- The amount of time a business takes to react to a crisis determines how fast it regains client trust.
Shoe manufacturer, Bata Kenya, last week asked customers who had bought low quality products from its stores to submit refund claims, days after consumers had taken to social media to air their grievances about its shoes, harming its brand trust.
Evidence shows that the swift move was an ideal first step, with the amount of time a business takes to react to such a crisis determining how fast it recovers consumer confidence.
“Restitution to purchasers and recalls undermine trust in a specific brand and it can take the company a long time to recover from the damage to its reputation, but it does not have to, if the company uses good crisis management tactics,” said Manpreet Hora, an assistant professor at Georgia Institute of Technology, College of Management, in a research report on What Companies Should do to Recover from Product Recalls.
Researchers at the institute, based in the US, in collaboration with the University of Manitoba, Canada, conducted a study which examined over 500 toy recalls between 1988 and 2007.
They found that a swift recall and restitution to purchasers can minimise harm to the company, helping it recover consumer confidence quickly and even improve customer satisfaction.
“Reducing the time it takes to handle a product malfunction will have a positive effect on consumers’ willingness to buy other products from the same company and if handled well, the stock price may recover to the same level as before the incident.”
Conversely, in cases where a company takes a long period to react to product malfunctions it risks losing consumer confidence, sometimes permanently.
An example of this was with car manufacturer Toyota. In 2009 the firm issued a recall of its vehicles following a series of accidents associated with floor mats interfering with the gas pedal.
Before the recall, a study conducted by German market research firm Gesellschaft für Konsumforschung (GfK) on brand disposition found that 83 per cent of consumers were positive about the brand while 17 per cent were negative about it.
“Prior to the recall, data collected showed consumers had tremendous confidence in the Toyota brand but it dropped when the recalls began. Positive brand disposition fell five points to 78 per cent and negative brand disposition rose five points to 22 per cent,” read the study report.
The drop in consumer confidence towards the brand could have been triggered by the firm’s reaction period, which came a full month after several incidents had been reported and gained widespread attention.
In 2010, following another recall by the car manufacturer, confidence in the brand dropped even further to 59 per cent, while negative feelings toward the brand rose to 41 per cent.
“After the second recall in January 2010 through April 2010, data collected showed that consumers’ positive feelings toward the Toyota brand dropped 19 points, while consumers’ negative feelings rose 19 points.
“A change in the company’s motto from ‘I Love What You Do For Me, Toyota!’ to ‘Moving Forward!’ as an attempt to communicate to consumers the company’s desire to start afresh and look toward a better future gradually improved the situation in 2011, with positive disposition toward the brand rising to 70 per cent while the negative dropping to 30 per cent.
“However the percentage of consumers who were positively disposed to the Toyota brand was still lower than pre-recall scores.”
In this, how well a brand communicates to its consumers and whether it takes responsibility of the issue also play a vital role in the recovery of its consumer confidence.
“Consumers are forgiving, so if a firm apologises, acknowledges the problem, and does not make the mistake again and again, consumers will continue to be loyal to that brand,” said Manpreet Hora.
“After apologising, the firm needs to get the product off store shelves and out of consumers’ hands as quickly as possible. To do this, the firm must choose the best way to compensate the product purchasers and determine who will interface with the customer to price the restitution.”
- African Laughter