How to Rescue a Brand in Crisis

What is a brand? It is a promise—a promise that the company is worth considering above all competitors. A good brand is a shortcut to a comforting sense of reliability, trust, value—even emotional attachment. Above all, a good brand reduces the perception of risk to the point where customers (as well as investors, analysts, and trading partners) are willing to pay more—and buy repeatedly—because the risk of failure in choosing an alternative seems too great.

When a crisis hits, brands face their biggest test—particularly for services providers, whose differentiation comes through the service experience and value delivered.

When things go wrong, the brand goes into a critical period of reevaluation by customers, prospects, and influencers. The actions that providers take during this period can worsen the crisis or provide an opportunity to recover a hard-won reputation.

The first response to any crisis should be to demonstrate that you are taking action to reestablish trust among customers by maintaining delivery and quality and by being transparent about actions you will take to fix the problems that led to the crisis.

But it’s not always clear what companies should say during a crisis. Should they consider trying to create the sense of a fresh start in the minds of customers, or simply try to maintain continuity and communicate what they are doing to rectify the crisis?

Respond quickly

Everything that a brand stands for is up for grabs during a crisis. Customers and prospects will be anxious to hear whether they were right to place their trust in the brand. And they won’t wait long before making up their minds. The company’s quick response is critical to making sure that the perceptions attached to the crisis don’t become permanent. Before making any drastic brand decisions, it’s important to clarify what will be done to rectify the crisis and to understand the impact of the crisis on the business. There are two steps to this process:

1. Be transparent. As soon as you have an action plan in place for the business, communicate it. Be open and honest about what happened and what is being done to fix the problem.
2. Assess the pace and depth of customer losses. The most important vital signs for companies to monitor in the wake of a crisis are the pace and depth of customer losses. Factors that will impact the pace and depth of losses include the following:

• Low switching costs. If the costs of switching to another provider are low, customers may panic and try to switch in the immediate aftermath of the crisis, increasing the pace and depth of losses. If switching is difficult, the pace of loss will likely be slower.
• Dire predictions from analysts. If Wall Street and/or industry analysts are outspoken in predicting that the crisis will have a substantial impact on the provider’s ability to do business now or in the future, it could precipitate a stampede.
• Level of commoditization. If the provider’s offerings are not substantively different from those of competitors, brand loyalty may be slim and customers will be vulnerable to aggressive poaching by competitors.
• Length of the crisis. If the crisis is something that can be resolved relatively quickly, press and analyst attention will likely die down quickly, too, perhaps decreasing the long-term pace of customer losses. However, if the crisis results in a lengthy public investigation, the long-term impact could be severe.

What other issues are there to consider in a crisis? Please comment.

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