Corporate reputations impact brand and product sales performance. That’s one of the key findings from a recent global study by Weber Shandwick called The Company Behind the Brand: In Reputation We Trust.
As the survey report states, “As consumers around the world have greater online access to a brand’s lineage, the influence of the brand parent, or company behind the brand, matters even more.”
The study identified Six New Realities of Corporate Reputation, which the PR firm says serves as reminders that business leaders cannot view their company’s reputation and their product brands as separately as they once did.
These six “new realities” are:
1. The corporate brand is as important as the product brand(s). For instance seventy percent of the respondents said they avoided buying a product if they dislike the company behind it.
2. Corporate reputation provides product quality assurance.
3. Any disconnect between corporate and product reputation triggers sharp consumer reaction.
4. Products drive customer discussions, with reputation close behind.
5. Consumers shape corporate reputations instantly.
6. Corporate reputation contributes to company market value.
In actuality, none of these are truly “new” realities, other than perhaps the ability of consumers to now shape corporate reputations instantly via social media.
What is also very clear from the survey is that Crises like product recalls or any incident involving the company can cause irreparable damage to the brand and reputation.
In reading the report, the value of minimising potential reputation risk became apparent. For instance, if a Reputation Manager paid attention to the top 5 talking points that the research revealed, he or she could develop strategies to minimise the risk before it occurred.
These five talking points are customer service, how employees are treated, company scandals or wrong-doing, and their feelings about the company as a whole (its reputation).
Understanding Reputation Risk and what could destroy value is now a vital competency for any Reputation Manager.
The report also clearly shows that Reputation Matters now even more than ever, with more than 60% of a company’s market value attributed to it.
The report which makes for excellent reading, is available online here
In my blog posts of 15 September 2009 http://deonbinneman.wordpress.com/2009/09/15/product-recalls-done-properly-reduces-reputation-risk/ and http://deonbinneman.wordpress.com/2010/01/25/is-your-company-ready-to-deal-with-a-product-recall-a-checklist-for-your-convenience/; I discussed the importance of product recalls and the type of planning and preparation that needs to be done to make this process a success.
The following video, although of low quality is a must watch and features Bob Eckert, CEO of the world’s largest toy manufacturing company and he has some real lessons to share about this process, including some real reputation risk reduction lessons using adequate communication and crisis preplanning and the risks that emerge from subcontracting.
Those readers who are interested to learn more about product recalls and the steps needed to prevent unnecessary reputation risk, will want to attend a special workshop that will be held on the subject at the end of July in Johannesburg, South Africa.
|What:||27 July – A Product Recall Workshop (Planning for and Managing a Recall)
The challenges of dealing with a product recall is immense and resource challenging. Not only is there the challenges of dealing with the recall itself but the challenges of communicating with all stakeholders and minimising reputational fallout is high. The Toyota and now wider recall issues in the motor vehicle industry (Honda, Land-Rover, etc) is serving a warning to other operators and manufacturers in other industries of the need to prepare for a recall long before if it happens. The issues in dealing with a recall goes back long before the actual recall event. Prior preparation, risk management, attention to quality and communication issues need to be addressed, and will be scrutinised if such a recall ever takes place. Since a recall is always a possibility despite of quality controls and risk management, companies are well advised to plan to handle potential recalls well in advance, as handling product recalls professionally can go a long way to safeguard reputation.
|When:||Tuesday, July 27, 2010 (all day)|
Johannesburg, Gauteng South Africa
They say that when a crisis strikes, how you act in the first few minutes determines the final outcome. With more companies developing crisis or disaster recovery plans they can turn to if the unthinkable ever happens, service providers are not far behind, hoping to offer them the right solutions for the job.
Numerous crises ranging from product Recalls to Oil spills to Social Media crises have again highlighted the importance for companies to be prepared. REPUCOMM has launched a crisis management toolkit that can assist companies to create a workable crisis management and crisis communication response plan for the business.
‘If you have an emergency situation that needs to be dealt with, the last thing you want to be doing is worrying about how to deal with it or worry how to keep all your stakeholders informed.’ said Deon Binneman. ‘Being prepared is an ethical responsibility to stakeholders’.
The Crisis Manager Toolkit is a highly effective, low cost solution to assist any company to develop workable crisis management action and communication response plans and is a useful resource that can assist any manager in this phase and during a crisis, and can serve as a benchmarking instrument. It consists of a ZIPPED file format that contains useful information such as the following:
- Detailed questionnaires, articles and checklists to prompt thinking processes whilst planning and preparing response plans;
- Various guidelines and tip sheets ranging from stakeholder communication templates to dealing with the Media tips sheets;
- Handy templates and forms;
- A Copy of a 2 – day course consisting of a PowerPoint presentation that can be customised for internal training and information sharing use with the Board, executives and staff;
- A 40 page Crisis Management & Communication Response Plan Template as well as a copy of an Emergency Response plan template;
- Guidelines on how to respond to Internet Reputation Crises, including Social Media Guidelines on Twitter, Facebook and Blogging crises.
The benefits of the toolkit are numerous including:
1. It allows for preplanning and development of a plan instead of employing outside professionals at the outset of such a project. Whilst having independent input is essential, it can save a lot of costs if the groundwork have been completed.
2. Many organisations do not have the capacity to have a fulltime Crisis Manager position but that does not absolve them of the necessity of planning for dealing with the hand of fate. Today stakeholders of an organisation expect an organisation to be ready to deal with all calamities as well as the unique communication challenges that these situations bring. But in many organisations plans exist in various forms and guises. Plans exist as Disaster Recovery (IT related), Business Continuity, Occupational Health & Safety & Emergency Response plans, and Communication Response plans (PR/Communication). Sometimes these plans are coordinated, sometimes they are not. I believe that all of these plans should be integrated in an overall crisis management response plan for the organisation.
3. Self- Study. The toolkit is a tremendous aid for those who want to bring themselves up to speed with the latest development in crisis management thinking & crisis communication response. The kit contains a complete PowerPoint presentation with leaders guide notes prepared and facilitated by Deon Binneman the past 14 years.
4. Benchmarking – What works? What does not? What does international best practice and experience teach us? The CM Toolkit is a useful product that you can use to see if your plans stand up against best practice. Are you ready?
The rationale behind the toolkit is as follows:
Recent media reports and other business and natural disasters have again just illustrated the need for companies to plan for all eventualities including the communication challenges that is created during these eventualities. The actual process of emergency planning and crises communication management is a vital one if companies want to safeguard their assets, minimise their risks and uphold their hard-earned reputation.
Two thoughts can guide us in this process, the words stated by Benjamin Disraeli “What we anticipate seldom occurs; what we least, generally happens”, and the fact that Noah built the Ark days before it rained.
Years and years of experience have proven that the companies who copes the best with crises of all kinds are those who are prepared to deal with the hand of fate. Those companies who have set in motion processes to minimise potential crises. Companies who cope successfully with crises are normally companies who have a predetermined plan of action including communication response plans.
Crises management is defined as the ability of an organisation to deal quickly, efficiently, and effectively with contingency operations with the goal of reducing the threat to human health and safety, the loss of public or corporate property, adverse impact on normal Business continuance, and damage to it’s good name – it’s Reputation.
The toolkit is a useful resource that can assist any manager in this phase and during a crisis, and can serve as a benchmarking instrument.
Here is a quick questionnaire (Based on a very detailed 11 page plus one in the toolkit) that can guide your decision to purchase the toolkit – See my blog post How up to date is your Crisis Management Plan? as well as the post How Reputation Event/ Crisis-Ready is your Organization?
POA – The toolkit is in a PDF and PowerPoint Format can be e-mailed to customers.
To find out more about the Toolkit, contact Deon Binneman.
Is your company prepared to deal with a Product recall?
Product recalls have the potential to seriously damage your reputation and brand name and can cause distrust amongst stakeholders and possible litigation, especially if it involves aspects of health & safety. In fact a shoddy product recall could results in untimely deaths.
The current product recall by Toyota is a prime example of what can happen to a company. Bad things can happen to good companies. In this case it is a removable floor mat that could cause accelerators to get stuck and lead to a crash.
Just imagine that you are the manufacturers of a product that could implicate the lives of babies. Just imagine that some dangerous bacteria manages to contaminate this product and you have shipped this contaminated products and they are in use at hospitals and clinics throughout Southern Africa.
How will you withdraw the product from the market and how will you inform all these outlets about the dangerous situation in a way that your integrity and reputation can remain intact and not be questioned?The trick lies in being prepared just in case it happens and then reacting swiftly to deal with it, both from a reality and a perceptual perspective. The difference lies in HOW these companies respond. That difference has its origins in how well prepared the business is to deal with the hand of fate. The companies that manages to weather the storm are normally those that are prepared to deal with the crisis and can communicate quickly and decisively.
But, how many small to medium size businesses even plan for this or even know what to do when such a situation comes around?
Perhaps the following checklist can be helpful as a planning and action guide. (Caveat – This checklist is only a rough guide. You should work with professionals before, during and after a product recall crisis. This checklist should be developed into a particular section of the completed crisis communication plan for the business and should constantly be updated. For an example of a complete crisis management template, you could consider obtaining REPUCOMM’s Crisis Manager Toolkit).
Do the following:
- Define a recall (e.g. an event to effect removal of product from business because as a result of an identified hazard or problem) using your company or industry’s specific language.
- Outline how the Company is to react once a recall is in effect and who/what declares a product recall, and what decides that a recall is over (These actions will be influenced by legislation particular to your industry, Industry association guidelines, bylaws, best practice, and organisations like the SABS – South African Bureau for Standards. Quick tip – The new Consumer Protection Act that is coming into effect in October also deals with this in various means -Consumer Protection Act, 2008 (Act No. 68 of 2008), Chapter 2 : Fundamental Consumer Rights , Part H : Right to fair value, good quality and safety, 60. Safety monitoring and recall.
- Outline the product recall classifications and the Company’s responsibilities in each circumstance.
- Define the process to identify affected product.
- Define the traceback system and record keeping practices and where to find the information about who the product was delivered to and when.
- Ensure that supplier and distribution (brokers, retail, wholesalers, etc.) contact lists are up to date and include as much contact information as possible. These lists should be updated either monthly or in real-time.
- Investigate how you would inform the public. It is essential to plan for recalls so that you could for instance quickly and effectively be able to run an advertising campaign, especially if people’s lives are at stake.
- Determine the required legal and other authority notification procedures for your industry.
- Know what data the authorities or legal practitioners will require from the company in the event of a recall e.g: product(s) recalled (brand names, product names, code number, type of packaging); production codes and dates (sell by date or other identification codes); problem/reason for product recall; how/when hazard was discovered.
- Know who will be the Company contact person and who will be allowed to speak to the Media. Make sure that this person is trained and well-versed with interviewing techniques.
- Define the information necessary to vet the quality of product recalled (i.e. complete info on lots, production dates, distribution and location of product, accounting of all product, etc.).
- Have on hand or get it compiled quickly – Any information on product distribution (i.e a complete breakdown of retail/non-retail distribution and amounts sent to retailers, etc.).
- Prepare beforehand any relevant information on how to handle the product. This may be defined by MSDS (Material Safety Data sheets). For instance if the product is in use, how do you prevent contamination of localities i.e. water or air, etc.
- Ensure that you plan beforehand how you will inform all stakeholders about an incident – the authorities, the Media, the shareholders, staff and customers.
- Determine the procedures to handle the return of the product in a retail setting such as where customers need to hand the product back to a retailer, what the compensation procedures will be and how you will communicate with the consumer.
- Set up procedures at the office to handle incoming calls. Ensure that your staff will be trained on what to say and to record. Will your Call Centre be able to handle the volume of calls?
- Have you had a dry-run of your product recall procedure? Dusty procedures is of no use in a policy manual or on someone’s desktop. Regular training is a must.
- Test your quality feedback monitoring systems. prevention is better than cure. If you can deal with problems before they occur, so much the better.
As you can see a product recall is not a simple exercise. Ideally you should plan beforehand and work with a number of identified experts to plan a potential recall. These experts could include HSE, PR and Legal practitioners.
If in doubt whether you need to go to this extent, remember that Noah built the ark seven days before it started to rain! (But he had access to divine wisdom)
Will you be able to say the same, if the hand of fate strikes? That you had prior wisdom?
Many companies fear that widespread disclosure and publicity of product recalls may be harmful to their reputations.
It could be but it depends on how product defects and recalls are handled. These days stakeholders ask for no less, namely that they be informed, especially if the product carries a health & safety danger.
Since a good reputation for product safety and reliability is an essential ingredient of a company’s sales efforts. Handling product recalls professionally can go a long way to safeguard that valuable asset.
The new South African Consumer Protection Act will impact on recall procedures.
However there are other factors to consider:
1. Recall communications is an expensive exercise. It will necessitate the use of mass media techniques depending on the circumstances, and the role of advertising agencies and other role players in this exercise will have to be factored in.
2. Negative publicity about a product before a company can officially respond can be damaging and may lower trust in the product name.
3. A Recall can have a ripple effect, as it may tarnish the reputation of the organisation and its other products. Act speedily and with resolve is key.
4. There may be product liability expenses. In many cases in the USA, litigation resulting in class action law suits have been extremely expensive. (Study Merck and its Viox withdrawal, which has run into billions of dollars).
As with any crisis, there are two things to remember, namely the reality of dealing with the crisis and the perceptions created during the crisis.
The reality of the situation involves dealing with the actual withdrawal and the perception side deals with informing various stakeholders about the withdrawal.
Here then is a short checklist that I have prepared that you may find handy. My advice is to do your homework before a recall occurs. Remember bad things happen to good companies (Murphy’s Law).
The checklist is by no means comparable to a a proper guide compiled by an external consultant working with your crisis team, but should at least prompt your thinking before a recall actually happens..
Product Recall Checklist
1. Because product recall communications and actions are complicated, close coordination of all the activities of various managers will be needed. Many managers will be affected; Sales, Distribution, packaging, quality control, customer service, PR and legal counsel. Outside stakeholders such as the Media, Advertising Agencies and the authorities such as the SABS may be involved. Who will act as Coordinator?
2. Where outside specialists might be involved, do you have them readily identified as well as SLA’s drawn up, before a recall happens? Consultants and experts identified at the last minute can be very expensive and often there is no professional working relationships between the parties.
2. Who will issue a general statement issued to the widest possible publicity distribution, spelling out the reasons and steps for the implementation of the recall as well as the steps taken to prevent recurrence?
3. Who will prepare the Recall procedure? How will customers return the product? (This protocol should be created prior to a recall)
4. What about Dealer logistics?
5. How will you keep your stakeholders informed about the success of the recall? Remember that some stakeholders will want to know how many products have been returned and at what cost?
6. Who will monitor Media reaction?
Product Recalls executed professionally can go a long way in allaying the fears of the consumer stakeholder and will bring and instil much needed trust.