Crisis management is no longer just about alerting customers to a fault or writing an apologetic letter. In the digital age, crisis management requires swift, sweeping action on all digital fronts including social media, blogs and company websites. Paul Johnston, a Senior Consultant in our UK MSS Practice looks at a recent product recall and considers how companies in the digital age should react to crisis management.
Product recalls are typically small in volume, affecting a limited number of customers and in some cases are sometimes conducted as a risk mitigation strategy, rather than to address a definitive issue. It is notable therefore that in between various scandals last week, a major product recall by Beko became prominent in the UK’s news headlines, and prompted concern amongst UK consumers. The cause of this concern is a fridge freezer blamed by the manufacturer for multiple fires, one of which resulted in a death. The impact of this piece of news has elevated the product issue from ‘nuisance’ to ‘deadly’ in many consumers’ minds, overwhelming the freephone number provided by the manufacturer.
This is a situation that can make or break a manufacturer, response to crisis is telling of whether a customer trusts that you will resolve their issues quickly when things go wrong. In this digital age, there is a greater opportunity, and expectation, for your customer communications to be cascaded quickly and issues resolved to restore faith in the manufacturer. On occasion, not all the facts are reported as clearly as they could be. Traditionally product recalls have occurred through a notice in a shop, or an advertisement in a national newspaper. The mainstream media do not always publicise it so prominently. By doing so it seems the facts have sometimes been reported in a manner that makes a good story, rather than providing comprehensive coverage of model numbers and years affected. A list of product numbers doesn’t make an exciting news story. In some cases, although there may be multiple models affected, it is seldom every product, yet you hear stories of customers phoning the helpline about a product they purchased in a timeframe absolutely not affected by the fault.
By their nature, manufacturers mainly sell through partners, from online agents to high street chain stores, the result of which is a lack of customer data visible to the manufacturer. Although some shops collect customer data through loyalty schemes on the high street, or through online forms when checking out of an online store, this is rarely voluntarily shared with the manufacturer, who often at very best can purchase the customer’s data from the retailer, but not always at the level that details who owns which product. And how many people really complete the forms to register your electrical appliance?
Therefore manufacturers need to be thinking of how they engage with customers directly, and with accurate information, when they need to, such as in the event of a major product recall, to avoid causing panic and damage to their reputation.
Toyota’s recent product recall crisis is another example where it all went a little wrong. As soon as the recall was announced, the negative news spread like wildfire through Twitter. However, considering Toyota has over 70,000 fans on its facebook page and 50,000 followers on its Twitter feed, the often considered ‘social savvy’ company remained silent. The consequences of this poor crisis management according to Interbrand is estimated to have lost Toyota 16% of its brand value.
Whilst a notice in a shop window will remain relevant, manufacturers should be looking to embrace digital channels in order to develop a direct relationship with their customers and also gain valuable insight on their preferences. This customer insight can feed into product development activities, as well as ensuring tailored messages can be sent directly to customers when required. Shops remain relevant as a sales channel, but play a reduced role in providing customer insight to the manufacturer.
The methodology for embracing digital channels has been discussed extensively, but to summarise, manufacturers should be using a mix of social media tools that their customers are known to use, for example a Facebook group or Twitter feed, to engage with customers who have purchased a product and use this as a channel to communicate directly with any customer that has joined the group to get relevant information on their product and choice of sales channel. Then leverage these channels to effectively communicate with customers in times of crisis. Another critical need is that the channels are two-way communications, many organisations fail with their social media strategy when they treat the resources like a one-way marketing tool. At times of crisis an agency may need to be employed to handle the increased communications. Companies need to decide what they really need from the customer in an era when customers have little patience for completing a lengthy form. A short Facebook message requesting a product code, date and place of purchase and email address, along with any promotional details, is far more likely to illicit a response than a request, either by letter or online, for full name, address, date of birth and information on which magazines you read most regularly. Companies also need to pay attention to Twitter and the blogosphere and consider solutions which turn social insight into action in order to be able to respond rapidly to online reputational threats.
These principles apply in other ‘crisis’ situations, for example within the airline industry at times of snow, ash or strike having the ability to cascade messages via social channels has become critical and a basic passenger need, rather than a delighter which it may have been previously.
Additionally, the online service channel and company websites must be equipped and able to adapt quickly in the event of a major recall. Full details of parts affected, actions being taken and a full assessment of the risk is far more helpful than a message informing customers to call a freephone number.
In summary therefore, manufacturers should be embracing digital channels to learn more about their customers, collating the right insight and acting rapidly on this. A website is the first impression many customers get of a company so managing this and linking the web team to the customer service team is critical.