How that business and more pertinently its leaders then deals with the crisis may determine whether its customers remain loyal, and ultimately whether it can survive.
The recent problems KFC met after changing suppliers, which resulted in their having to close the majority of their UK units for a few days due to an absence of chicken, is a good example of how to respond well.
Firstly, they posted notices at the closed units apologising, but with a touch of humour, explaining that while the chickens may have crossed the road, they had not arrived at KFC.
Secondly, the company was open about the cause of the problem, a change to a different logistics company.
Thirdly, they took out full page advertisements in some national media, apologising and cheekily including a picture of their logo, but with the KFC changed to FCK, into which, of course, most people were able to insert the missing letter and to which the reaction was a smile.
If anything, the company will not have lost customers. In fact, it has been speculated that it may have gained some as occasional customers realised how much they would miss the product’s easy availability.
The KFC approach illustrates several elements a business needs to get right if it is to avoid reputational damage. It put customers first, apologised and gave an explanation, rather than an excuse. Above all, it was brave enough to use humour in a way that people instantly connected with.
How to get it wrong when reacting to a crisis
By contrast, in the same week, MPs released the full version of an FCA (Financial Conduct Authority) investigation into the behaviour of RBS and its restructuring arm GRG, which has been accused of acting in its own profit-making interests at the expense of thousands of SMEs, many of which it is accused of having forced out of business rather than helping.
The report had been previously released in summary, in which various points from the full report had not been included or arguably had been “watered down”. RBS Chief Executive Ross McEwan was then interviewed by various news media and appeared before the parliamentary Treasury Select Committee.
The general consensus from commentators was of an inflexible and defensive tone and a failure to acknowledge discrepancies between the full and summary reports or any RBS responsibility for what happened.
While, as Ross McEwan has said, a system for SMEs to claim compensation had been put in place, the compensation process has been questioned by Mike Cherry, chairman of the FSB (Federation of Small Businesses), who said: “What really matters now is that GRG victims receive the compensation they’re due. Amid concerning reports about the scope of RBS’ £400 million compensation scheme for those affected, it’s encouraging to hear that we will receive quarterly updates on how the redress process is progressing.”
It may be understandable that companies want to minimise potential liability for past behaviour but a failure to take responsibility means that a line cannot be drawn between past mistakes and their rectification. All too often a morally bankrupt culture persists when executives seek to defend or cover up reprehensible behaviour. Lawyers might advise that you should never admit liability but too frequently executives forget lawyers are simply advisers giving advice from one perspective.
Sincere regret, humility and genuine concern for those damaged also goes a long way to helping reassure others about taking responsibility as does demonstrable action to address the causes.
Is it really true that there is no such thing as bad publicity?