Expect the unexpected they say, but is it really possible? Although it may sound like an oxymoron, crisis management is a vital tactic for every business. And it’s imporant to take all the necesarry crisis management steps to make sure that you navigate the situation properly.
Maybe in the 20th century, brands could have discussed whether they needed a whole plan of crisis management steps. Unfortunately, in today’s world when information spreads within seconds, a small problem can go viral in a flash. Keeping that in mind, it’s naive to think that your company will never experience any kind of crisis.
It’s time to study some famous brand crises and develop an effective action plan for your brand thanks to the help of this article.
What Constitutes a Crisis for a Brand?
There’s a substantial difference between routine management and crisis management. In the latter, we discuss a situation that is new in some way. It requires immediate decisions, even under pressure and in unfamiliar circumstances.
Brand crisis – how to recognize it?
A brand crisis is a new and unprecedented situation that has a negative impact on a company’s reputation.
As a manager, you will be forced to make some tough choices.
They may refer to your company’s values, priorities, goals, or even its strategy core. In routine cases, you can figure out the plan and deal with a situation in advance by identifying the key issues. But during a true crisis, there will be a whole bunch of things colliding simultaneously.
What’s more, the situation could be so new that you have no idea what to do, as you probably don’t have any previous experience in it.
Often it requires focusing on strategic issues so that the company won’t fall into another crisis right after achieving success in that field.
When might a crisis strike?
A crisis often strikes at the most unexpected moment, as it could be provoked by a single message from one of your customers. Such situations are sudden, but they’re easier to handle with a set of tools and techniques that can be adjusted according to the circumstances.
So when might a crisis strike? When organizations don’t have a defined way to solve a problem ahead of them.
It’s probable that your business won’t be able to handle a crisis as effectively as it could with some preparation, like specific strategy and monitoring the market changes regularly.
When you use tactics that aim to prevent crises, your company learns how to foresee upcoming problems based on some drivers. It’s called being proactive.
The Core Elements of Crisis Management You Should Know
Crisis management relates to a few stages of dealing with a negative situation. They include:
- Prevention – the constant process of proactive reputation management. It includes ongoing media monitoring, moderation, and immediate responses to complaints.
- Attack repelling – the moment when a crisis hits an organization. The company has to identify the problem, think about responding to the issue, and issue a statement accordingly and as quickly as possible.
- Healing – the process of making the brand’s reputation great again. Sometimes it requires reparation. It can be dealt with only after rethinking previous and new strategies, operational activities, and company structure to ensure further development.
Four types of crisis management are distinguished:
- Strategic crisis management – requires reorganization of the brand strategy (e. g. refraining from making new / any investments).
- Financial crisis management – e. g. financial restructuring.
- Operational crisis management – solving problems with manufacturing or sales by e. g. a performance boost or marketing budget reduction.
- Crisis management when the company is insolvent – aims to protect the brand from creditors’ demands, e. g. control of the bankruptcy estate.
Volkswagen, Corona Beer, H&M – Did They Handle Brand Crises Well?
The theory is helpful, but learning from actual experience is better. That’s why below you can read an analysis of five brand crises that genuinely happened.
Dieselgate was a vast emissions scandal that backfired on Volkswagen on the international market. The crisis struck in 2015 when the United States Environmental Protection Agency discovered a violation of the Clean Air Act.
It revealed that the German automaker had intentionally programmed diesel engines to only activate their emissions controls during laboratory testing. As a result, they were able to pass US regulatory testing even though they emitted up to 40 times more nitrogen oxides (NOx) when they were used on the road. Over 11 million cars worldwide were sold with this system.
How did the brand react?
After the scandal, the chairman of the brand resigned, and three main managers were suspended. The Volkswagen Group has allocated $7.3 billion for emission problem repair and presented a recovery plan for vehicles with this system.
What was wrong?
A few months before the crisis, Volkswagen had pointed out that some of their vehicles had mere technical glitches. This wasn’t pro-active crisis management but more of a prevention airbag, so that when they were smeared they could respond with “but we said so” . A few years after the affair, Netflix created a documentary series called “Dirty Money”, and the first episode, “Hard NOx”, was dedicated to the Dieselgate crisis.
#2 Corona beer
This is probably one of the funniest examples of a brand crisis in history. When the Coronavirus pandemic struck, some customers linked it to Corona beer. Research into Google Trends reflected this, showing a spike in searches for “beer virus” and “corona beer virus” at the end of January 2020.
The conducted survey showed that 38% of Americans would not buy Corona beer, and thus consumers’ intent to purchase the product fell to its lowest in two years. Also, memes that were created using the brand’s logo spread misinformation.
How did the brand respond?
The distributor of Corona Beer denied that the surveys were genuine and said there’s no negative impact on the brand due to the pandemic. Spreading information about its poor brand performance was called fake news.
What was wrong?
The response doesn’t seem to be very thorough, yet it seems impossible to be prepared for this kind of brand reputation crisis. In fact, the only thing Corona Beer could have done better is reacting immediately to the trend shown in Google Search – a powerful narrative and a quick response could have prevented the situation.
#3 H&M’s scandal – a black child wearing the ‘coolest monkey in the jungle’ hoodie
In 2018, H&M displayed an online advertisement that showed a black child wearing a hoodie reading “Coolest monkey in the jungle.” It immediately led to discussion on social media – Twitter was abuzz with criticism from users who accused the brand of promoting racist undertones.
How did the brand respond?
A representative of H&M apologized for the degradation of the human image and said to the Washington Post, “It is obvious that our routines have not been followed properly. This is without any doubt. We will thoroughly investigate why this happened to prevent this type of mistake from happening again.”
What was wrong?
The company limited its actions to the apology. They could have gone a step further, for example, by reacting to the comments quicker and implementing CSR actions. Again, prevention was possible here, and the problem wouldn’t have occurred if all aspects of the decision-making process were done right.
When Things Go Wrong – 4 Steps to Save Your Brand
As shown in the examples above, sometimes you can prevent a crisis from happening and sometimes you can’t – but you can react as fast as possible.
Step 1: Preparation during calm times (when there is no crisis)
Today, there are over 5 billion daily mobile internet users. People are used to sharing their experiences, so one tweet can lead to a crisis if it goes viral.
However, it’s a double-edged sword – you might encounter a problem you weren’t expecting, but you can also react more quickly than ever before. That is possible thanks to the tools that carry outmedia monitoring automatically.
To proactively prevent crises:
- Designate a unique group of employees to focus on potential issues and their prevention. Identify a crisis team that would be able to prepare a crisis strategy and implement the right tactics when one strikes.
- Arm your team with powerful tools that will help them predict and identify crises. Systems like Determ collect data 24/7, interpret whether the comments are positive or negative, and notify you whenever something important happens so that you are well aware of any issues straight away.
Step 2: Rapid response when a crisis strikes
By actively monitoring the Internet, you can see what is said about your company in every part of the online world. Thanks to real-time access to such data, you’re able to react to negative comments immediately. Social listening tools like Determ might turn out to be invaluable in this matter. You can read more about such tactics in crisis management in this article.
Tip: to respond even more quickly and efficiently, your crisis team can work with content managers to develop multiple answer scenarios and ready-to-implement answer themes that can be adjusted to the exact situation.
Step 3: Own up to the mistake and communicate quickly
When it comes to an apology and the overall communication, there are a few ways to handle a crisis:
- Try to respond only with precise, confirmed information – otherwise, you can fuel the fire and create even more chaos.
- If possible, try to move the conversation with a frustrated client from the public’s eye. Encourage them to write to you via private message and continue the discussion there.
- Think about an official statement from the company and an apology on the website or on any media channel that you find appropriate.
Step 4: Analyze what went wrong and prepare for the future
Evaluation is an essential part of the crisis management process, as it enables your company to learn from previous mistakes and avoid making them in the future. Also, analysis is crucial for the operation of healing after a crisis.
Based on your experience, ask your crisis management team to prepare strategies for such situations like the one you have just undergone.
How Can You Tell Whether Your Crisis Management Is Effective Or Not?
Effective crisis leadership means real-time problem solving – rapid innovation under time pressure and feelings such as stress embedded with fear. It requires intuitive yet solid decision-making.
However, leaving everything to faith and relying on your manager’s instincts isn’t the best strategy of them all. You can start crisis prevention today with the small steps mentioned above.
The most effective crisis action plan is one that is introduced step by step so that your employees will know how to deal with potential problems.
Overall crisis management success depends on multiple factors, such as:
- regular, proactive crisis prevention,
- proper identification of the core issues and causes of crises,
- adaptation of the previous brand strategy to the current circumstances,
- financial structure,
- sector analysis (such as an economic situation),
- evaluation of crisis management actions,
- new crisis management plan for the future,
- crisis intensity,
- identification of how long the crisis lasted.
Of course, it’s impossible to avoid every unpleasant situation, but it’s possible to reduce the number of them.
When a crisis comes, you have to react quickly. Social media monitoring systems are a perfect example of this kind of help. They send you a notification whenever something important happens so you can react within minutes and put out the fire before it spreads.
Brand crises are a normal phenomenon that can happen even to the best companies in the world. Nobody’s perfect, even those businesses that are as transparent as possible can slip up once or twice.
The critical thing is to keep an eye on market changes and take care of customer relations. A proactive approach seems to be one of the most effective tactics to help you prevent crises from occurring, so stay alert to market changes to keep on top!
If you’d like to learn more about how Determ can help you mitigate crises, book a demo and our experts will guide the way.