How To Manage Brand Failures Effectively

A brand is the identity of a company, product, service in the minds of consumers that is built through hundreds of experiences and interactions, reinforced by word of mouth references of others.  The activities involved in branding, therefore, comprise far more than advertising and marketing messaging. Design functionality, strategic planning, customer service, organizational structure and corporate culture are all vital components that directly and indirectly influence how a consumer interacts with a company to create their perception. Failure in any area can cause a brand to slip much faster than trust took time to build.

While minor transgressions like a poorly designed website or a difficult to navigate retail experience can build over time, other events can change the perception of a brand’s image in the blink of an eye.

A massive corruption scandal in China recently caused Chinese sales of GlaxoSmithKline products to fall 60% and greatly damaged their image in the world’s most desirable emerging market. More tragically, when a factory collapsed in Bangladesh killing 1,120 people, UK retailers Primark and Bonmarche along with many other fashion retailers came under worldwide media pressure they were never prepared for.  Insensitive comments like Abercrombie & Fitch CEO Mike Jeffries’ disdain for fat people, or a leaked advertisement like Ford’s depiction of women tied-up in the back of a car can also have lasting negative impacts on a brand image.

Despite the presence of market research, legal and PR teams, it is surprising how much poor decision making persists as red-flags are ignored when times are good. When advertising campaigns go wrong, blame falls on the desire to creatively stand out from competitors. Other failures have deeper roots within the organization. When brands become complacent, entitled and bureaucratic, they are rarely prepared for the consequences. But whatever the reason for a failure, there are distinct ways a brand must handle crisis. Unfortunately, much of the activity is required long before a crisis arrives.

Three ways a brand must handle crisis

Listening and Monitoring: In the era of 24-hour news, bad news travels fast. According to PWC, social media is a No. 1 area of concern for executives due to the fear over reputation damage it can cause. Thus, it is vital that conversations about the brand are monitored. While companies typically conduct brand-audits on an annual (or even less frequent) basis, software can now capture every conversation in blogs, comments, news, and social media to understand sentiment in real-time. To stay ahead of any potential crisis, marketers must become data-scientists.

Preparation and Response: Many organizations treat crisis planning as something to do when a crisis presents itself, but it takes only a few hours of silence or the wrong first-step to do irreparable harm. Guidelines to handle crises must be drawn up well in advance. When PR staffs are suddenly thrust in to survival mode, emotions can overwhelm the message and become negative or defensive. Since the speed and tone of response in the early stage of a crisis is crucial, positive pre-approved statements should always be ready. Not communicating can create a void that can be easily be filled by rumor and speculation.

In 2013, yoga brand Lululemon suffered damage it never should have thanks to its lack of organized response to problems with materials. When consumers flooded to social media to make enquiries, they were directed to stores for questions and no public announcement was made for several days.  Lasting images of the uninformed, unhappy mobs across North America cost high-profile Lululemon executives their jobs.

Conversely, when Bloomberg came under fire for illegal data tracking, they wasted no time in delivering a swift, on-brand response within hours. With as much transparency as possible, Bloomberg reiterated internal policies in television media, opinion editorials and personal appearances in perfect coordination with all other communication channels with a balance of humility and concern. Their strategy also included progress-reports of the improvements being made to assure clients that real action was being taken.

Honesty and Understanding: In the best case, a major crisis can become an advantage, but it requires honesty and a genuine desire for change. While it doesn’t have to include an apology, a company must demonstrate an accurate assessment of the issues facing its customers, recognizing that it must do better. Consumers must be assured that a brand understands the core of a problem before they can be convinced of a solution. Once it recognizes its true purpose, it must then be the most authentic version of itself it can be – unleashing an emotional response that shows the world what it believes in. The hard-part, however is implementing the turn-around, which is why the entire organization must be genuine in its promise. Consumers can spot a fake very quickly and may never return their trust.

In an era where it is difficult to gain the spotlight and even more rare to admit failure, doing exactly that may have a greater long term positive impact with consumers. This is a clear reason why brand strategists belong in the boardroom, eye-to-eye with accountants and financial officers. The brand is more important than any physical asset on a balance sheet and no amount of accounting creativity can repair a tarnished image in the way that a sensible and earnest commitment to change can.

Unfortunately for most brands, it often takes a failure or that of a competitor to drive meaningful change and preparedness in crisis management. In the case of the Bangladesh garment factory, many of the world’s largest fashion retailers, H&M, Zara, Gap, Calvin Klein and Walmart moved to address worker safety-using the opportunity to become activists for a cause that damaged their industry. But the best crisis strategy is, of course, that never has to be used.  When dealing with crises that cannot be anticipated, they must be faced head-on with expediency, humility, clarity and a genuine, public and transparent road to recovery.

There is an old-saying that a cover-up is worse than the crime. A defensive tone is the wrong one and honesty is often the best policy to turn a crisis in to an opportunity. Using a failure as a chance to show true values can help consumers identify with a brand as human and worthy of a customer’s relationship them.