A blogger has called you out on one of your company’s products, or your CEO has made a business decision that’s controversial. There is extreme pressure on you to quell the rising outrage, or perhaps even to reverse your decision.
When the heat is on from a crisis or a controversial business move, when do you hold ‘em, and when do you fold ‘em? When do you respond or even change your decision, and when do you simply keep your mouth shut?
That’s a dilemma bourbon brand Maker’s Mark experienced in February, after it announced that it was adding water to its recipe to extend supply—dropping the alcohol content from 45% to 42%. The immediate negative online reaction from bourbon drinkers everywhere gave Maker’s Mark a pounding hangover and forced the company to reconsider.
It’s a scenario that Harlan Loeb, global practice chair, crisis and risk at Edelman, knows all too well.
Because of the intensity of social media, Loeb says companies really struggle to hold their ground in the face of a social-media barrage. “It becomes personal. It’s their brand, their issue,” he says.
In a social-media age companies have to balance their business model and operational realities of supply and demand with the satisfaction of their customers. But customers have clout. “Consumers don’t want to be told that something is being taken away from them,” Loeb says.
Ultimately, Maker’s Mark reversed its decision, but Loeb suspects it wasn’t an easy one to make.
At Edelman, there’s a process to determine the level of response, involving the analysis of influencers a brand knows and a second set of influencers who have nothing to do with the company. “Then you calibrate your response to the level of risk,” Loeb says.
Knowing your audience and influencers ahead of a crisis can take much of the sting out of public scrutiny, says Sarah Tyre, managing director in the issues & crisis group at Burson-Marsteller. When under the gun, Tyre recommends communicators ask where the conversation is coming from and who is doing the talking. Then evaluate and decide on the level of response.
Of course, Tyre says there are situations in which organizations should hold off on giving a response: When there’s an active law enforcement investigation; when an entire industry is being criticized, individual companies often elect to remain silent and when criticism is being leveled by fringe elements.
“Responding to them may be giving them what they want,” Tyre says.
ANTICIPATE OUTCOMES
And while social media has lifted crises to higher levels of intensity, Tyre counsels clients just as she would before social media existed.
The bottom line: Are the people that are in an uproar going to buy your products? “If they’re not going to buy, your business won’t be impacted at the end of the day,” Tyre says. “There’s nothing to be gained by a response.”
AGAINST THE GRAIN
One crisis expert who feels strongly about crisis response is Eric Dezenhall, head of Dezenhall Resources.
“Nowadays, every crisis management meeting features somebody who suggests ‘engaging stakeholders on social media,’” Dezenhall says. “This is always greeted with applause, as if it’s a generically brilliant comment. It’s not.”
The fact is, says Dezenhall, when it comes to crisis management, social media is the problem, not the solution. “I’ve seen very savvy companies get themselves into trouble because they over-responded to a catalyst,” he says.
He adds: “Agencies make money selling tactics and in-house PR people are underpressure to demonstrate value, so there is an inherent bias in favor of taking action.”
Dezenhall puts this phenomenon in the context of marital survival.
“In the 1970s, everybody preached ‘communication’ as the solution to everything. This, of course, led to a divorce rate higher than 50%,” he says. “The more realistic advice is recognizing that there are times when the solution is to just go in the other room for a while and stop thinking that communicating is the cure-all.”
Yahoo did go to the other room after CEO Marissa Mayer said that Yahoo employees would no longer be able to telecommute.
The announcement sparked a blitz of articles and commentary by the media. Yet Yahoo’s silence afterwards signaled that the decision would stand. Eventually the company issued a brief statement: “This isn’t a broad industry view on working from home. This is about what’s right for Yahoo.”
Edelman’s Loeb says there’s a trend toward communicators seriously considering whether a response is really necessary. “Ninety-five percent of the chatter out there is not relevant to the success or failure of a business,” he says.
It’s that 5%, however, that can hurt you. PRN
CONTACT:
Harlan Loeb, [email protected]; Sarah Tyre, [email protected]; Eric Dezenhall, [email protected].
Pressure Cooker: 3 Companies That Refused To Cave In
It’s human nature to want to respond to a crisis and make things right again. Here are three companies that chose not to respond—and the subsequent results:
Company: Netflix
Situation: In July 2011 the company decided to increase the price of its DVD/streaming plan by 60%, to $16. The move was hugely unpopular, causing a massive uproar among their customers and investors. After losing 800,000 customers and seeing its stock dive CEO Reed Hastings apologized for the way the increase was handled, but kept the increase.
Outcome: After its stock plummeted to $53 in 2012 from more than $300 in 2011 Netflix is now trading at roughly $182.94.
Company: Transocean
Situation: From the start, the company that owned and ran the Deepwater Horizon drilling rig, which exploded in the Gulf of Mexico in April, 2010, killing 11 people and setting off the largest oil spill is U.S. history, tried to deflect blame to BP. During the government’s investigation Transocean maintained radio silence, not admitting to mistakes, offering no apologies and declining to pay for clean-up, reported Bloomberg Businessweek .
Outcome: In January, Transocean agreed to pay $1 billion in fines for violations of the Clean Water Act. In contrast, BP’s fine was $4 billion. The company says its ready to fight an upcoming civil suit.
Company: Chick-fil-A
Situation: The company’s CEO, Dan Cathy, created one of 2012’s greatest PR crises when, in an interview with the Baptist Press, he addressed what the publication described as Chick-fil-A’s “support of traditional family” with, “Well, guilty as charged.” This raised the ire of a number of lesbian, gay, bisexual and transgender advocates and bloggers. But Cathy did not back down from his statement.
Outcome: Ultimately, the media circus surrounding the CEO’s comments may have helped more than it hurt. By late 2012, Chick-fil-A was enjoying record profits and increased brand recognition.
The bottom line: Are the people that are in an uproar going to buy your products? If they’re not going to buy, your business won’t be impacted at the end of the day. There’s nothing to be gained by a response.”Sarah Tyre, Burson-Marsteller