Should Big Brands Suffer Consequences After Crises?
By now, you may have seen the viral video of Dr. David Dao pulled from his United Express flight to make room for Republic Airlines crew members. Disturbing and frightening, the incident sent shock waves around the globe.
Incidents like this, although rare, have happened to some degree for years. The difference now is social media sharing. Cell phone videos empower citizen journalists to capture news in ways we never could have imagined before.
Did the United brand take a hit?
You bet! But it may only be temporary.
Initially, “United Continental Holdings () stock was off about 4%, knocking off close to $1 billion off the company’s market value. By late afternoon, after a mea culpa from the CEO, the stock had recovered from the worst losses — but its market value was still off by $250 million.” (CNN Money)
By this morning, shares had recovered. “Wall Street analysts have warned over the past few days that no matter how viral or shocking, United’s poor handling of the issue was unlikely to affect the company’s bottom line.” (Fortune)
As for consumer punishment, it’s likely that United will be back in the “friendly skies” fairly soon.
As deeply troubling as the video is, analysts said, the emotional fury such incidents generate usually is fleeting, lasting a few days or weeks at most. The reality, they say, is that consumers have long put price, convenience and personal taste ahead of outrage…
United is just the latest corporation mired in a public-relations mess. But many of these cases have resolved relatively quickly, with little or no lasting damage to the company’s financial performance. ” (Washington Post)
Why are consumers so forgiving of big brands?
My answer: money. When I do customer service workshops for small-medium business and nonprofit audiences, I always warn them about brand boo-boos. Without big budgets to counter crises or bad customer experiences, small brands can suffer badly.
In the corporate sector, it’s wholly different. “CEOs bank on three things: advertising to re-brand, the collective short-term memories of consumers and convenience,” said Eric Schiffer, chairman of Reputation Management Consultants in a recent Washington Post article.
The only way that big brands truly suffer is “a long-term boycott strong enough to send a devastating blow to their quarterly earnings,” adds Schiffer. But let’s face it, that doesn’t happen often.
“Who is going to boycott?” asked Lakshman Krishnamurthi, in the Post article. The marketing professor at Northwestern University’s Kellogg School of Management stated, “The frequent flyer is not going to. I am a 2 million-mile frequent flyer on United, and I’m not going to change my habits because of this.”
Another case in point. Remember when United forced a musician to put his $3,500 custom Taylor guitar in the baggage compartment?
That prompted him to write “United Breaks Guitars,” a YouTube video hit. If not for this recent incident, you probably forgot about this one.
Is it fair? In my opinion, no!
But, it’s a matter of supply and demand, short-term memories, and investments in brand recovery that affect consumers’ opinions. As consumers, we are certainly fickle! And, as marketers, we are surely smart. 😒
As I mentioned, smaller brands don’t have the same brand assets to survive bad PR. So, how can you avoid catastrophe if bad karma lands your way?
Do what the big guys do: have a crisis communications plan developed before an incident occurs.
According to Chris Ann Goddard, president of CGPR public relations, in a USA Today article, “A crisis plan should include a heartfelt apology, release of a specific plan for addressing the mistakes, clear communication with front-line employees and a statement sent to frequent fliers and loyal customers.”
Here’s a good resource, “How to Fix Bad Publicity” from the Houston Chronicle.