heads and will fill voids.
Planning for Crisis Communication
Chris: A topic I'd like to cover is measures, or tips, that you can recommend for brands that are thinking about their crisis communication plans. What's one big thing to really consider as you’re planning for your crisis communication plan?
Elizabeth: Have a plan, be proactive and continually reinforce the brand.
Leslie: And revisit it, too. Make sure you have all your touchpoints covered. What are all of the places from which information could come out?
How do we manage each one of those? What is the timing of that? Who's responsible for it? Your plan needs to be very specific. Many people put that in place but do not revisit it until something happens.
Chris: It might be outdated by then.
Jonathan:Yeah, it's locked in a drawer somewhere and it's gotten dusty and nobody realizes it's not even relevant anymore. “Yeah, we did this three years ago…”
Leslie: “…And we forgot about Twitter.”
Chris: “We did it before social media was around.”
Jonathan: That's frequent. Another thing to think about is all the different types of scenarios, whether you or other people caused them.
I also think part of the crisis plan should be positive: “Where are the opportunities we can capitalize? What's the crisis plan for when our competitors are failing?” We'll call that the opportunity plan.
People don't think enough about the value of the brand and how they can leverage it throughout their entire organization on a daily basis.
Chris: You're not going to be able to account for every single thing that could possibly happen, but there are things that are foreseeable.
Jonathan: One of the most powerful tools an organization has at their discretion tip is a SWOT analysis. You have to look at your strengths, opportunities, weaknesses and threats. Think about a basic SWOT analysis of your product, service, market position, your ability for disruption or regulatory compliance.
What's going to happen if the government changes a particular policy? What's going to happen if there is a new technology that suddenly makes you obsolete? What's going to happen if you have a product or service failure rate?
Think about sexual harassment for organizations. Is it the individual or is it the brand? Is the brand stronger than the individuals? Is the individual going to take down the brand?
Thinking through those dimensions of your SWOT analysis is going to be very helpful for our organization.
Chris: Excellent. Well, guys, I think that about wraps it up. Thanks for your time, I really appreciate it.