Author: Jonathan & Erik Bernstein

Playing to one stakeholder group at the expense of another is risky business

This weeks dustup over new YouTube ads from car shopping site Edmunds.com, is a great example of the dangers of focusing too much on one audience while neglecting to consider another.

Edmunds has been pushing the idea of no-haggle car sales for a while now, and, in an extension of that effort, its latest video series poked fun at the wrangling over prices that’s so famously associated with picking up a new ride.

While customers seem to be enjoying the videos, Edmunds advertisers aren’t happy. AdAge spoke to Jeff Wyler, CEO of the Wyler Automotive Group, whose dealerships are paying Edmunds customers:

“For 41 years, the Jeff Wyler Automotive Family has been committed to practicing business at the highest levels of integrity,” he said. “Negotiating prices on cars has always been expected by the consumer and having it referred to as ‘haggling’ by a company that I am a customer of is insulting.”

The 15-store group, Mr. Frye said, was putting its 2015 ad budget together when the videos hit YouTube.

While we would have advised the dealers to make their point about the tone of the videos rather than the word haggling, which, let’s face it, is the term most people use, the point still stands that Edmunds ticked off one set of stakeholders while appealing to the other. The result? One day after the dealer outcry, Edmunds pulled the videos, issuing the following statement:

“Our digital videos illustrating the ‘Absurdity of Haggling’ missed the mark. Some of our partners were deeply insulted, expressing that our attempt at humor reinforced outdated stereotypes. That was obviously never our intent. It has created a distraction from our business of helping to make car shopping easier. We are terminating the videos and getting back to working with our dealer partners to improve the car buying process for car shoppers around the country.”

Playing to your stakeholders can win you attention and brand loyalty, but don’t pander to one group while throwing dirt on another. Not only did Edmunds lose money on these ads that have already been pulled from public view, but we’d bet advertisers will be keeping a close eye on the organization’s next moves for signs that they’re no longer as dedicated to supporting them as they claim to be.

[Editor’s note: Tony Jaques, our friend, colleague, and frequent contributor to our blogs has just released a new book on crisis management, and we’d like to share his introduction to this in-depth work with you.]

Companies which think they are crisis-prepared may in fact still be dangerously vulnerable to financial and reputational damage.

That’s the conclusion of Australian author and crisis expert Dr Tony Jaques, who says it is increasingly clear that while some organisations establish very basic procedures to respond to a crisis when it strikes, many are failing to take a strategic approach to preventing the crisis from happening in the first place.

“The real danger comes when organisations believe all that’s needed to protect them from a damaging crisis is a three-ring crisis manual on the shelf and an annual crisis simulation” he warns. “Research involving Australian CEOs showed a unanimous acceptance that the best crisis management it to take proactive steps to prevent a crisis occurring, yet companies consistently fail to implement effective crisis prevention.”

Dr Jaques says a ten year study of crises in Australia revealed that more than a quarter of the organisations concerned did not survive. That fact alone is a good reason for executives to introduce systematic plans to reduce the chances of a crisis occurring before it happens. At the same time, he added, international data shows that at least half of all crises are not sudden, unexpected events, but result from slowly emerging crises which could have, and should have been identified in advance.

The need for a fully integrated programme both to be prepared for a crisis, and also to identify emerging crises and prevent them occurring, is a key theme of a new book Issue and Crisis Management: Exploring issues, crises, risk and reputation by Tony Jaques, (Oxford University Press, 2014).

The book is the first of its kind in Australia devoted wholly to issue and crisis management, and highlights the difference between tactical crisis response and integrated strategic crisis management.

Tony Jaques manages Australian-based issue and crisis management consultancy Issue}Outcomes, and is the author of the upcoming book, Issues and Crisis Management: Exploring Issues, Crises, Risk and Reputation, available at most major retailers both in the U.S. and abroad.

Putting out information at the right time will help get your message across

Communication is the cornerstone of all crisis management, but what good does it do if you’re putting messages out when your stakeholders aren’t around?

Before you start putting information out to the public, take a look at this useful infographic from SurePayroll:

Already hurting, new scandal puts grocer in a dangerous position

UK-based grocer Tesco is under the microscope of investors and regulators that results in a reputation crisis, as well as being lambasted by the public, following the revelation that some seriously shady accounting had been going on.

Business Matters summed the situation up:

Tesco was once the darling of the high street but now the 95-year old supermarket chain is facing its worse crisis ever as it admitted to inflating its accounts by £250 million last week. This wiped more than £2 billion off its market value, saw shares drop by 40% and put them at the bottom of the FTSE 100.

As a result, four senior executives were suspended, including finance director, Carl Rogberg, with UK managing director Chris Bush also thought to be one of the four, whilst an investigation takes place into what has been going on. Questions will also be asked of former chief executive, Philip Clarke, and Laurie McIlwee, the chief financial officer who left last week.

Tesco said it discovered the overstatement of its figures, made as part of an August 29 profit warning, during its final preparations for its forthcoming interim results. It then announced that full-year trading profits could be as low as £2.4billion – some £400million lower than expected – after ‘challenging trading conditions’.

Scandalous as it is, this is the type of issue that a well-prepared business should have crisis management plans for, although the sheer magnitude of the executive’s deceit will make recovery a slow road. After all, while it’s a great asset to a rapid comeback, no amount of planning will instantly put £2 billion back into your coffers.

Social media crisis management done right

DiGiorno landed itself in the middle of a social media firestorm when it accidentally made light of a discussion on domestic abuse by using the #WhyIStayed hashtag, tweeting “#WhyIStayed You had pizza.”

Whoever was running the account realized their mistake within minutes, deleting the offending post and sharing a frank apology:

A million apologies. Did not read what the hashtag was about before posting.

— DiGiorno Pizza (@DiGiornoPizza) September 9, 2014

We heard from many of you, and we know we disappointed you. We understand, and we apologize to everyone for this mistake.

— DiGiorno Pizza (@DiGiornoPizza) September 9, 2014

Following that, the account went into full crisis management mode, spending a solid 24 hours apologizing to Twitter users, followed by a drastic alteration of its social media schedule, which typically involved snarky posts from morning ’til night. From September 9 through October 1, @DiGornoPizza went virtually silent, only tweeting to apologize or resolve customer service issues.

On the 1st, DiGiorno’s kicked back into action with the tweet below:

So, October is National Pizza Month? I thought that was every month HAHAHAHA seriously tho #NationalPizzaMonth

— DiGiorno Pizza (@DiGiornoPizza) October 1, 2014

The brand’s return to levity was met with enthusiasm from many on Twitter, and all signs point to the reputation threat created in the first place being nullified. Excellent social media crisis management from DiGiorno, and an example other organizations should be filing away for possible use in the future.

Are you protecting your most valuable asset?

We’ve been saying for years that reputation is, without a doubt, your most valuable asset, and as time rolls on that statement continues to be cemented as truth on an almost daily basis.

Whether you’re a massive multinational organization or a single person, your reputation will continue to carve your path to success, or, on the flip side, a need for crisis management.

Social scientist Heather Schlegel penned a compelling article for CNN.com which included this quote on the not-too-distant future of reputation:

Reputation will become an increasingly visible part of our everyday transactions. While we will create reputation on individual platforms, there will be an increasing demand for fluid exchange of reputation and ratings from one system to another. We’ll see tools to aggregate your reputation in one place. We may even see reputation system APIs developed to enable the transfer of your reputation to new platforms.

Picture this: four friends having dinner in a restaurant in the not-too-distant future. After the meal, they pay using a “Smart Check,” using integrated mobile payments, credit cards and private coins. As part of the Smart Check experience, diners can rate their experience immediately — everything from individual dishes, the service, and even the restaurant itself.

If you look around, you’ll realize this is already happening today. Not everything is as integrated and fluid, but with a few taps on a smartphone anyone can, and of course many do, affect a reputation through reviews, social media shares, blogs, and any number of other means.

Grow your reputation constantly, and safeguard it with a passion, or the not-too-distant future won’t look so good for you.

 

Yet another reminder of the need to include data breaches at your org and others’ in crisis management plans

Japan Airlines has joined the data breach club, announcing that hackers had made away personal info belonging to several hundred thousand of its Frequent Flier club members.

The Japan Times reports:

Hackers may have stolen details of between 110,000 and 750,000 members of Japan Airlines’ frequent flier club, the airline said, blaming a virus attack on computer terminals within its network.

The data includes the names, addresses, genders and places of work of members of JAL’s mileage program, the airline said Wednesday.

JAL said it has not identified a leak of credit card numbers or passwords, and that no financial damage has been reported.

The airline detected a number of intrusions on Friday and Monday into the system that manages customer information.

An investigation found that 23 personal computers contained a virus. Seven were found to have been sending data to a server in Hong Kong.

Data breaches are a global problem, and even those affecting businesses overseas can hold significant implications for organizations on home shores. In order to be properly prepared, you need crisis management plans for data breaches not only in your own organization, but also amongst your associates, suppliers, contractors, and anyone else associated with your business or the information it collects.

Would your organization have a plan in place?

The Target hack has been dethroned as the largest known data breach after less than a year following Home Depot’s revelation that some 56 million credit and debit cards were exposed to hackers due to an assault via customized malware.

The Wall Street Journal’s Robin Sidel reports:

Home Depot Inc. said 56 million cards may have been compromised in a five-month attack on its payment terminals, making the breach much bigger than the holiday attack at Target Corp

It was the first time the do-it-yourself retailer had defined the scale of a breach it said it was alerted to on Sept. 2. It also said for the first time that the malware has been eliminated from its systems.

The attack further highlighted the vulnerability of U.S. retailers to hackers that have been targeting their payment systems. Home Depot began a project to fully encrypt its payment terminal data this year, but was outpaced by the hackers, people familiar with the matter have said. The company said Thursday that the project is now complete in the U.S.

Home Depot claims to have cut hackers off from its system and eliminated the malware, as well as installing a new encryption system for payment data. While those are important steps to take, even more urgent is the need for all organizations to realize that, no matter the precautions they take, they ARE vulnerable to any data stored on computers, or even hard copy sitting in file cabinets, being stolen.

When the question is not if, but when, suddenly the need to prepare crisis management plans for the worst case becomes much more pressing. Don’t wait until you’re already taking damage to figure out what Step 1 should be.

Even easily avoidable crises don’t dodge themselves

When we saw that Malaysia Airlines was holding a contest asking travelers which places were on their “bucket list”, our jaws just about dropped through the floor. Even in a company that’s proven to be insensitive to the feelings of stakeholders this seemed an impossible mistake, yet here it was making headlines around the world.

Even worse, after the negative backlash surrounding its compassion-less communication following the crashes of both MH370 and MH17, the airline showed it’s learned nothing, giving an apology best described as half-assed:

“Malaysia Airlines has withdrawn the title of a competition running in Australia and New Zealand, as it is found to be inappropriate at this point in time. The competition had been earlier approved as it was themed around a common phrase used in both countries. The airline appreciates and respects the sentiments of the public and in no way did it intend to offend any parties.”

What can your organization learn from this unbelievable error?

1. Advance planning is great, but double-check before going live. It’s always good to plan ahead for events and promotions, but there’s no excuse for not checking to confirm whether your plans are still appropriate when it’s time to go.
2. Always think, “what could go wrong?” If your communications send a different message or evoke emotions other than what was intended, you’ve failed. Take a few minutes to consider how you could possibly be misinterpreted or cause offense, and head back to the drawing board if you find an answer.
3. Learn from past mistakes. When you screw up, people are going to talk about it, which makes it easy to determine what needs improving the next time around. Stakeholders of all kinds are surprisingly forgiving of one mistake, but continue to make repeated errors in the same vein and you’ll quickly wind up on the wrong side of a very vocal crowd.

Communication failures are some of the most easily preventable crises out there. Put yourself in your audiences’ shoes and think, “how would this impact me?”. If you can really pull that off, you’ll always know what to say.

A call to action through education

The longer crises are allowed to go on without definitive action being taken, the more damage is caused. When you have events like the current Ebola outbreak, that involve not one individual or organization, but many, the response becomes far more complex. In a continuation of its tried-and-true tactic of crisis management through education, the CDC sent its director on a media blitz, where he spread powerful statements like those below, from a CBS News article, to large national audiences:

Dr. Thomas Frieden, director of the U.S. Centers for Disease Control and Prevention, says the Ebola epidemic is “spiraling out of control” and is likely to get worse. Frieden has just returned from West Africa, where he toured areas affected by the outbreak.

Speaking on Tuesday with “CBS This Morning” from CDC’s Atlanta headquarters, Frieden said it’s critical now more than ever to help the countries where Ebola has taken hold.

“There is still a window of opportunity to tamp it down, but that window is closing. We really have to act now,” Frieden told CBS News. “Too many places are sealing off these countries. If we do that, paradoxically, it’s going to reduce safety everywhere else. Whether we like it or not, we’re all connected and it’s in our interest to help them tamp this down and control it.”

Later, in a news conference at the CDC, Frieden said that while the situation is dire, it is not hopeless. “The countries are engaged, they’re willing to stop it,” he said. “They need the world to work with them. This isn’t just these countries’ problems, it’s a global problem.”

Knowing what a hairy task it can be simply to get a room full of company leadership to focus on one goal and take action together, we certainly don’t envy Dr. Frieden’s position, but we do send him, and the many professionals and volunteers conducting crisis management for this global health risk, our respect.