How to handle a brand reputation crisis

History tells us brands can come back from the brink of a company crisis, yet it takes serious and long-term communications, vision and commitment to get there

While the reputations of Australia’s financial services companies might be copping a hammering right now at the hands of the Royal Commission, they might take take heart from the knowledge that no matter how bad things, there is usually a way back.

Most of the time, at least.

Australia’s corporate history is littered with examples of brands that have been publicly pilloried and have carried on regardless. In some cases, they’ve even come back stronger than before.

Just look at Vodafone, whose customers were particularly savage in their treatment of the company during its ‘Vodafail’ period earlier this decade. Since then, it’s been gradually regaining marketshare, climbing back above 15 per cent of the market last year (although it did have to spend more than a $1 billion improving its network to do so).

In 2009, iconic clothing brand, Bonds, experienced a massive backlash when its owner, Pacific Brands, decided to relocate manufacturing to China and cut just under 2000 jobs. But soon after the decision was announced, CEO, Sue Morphet, said the resultant drop off in sales lasted no more than two or three weeks.

For online lender, Direct Money, meanwhile, a crisis moment came two years ago thanks to increasing distrust of the financial services sector and specific questioning of whether the so-called peer-to-peer lending could survive. This was reflected in a story in the Sydney Morning Herald questioning whether the company was able to fund new loans.

The response was the appointment of a new management team, including CEO and CMO, and rebrand to Wisr, with an expanded focus based on financial wellness and doing more for customers.

The company has subsequently achieved record growth, and has actually benefitted from some of the pain that its larger rivals are now experiencing.

Building belief

“As a brand, we needed something that could reflect that,” its CMO, James Goodwin, tells CMO. “Direct Money made a lot of sense during the P2P period, but we needed a brand that could speak more broadly to the other ambitions we had around products and services that go beyond just personal loans.”

Goodwin’s advice is to look at the purpose and what are you trying to achieve. “For us, it is about putting the customer at the heart of what we build and what we do.

 “When there have been big hits in the newspapers around the Royal Commission, we are actually seeing spikes in traffic across our website, so people actively going out for searching for alternatives to the traditional lenders.”

Not all companies can change their brand, but that still doesn’t stop most from finding a way back.

Of course, not all are so fortunate. UK-based data analytics firm, Cambridge Analytica, is the most prominent recent example, appointing insolvency practitioners in May following revelations it had misused Facebook user data and the emergence of footage of its CEO discussing the use of entrapment to influence elections.

Brand storytelling

When a company experiences a crisis, the most obvious measure of the damage is to its share price, and then its revenue. But sometimes the damage can be deeper, and longer lasting. Companies that have experienced a crisis often also suffer low staff morale, leading to staff attrition and difficulties in hiring replacements.

Whether a company bounces back obviously has plenty to do with the seriousness of the crisis that it finds itself in. But if it is to have any hope at all, the quality of its communications team is also a crucial factor.

According to Louise Ingram, an associate director with Temple Executive Search and former communications executive with the Commonwealth Bank and Nokia, organisations are increasingly realising the value of a good corporate affairs teams for managing through and beyond possible crises.

“The reality is that post these incidents you cannot simply advertise or comms your way out of a long term reputational loss,” Ingram says. “It is a long road back and it requires a comprehensive focus from the board and the business leadership.

“As Sarah Wynn-Williams [director of global public policy] from Facebook said recently at the Corporate Affairs Summit in Sydney, ‘Your customers decide when you get your life back’.”

Facebook is a company that knows a thing or two about managing a crisis.

Ingram stresses recovering from a crisis is a long-term process that requires a CMO working closely with their corporate affairs counterparts as well as customer relations functions to develop and deliver a narrative not over days, weeks and months – but over years. This is especially true in an era now where trust in many institutions has plummeted.

“And that narrative must be built on the both the organisation’s purpose and the actual experiences of the customer,” she says. “We are certainly seeing in the heads-of-function roles that we recruit that organisations want more rounded individuals with very strong skills and experience in all areas of stakeholder management, including marketing and public affairs.”

Up next: How social has changed the nature of a reputation crisis, plus finding the right balance of communications

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