How To Prepare For Your Reputation Crisis

How To Prepare For Your Reputation Crisis

As the recent episode of This Is Us and a Crockpot fire showed, a brand can face a reputation crisis that comes out of nowhere, and has the potential to endanger its business.

In fact, Deloitte estimates there is an 80% chance of a company losing at least 20% of its value in any single month over a given five-year period because of a reputation crisis.

And while it can be difficult to assess an actual value of a bad online reputation, The Voice Of The Customer blog places the annual cost of unhappy customers at more than $537 billion. That’s how much of the US consumer market business is at risk when customers switch products due to poor preventable experiences.

And it’s not just the big guys that get hit.

Every business has the risk a crisis that can seriously disrupt their business — tainted product, accounting fraud, destructive fire, natural disaster, violence by disgruntled employees, employee theft, executive scandal, cyber breach, environmental damage and even an unanticipated work stoppage from equipment failures.

If you can’t develop, produce or sell your product or if your management gets entangled and distracted with a reputation crisis, how will you grow or even sustain your business?

How an organization handles company and brand reputation crisis and disclosures about it can be mitigating factors. But many companies and brands stumble in times of crisis.  That’s the opinion of Lawrence A. Crosby, Ph.D. and retired dean of the Drucker School Management.

Crosby reports that consumers and influencers will consider these seven factors as they evaluate a brand during and after a reputation crisis:

  1. Did the company take immediate actionwhen the problem was detected?
  2. Has the company been upfront and transparentas to what occurred and why?
  3. Did senior leadership take responsibilityfor what happened?
  4. Did their apologies sound sincere?
  5. Is there accountability at all levelsfor those who cause problems or fail to prevent it?
  6. Are the remedial actions enoughto prevent problem from occurring again (e.g. improved management and operations, open lines of communications and addressing bad culture, etc.)?
  7. Has the company provided just compensationto those who were directly harmed, or has it tried to wiggle out of its duty?

As we all know, customer trust can be fragile. Once lost, it can be difficult to regain. Consumers have short memories and are somewhat inclined to forgive, but that’s not nearly guaranteed.

Think about wise Ben’s advice.

“It takes many good deeds to build a good reputation, and only one bad one to lose it.” Benjamin Franklin

A HBR piece offers these strategies to manage through a crisis including — evaluating the reality of managing a crisis, closing the gap with communications and putting one person in charge during the crisis.

Here eight strategies that we suggest clients use to manage a reputation crisis and regain customers’ trust.

  1. Philosophy & position— know and appreciate the value of being open, responsive, sincere, professional and proactive when a crisis hits.
  2. Anticipation– before it hits, identify the worst-case scenarios and your team’s capabilities to address them (see list below) as crises can come in many ways known and unknown.
  3. Listening & hearing – have off and online listening mechanisms for hearing about your brand or organization’s problems on a timely basis; here are best strategies and tools for social monitoring online from Chris Syme during a crisis. This Brandwatch post will get you started on basic and valuable software monitoring tools.
  4. Policiesprocedures – know how, who and when about speaking competently and confidently to build trust with media and all your constituencies. CEO or other senior executive best at this?
  5. Spokesperson designation and training– prepare and train that CEO or senior executive to establish that your spokesperson and his words matter and are trustworthy.
  6. Messages & materials– anticipate and prepare valuable and pertinent messaging and template statements, releases and Q&A for both social and mainstream media.
  7. Allies network– identify and build alliances and create communication systems to help allies help you during a crisis.
  8. Followup & response process–– create systems and procedures on how to update the media, influencers and public in a timely, responsible manner.

You will want to consider this mention crisis planning framework too – simple and powerful.

How prepared is your brand to manage a reputation crisis?


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