Brand Crisis Ed p38-44

8/6/2019 Brand Crisis Ed p38-44

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epairing a badly damaged brandin the wake of a crisis doesn’tcome cheap, both in hard cash andman-hours. So what lessons canwe learn from those who tackled acrisis full-on and those who duckedfor coer?



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Te situation was worsened by the act that the Atlanta-

based company was especially sluggish in its reaction to

the crisis.

Tey eventually ordered the recall, took out ull-page

adverts in the media to apologise and oered every Bel-

gium householder a ree bottle o Coca-Cola. But their

initial reluctance to accept responsibility led to urther

problems down the road. “Te crisis got bigger and bigger

without Coke ever really establishing any inuence over

it until a ortnight into the crisis, when the global CEO

ew over rom the United States to Belgium,” says Hemus.

Te cost to Coca-Cola was hard to swallow. “It meant the

CEO losing his job, the brand value alling and the cost o

the recall running into over US$100 million. Te brand

has ultimately recovered, but it took good year or the

organisation to get back to where it was beore the crisis.”

Julius Duncan is Director o Social Reputation at

social media agency Headstream. He says honesty is thebest policy in any situation like this. “You have to quickly

acknowledge any blame, show your concern as a com-

pany and show that your customers and protecting their

saety is at the oreront o what you’re thinking about. It

comes above absolutely everything else and you have to

stress that the whole time.” More recently (2009), saety

concerns suraced at child buggy-maker Maclaren when

dozens o youngsters had ngers chopped o, broken and

sliced in the hinges o their pushchairs. But instead o or-

dering a blanket recall, Maclaren had one million prams

returned in the US, leading to uproar in the UK rom

worried parents conused by the inconsistency. “Because

o the global nature the o media and the way that news

disseminates now, this became a big issue around the rest

o the world,” Duncan asserts. “Tey [Maclaren] should

have gone global with it immediately and said to every-

body, ’We’re absolutely shocked about this and we’ve got a

ree x here that you can get rom your local store, to stop

this happening ever again.’”

Maclaren reused to admit liability, but has agreed

to pay between €2300 and €11,600 to at least 40 chil-

dren. By then, o course, the damage was well and truly

done, primarily due to the mixed messages, says Hemus.

“Ultimately, it wasn’t a sustainable situation to have two

dierent messages about the same products in two dier-ent markets.” He believes the best course o action is to

ip your perspective on the situation and look at things

through the public’s eyes. How will these actions be re-

ceived by consumers? Will they gain or lose condence

in the brand? “It didn’t seem like Maclaren took that

perspective to their decision-making in this particular

situation,” he suggests.

Conversely, when toy manuacturer Mattel was

orced to recall 18.2 million toys in 2007 – the most in t he

company’s history – due to lead paint and design aws,

A

n outdated approach to ending o a

looming crisis could be to bury your

head rmly in the sand and keep

telling yoursel that any publicity

is good publicity; aer all, today’s

news is tomorrow’s sh and chip

paper, right? Unortunately, that kind o laissez-aire at-

titude is a one-way ticket to Disaster City. For the exec

at the top o the corporate tree – the CEO – it can mean

alling on his or her sword i a poorly managed incident

snowballs into an avalanche. Te boardroom bigwigs

will invariably have a trained eye on how an impending

catastrophe aects the all-important bottom line, but the

damage to an organisation’s reputation can sometimes

prove irreparable. And while it’s a natural reaction to de-

velop Schadenreude-like glee i your biggest competitor’s

name is being hung out to dry, don’t get too smug: your

own crisis could be hurtling over the hills as we speak.A nightmare is unolding right this second or oil

and gas supermajor BP, as crude oil spews out into the

Gul o Mexico ollowing an explosion that killed 11 rig

workers. Te oil and gas industry doesn’t exactly have a

squeaky clean image at the best o times, let a lone ollow-

ing this ecological and deadly disaster. BP has seen €28

billion wiped rom its market value and besieged CEO

ony Hayward is all too aware that his head is on the

chopping block.

Company chies don’t have crystal balls orecasting

impending crises. Tey can strike out o the blue, 365 days

o the year, but how you react denes whether the inci-

dent is nipped in the bud or whether it lingers like a badly

inected wound, dragging the brand’s name through the

mud or weeks or months, or even years. “Te damage is

done by how the organisation responds to the crisis rather

than the crisis itsel,” suggests brand reputation expert

Jonathan Hemus, ounder and Director o PR company

Insignia. “What an organisation does in the rst hours or

days is absolutely critical in terms o whether it emerges

rom the crisis very quickly, potentially with its reputa-

tion enhanced, or whether it’s going to do signicant

damage to the organisation and require nancial and

human resources to restore it.”

In safe handsTroughout history, saety has been at the epicentre o

copious brand crises. Lose consumers’ trust in your prod-

ucts because o a slap-dash attitude with saety and watch

your market share nosedive like a stricken plane with one

wing. Te ood and drinks industry, or instance, has had

innumerable product recalls. One that probably eclipses

all others in the drinks sector was the recall o 30 million

cans o Coca-Cola due to school children alling ill with

vomiting and stomach cramps in Belgium 10 years ago.

By Julian Rogers



40 www.bme.eu.com

In the Domino’s video, senior management, ran-

chisees and sta expressed disgust at the oending

video and pledged to sanitise every outlet globally. “Tey

moved orward on to their ront oot and started to push

the agenda in the direction they wanted it to be in,” says

Duncan, “because they managed to nd opportunity in

the crisis. Coming rom the shop oor, the video was very

authentic and powerul.”

Domino’s also used witter and Facebook to reute

claims that this was a widespread problem, but instead

a regrettable and isolated incident committed by two

rogue employees. Communication was a cornerstone in

the recovery. Stephen Cheliotis, Chairman o the Busi-

ness Superbrands Council, believes global companies like

Domino’s need to take a philosophical viewpoint because

you can’t control every eventuality. “Consumers aren’t

stupid; they will sit there and say, ‘It’s just some bloody

idiot in Domino’s who has taken it upon himsel to dosomething stupid.’ However, the bigger the brand and the

more consumers and employees you have, the more likely

there is to be a crisis. You have to have contingency plans in

place or everything that could go

wrong, however improbable, be-

cause your reputation is the most

important thing that you’ve got.

As long as brands react, people

will say ‘Fair enough, they’re now

supervising this closely so it can’t

be repeated.’”

Conectionary king Nestlé

was quick to react to a damaging

aair, but they chose the wrong

course o action and discovered

that negative publicity cannot

always be swept under the carpet. Greenpeace uploaded

a graphic video to the net alleging that Nestlé uses palm

oil suppliers who contribute to deorestation. Te video

showed an ofce worker greedily chomping on a pretend

Kit Kat made o an orangutan’s ngers rather than choco-

late waer. Nestlé’s response: get the video removed rom

Youube ASAP. Tis draconian reaction merely uelled

increasing interest in the oending lm, so Greenpeace

switched to video sharing site Vimeo – by which time ithad gone viral.

Nestlé has since announced a “zero deorestation”

policy in partnership with Te Forest rust, but Duncan

argues that the chocolate-maker’s eorts to stie the video

“backred”. “All that did was make it much hotter currency,

because everybody now wanted to see what was becoming

known as the censored Greenpeace video that Nestlé had

taken down,” he insists. “You have to realise that you can’t

control who is saying what and you haven’t got the same

level o control as you used to have when it was just main-

Chairman and CEO Bob Eckert took the crisis personally.

Tere were no mixed messages over the recall and Eckert

himsel was all over the media and using the company’s

social media channels to create transparency. Mattel

employees told o Eckert’s willingness to speak to them

directly and how they elt the company pull together to

overcome the challenge. “By demonstrating the right

behaviours, by lling the vacuum and by tak ing steps to

address the situation, they controlled it and the reputa-

tion is intact,” Hemus reveals.

Web reachIt goes without saying that crisis management (as well

as standard PR eorts) has signicantly intensied with

the emergence o online orums, blogs, social networking

sites like witter and Facebook, and video sharing giant

Youube.

All these channels are weapons in your arsenal whenconveying your message; on the ipside, these online

tools are at the disposal o Joe Public sitting at a PC any-

where in the world. It’s oen said that i consumers suer

a bad experience they will tell

around 10 people. I they receive

good service they will inorm just

a raction o this number. With

the power and global reach o the

web, consumers with an axe to

grind or your common-or-garden

activist can post, blog and tweet

pretty much what they like about

your organisation.

Emergencies that spawn

online require an online approach,

says Jay Baer, a social media and

strategy coach at Convince & Convert. “Companies don’t

ght social media re with social media water. I a crisis

erupts on Youube, you don’t answer back with a press

release – you answer back on Youube.” He adds: “Social

media moves so swily that unless a company has a crisis

plan in place beore the crisis occurs, it’s unlikely that

they can move ast enough to limit damage.”

Domino’s Pizza ollowed Baer’s advice and lever-

aged Youube to its advantage aer two US employeeslmed themselves carrying out vile acts in one o the

ast ood chain’s branches. One o the perpetrators

passed wind on a sandwich, shoved cheese up his nos-

tril and wiped his backside on a cloth. Te video was

uploaded to Youube and viewed more than one mil-

lion times. Tis was a potentially catastrophic situation

or Domino’s, so bosses sacked the oending pair and

quickly decided to ght re with re and post their own

Youube video. Te crisis originated online so needed

to be solved online.

“Crisis management has signicantly intensied with theemergence o online

orums, blogs and social networking sites”



www.bme.eu.com 41

The good: Mercedes Like any car launch, the uneiling of Mercedes’ new A Class in 1997 was a big

deal for the German car company. Howeer, Mercedes bosses were left with egg

on their faces when the diminutie car was put through its paces with the ’elk

test’ – a simulation in Scandinaia to see whether a car can cope with aoiding

an errant moose on the road. A Swedish motoring journalist swered to aoid a

set of cones but the A Class toppled oer, coming to rest upside down, smashed

and dented. With safety of paramount importance to the car industry, Mercedes

immediately postponed the car’s release and added fatter tyres, SP (electronic

stability programme), lowered the ride height and strengthened anti-roll bars. The

company communicated with the public eery step of the way to highlight how

it was tackling the problem. For the re-launch, Mercedes inited the press along

and hired the serices of Formula 1 drier Niki Lauda to push the car to the limit. Adelayed and costly, not to mention embarrassing, launch that was eentually put

back on track.

The bad: Jyllands-Posten newspaperAlthough started by a handful of people, this controersy soon spread around the

world, damaging a whole country’s reputation and leaing more than 100 people

dead. In 2005, Danish newspaper Jyllands-Posten printed cartoons depicting the

Islamic prophet Muhammad, including one with a bomb in his turban. News of the

cartoons spread in the Muslim world and soon Danish embassies in Arab countries

came under siege, some being set alight. violent protests led to more than 100

people being killed. Fuel was added to the re when the offending cartoons were

printed in more than 50 other countries. The uproar led to a boycott of Danish

products in certain countries and Denmark’s Prime Minister describing the scandal

as his nation’s worst international crisis since World War II. The cartoonist behind

the bomb in the turban illustration was forced to go into hiding following death

threats and a bounty being put on his head. A few years later, Danish police

arrested three men planning to assassinate him. Denmark’s crisis lingered for

years, not weeks, and has not been fully laid to rest to this day.

The ugly: Sanlu GroupProbably the biggest controersy to eer hit the food industry was the Chinese

melamine contamination in powder milk in 2008 that af fected an estimated

300,000 people and left six babies dead. Farmers laced their produce with

melamine, used to make plastics and fertiliser, in order to increase its apparent

protein content. When consumed in large amounts, melamine can cause kidneystones and kidney failure. China’s largest milk producer, Sanlu Group, wasn’t the

only company to sell the tainted milk but bosses did try to keep a tight lid on the

scandal once reports of babies falling ill began to surface. en the world’s best P

guru would struggle to put a positie spin on this tragic mess. Indeed, the World

Health rganization said the crisis of condence among Chinese consumers would

be difcult to oercome. Four Sanlu executies went on trial in China, including

the company boss, who was spared the death penalty and jailed for life. Two men

accused of being responsible for the contamination were handed down death

sentences. For China, which relies on its exports, this was a national disgrace that

seerely dented its image.

The good, the bad and the uglyA sideways glance at reputation crises in recent years.

The Mercedes logo (above); powderedmilk is recalled in China (let); protestersburn the Danish fag (below)



42 www.bme.eu.com

person in ront o a camera, be it or television, Youube

or the organisation’s own website. Conventional wisdom

says it should be your CEO, and nine times out o 10 it

will be. Whoever is selected to ace the music needs to

command authority, without appearing aloo, and suc-

cinctly convey their points lucidly. “Don’t put orward

someone who has the right title but is not capable o com-

municating eectively,” Hemus stresses. Tere’s always

the risk that your chosen spokesperson could squirm or

struggle to express the right message i a media scrum is

pitching awkward questions amid a sea o ickering ash

bulbs. Charismatic Virgin boss Sir R ichard Branson is an

instantly recognisable entrepreneur, particularly in the

UK. When one o his trains derailed in 2007, leaving one

dead and dozens injured, he took ull control o the PR

machine in the aermath – arriving at the crash site and

becoming the ace and mouthpiece or the company.

But when Eurostar trains connecting the UK andFrance broke down last Christmas, leaving thousands o

passengers stranded, some stuck in the darkness o the

Channel unnel without ood or water or 16 hours, CEO

Richard Brown’s words didn’t carry the same gravitas. His

PR eorts received a lukewarm response rom custom-

stream media. It’s really about engaging with consumers

and putting out your own content to balance out this nega-

tivity, rather than thinking you can completely control the

message or what people are saying about you.”

Whichever communication platorm management

opts or, it needs to connect with the consumer and be

devoid o corporate language. Bland, impersonal state-

ments go down like a lead balloon with the public. “Te

conversation needs to be authentic and transparent,” says

Duncan, “and have a level o humanity to it i you’re going

to really make things work on these platorms.”

Baer echoes these thoughts, stressing the need or a

humanised presence with communications, particular

social media. “Te companies that are the best at social

media conict resolution do so by attaching real people

to the scenario, not a logo. Ford did this incredibly well

during the auto bailout, building an entire microsite

explaining the company’s present and uture rom themouths o key executives.”

Speech bubbleLike Ford, part o the communications oensive will

usually include sticking a congenial and voluble spokes-

“Te companiesthat are thebest at social media confict resolution doso by attaching real people tothe scenario,not a logo”

V

How two high prole celebrities adopted contrasting stances to their recent scandals.

From the outside looking in, US golfer Tiger Woods had it all: a glittering

career, a Swedish model for a wife and more cash in the bank than any other

sportsman in the world. But in 2009, his reputation and the Woods brand

were in tatters when news surfaced of a string of affairs behind his wife’s back.

Altogether, more than a dozen women came forward in the media with

claims of haing had steamy sexual encounters and relationships with the golng

great. Despite the kiss-and-tell reelations and media circus surrounding the

indelities, Woods remained tight-lipped, taking a self-imposed hiatus from golf.

He did his best to aoid the glare of the media but paparazzi photos of him trying

to remain incognito while checking into a sex addiction clinic only fanned the

ames of speculation.

Woods’ silence exacerbated the crisis, says Insignia’s Jonathan Hemus.“erbody else was being interiewed by the media for their iews and rumours

were spreading like wildre, but the one person who wasn’t shaping or exerting

any inuence on this was Tiger Woods himself – presumably in the hope that it

would just go away but it clearly didn’t.” When he eentually faced the limelight,

his ’apology’ hit out at the media rather than expressing remorse. The fallout from

the whole debacle was a backlash from sponsors, with the likes of Gatorade, AT&T

and Accenture axing lucratie endorsements. These companies couldn’t associate

themseles with a tarnished star who shaped his brand on his seemingly clean-cut

image. Woods, a magnet for sponsors like Nike, was thought to earn €81 million a

year in endorsements before the adultery came to light.

TIGR WOOS

People brands



www.bme.eu.com 43

ers, but the company as a whole was ill-prepared or the

breakdowns and ensuing mayhem. “Tey tried to set up

witter accounts but the names that they wanted weren’t

available,” says Hemus. “So they were communicating

via a witter name that had been set up to promote short

breaks rather than having an account ready to use in the

heat o a crisis.” Lousy crisis management and not having

an eective ‘voice’ o the company meant that Eurostar

took a battering or the asco.

According to Hemus, Japanese automaker oyota had

a similar problem with its MD or the UK, Miguel Fon-

seca, when he appeared on breakast television recently.

oyota had already been accused o procrastinating over

the recall o more than eight million vehicles globally

ollowing cases o stuck accelerator pedals. Again, the sa-

lient issue o saety was the crux o this potentially deadly

crisis. “In the interview he just was not an eective com-

municator,” suggests Hemus. “He did not get his point o view across well and that was bad or oyota, but it was

also bad or viewers because they didn’t get clear guid-

ance on what they needed to do.”

Even i you are blessed with a great communicator,

you will need back-up spokespersons. “Otherwise, you

S US chat show supremo Daid Letterman decided to tackle his personal crisis

head-on – reealing lie on air that he was being blackmailed oer an

extramarital af fair. His unexpected outpouring had the studio audience

initially questioning whether it was all part of his primetime talk show, but it soon

became clear Letterman was telling the truth, reealing how he had had sex with

women on his staff. CBS producer obert Halderman demanded €1.6 million in

hush money after discoering the adultery through peeking at a former girlfriend’s

diary. Letterman displayed genuine fear for his safety during the 10-minute speech

interspersed with the odd quip: “Would it be embarrassing if this were to be made

public? Perhaps it would – especially for the women.”

viewers were left stunned by Letterman’s admissions but Hemus says his

direct approach to the situation was the polar opposite of Woods’ head-in-the-sand ploy. “As soon as allegations of an affair arose, he went on-air, apologised,

and took control of the communication of the message. Yes, it was still a big story,

but it was nowhere near as damaging to his reputation as it has been for Tiger

Woods.” Letterman, who married his long-term girlfriend last year, with whom

he has a six-year-old son, is normally ery guarded about his priate life so his

on-screen admission was all the more startling. It also seerely dented his good

guy image. Halderman was arrested and eentually sentenced to six months in jail

and 1000 hours of community serice after pleading guilty to attempted grand

larceny. For Letterman, who was commended for his honesty, the scandal had

little effect on his career.

vI LTTRM

Continued on page 44



44 www.bme.eu.com

orecourts in the UK soon spluttered to a halt, leaving

them with repair bills running into hundreds o pounds.

Te petrol, linked to one supplier, contained traces o

silicon. But instead o blaming the supplier, esco took

out ull-page newspaper adverts apologising or the

mistake and oering a reund or the petrol as well as to

oot the hey bill or repairs. Tey also set up a website

and advice line dedicated to oering help on what to do

and how to claim or repairs. Hemus commends esco

or adopting this strategy. “I’m sure the repairs cost them

many thousands o pounds but i they had not paid and

said it was not their problem but the supplier’s ault, the

longer-term damage to their reputation could have been

ar, ar worse.”

Having looked at the tactics to deploy and pitalls to

dodge, is there in validity in the rst point that today’s

news is tomorrow’s sh and chip paper? Can a 21st cen-tury company really expect to survive with this mentality

or can sitting on your hands and hoping the storm clouds

quickly pass save you rom garnering more publicity rom

a bungled crisis management plan. “Doing nothing may

have been a good strategy 10 years ago, but online media

means that this denitively isn’t true anymore because

anything that has appeared is now stored and reerenced

via Google,” says Hemus. “Also, all publicity certainly isn’t

good publicity and I think anyone who still believes that is

living in a antasyland.” n

can bet your crisis will happen on the day when your

super spokesperson is on holiday in Australia and not

available to do the interview,” advises Hemus. Baer says

customers oen need to see and hear the CEO as soon

as possible in a crisis. “I ask my clients whether they can

get a video rom their CEO recorded and uploaded to

Youube within two hours, even i that CEO is shing in

Arkansas. I they can’t then they don’t have an adequate

social media crisis plan. It’s less about messaging and

more about rapid response capability.”

As well as good communication, experts agree that

honesty is the best policy. Organisations need to come

clean about their ailings and where mistakes were made.

Concealing the truth or trying to wriggle ree rom any

blame merely antagonises customers and turns people

o the brand. I you umble the ball, be brave enough

to admit it. “Some companies tie themselves in knotsabout using the ‘S-word’,” says Duncan. “I you decline

to do that it becomes the story rather than actually just

accepting some responsibility, saying sorry and moving

the debate orward.” Tis is reiterated by Baer: “Tere’s

no place to hide any longer; oyota’s biggest problem isn’t

really the product quality concerns, it’s the lack o trans-

parency and appea rance o a ‘cover up’.”

Supermarket titan esco swallowed its pride and took

the blame or a uel contamination incident three years

ago. Motorists lling their vehicles at a batch o esco

➊Hae a plan: You

can’t foresee eery

eentuality but you

need to ensure you can

go on the front footonce the need arises. Fail

to prepare and prepare

to fail.

➋ct fast: Hoping a

problem goes away is

not an option because

there is nowhere to hide

nowadays. Be quick to

re up your action plan.

➌Be honest: It’s K to

say sorry. Consumers

respect companies that

admit mistakes and ow

to put things right.

➍Use social media:

Banal press releases

or, heaen forbid, “no

comment” quotes

rile consumers. Build

a following on social

media sites now – not in

the heat of a crisis.

➎Good spokespeople:

The C needs to

spread the right

message eloquently and

effectiely. If the C

isn’t that press say,

train up senior people

who can do the job

instead.

Golden rulesfor crisismanagement

Continued from page 43

Documents

Brand Crisis Ed p38-44