Marketing Matters Featured

9:59am EDT July 22, 2002

You hear about these all the time—death in the organization, a natural disaster, layoffs, lawsuits, regulatory violations, crime in the workplace or a service or product liability. Odds are, sooner or later, you’ll face one of these crises. How you handle it—and communicate it to others—will shape your company’s image and could determine whether you are successful, gain or lose market share or even stay in business.

For a business, dealing with a crisis is similar to fighting a forest fire. To contain the spread of fire, you must establish secure individual fire walls. If you’re successful, the fire can be contained and you can move on to fight the fire in another area; if you’re not, you can be consumed by it.

In a business crisis, the first fire wall must be built to deal with the crisis itself. That means assembling the best management team of legal, financial, operational, safety and business counsel you can, then getting to work to solve the problem.

At the same time the problem is being dealt with, you must build another fire wall to preserve your company’s reputation. That means effectively communicating facts about the crisis—and the steps you’re taking to resolve it—to customers, prospects, investors, employees, government regulators—and, yes, the media.

Crises almost always are something the media love to sink their teeth into. Take layoffs. They have an impact on the community, breed controversy and provide both an apparent bad guy and victim.

Not only can the media play up the personal, human-interest side of the story, they can present it as affecting the region’s overall economy. Because layoffs often are newsworthy, the media can turn them into a community crisis, escalating the crisis element for you.

Another way of looking at a crisis is that it puts your organization’s values on trial before the court of public opinion. Generally speaking, the American public accepts that anybody can make a mistake. It’s how you handle your mistake that becomes the critical issue.

Several years ago, the large public relations firm Porter/Novelli conducted a survey to investigate consumer response to organizational crises. It found that two-thirds of the public make buying decisions based on behaviors of organizations during a crisis. In addition, 95 percent of those surveyed said they are more offended by an organization’s lying about a crisis than they are about the crisis itself.

Consider the case of Gerber, the baby food company. A few years ago, Gerber lost 14 percent market share over reports of glass in baby food jars. The loss wasn’t so much because of the glass, but because Gerber mishandled the situation. It didn’t immediately recall the product, which gave the appearance that Gerber cared more about sales than its customers’ babies.

The point is made time and again, in crises ranging from layoffs and airline crashes to product tampering and recalls—you must act swiftly to communicate the facts of the incident to all of your important audience groups. Then, you must continue to communicate frequently and truthfully as the situation unfolds. It’s better that they obtain the facts from you, as you can control the dialog, than for them to rely on unfounded rumors and half-truths.

The essence of communicating in a crisis is not damage control or “spin.” It’s not cutting your losses. It’s leveraging the opportunity presented to enhance your reputation by responding to the crisis in such a way that people will say, “That’s a good company. They did the right thing.”

Jeff Krakoff is president of Krakoff Communications Inc. Comments. Questions can be sent via e-mail to contactus@krakoff.com.