Be Real, and Be Prepared, When the Crisis Hits

Scott Davis is a partner at consultant Kuczmarski & Associates, Chicago, heading its Brand Asset Management Practice. He's also an adjunct professor at Northwestern's Kellogg Graduate School of Management, and author of Brand Asset Management, to be published by Jossey-Bass Publishers next winter.

It was a stunning reversal of fortunes: in less than a three-week period in June, Coca-Cola--the masterfully managed company that writes all the rules for everyone else to follow-went through the biggest crisis it had faced in its illustrious 113 years. Three different debacles occurred in Europe, including claims of rat poison, fungicides and carbon dioxide leaks in cans of Coke, and scores of consumers became sick.

The immediate result for Coke was 14 million cases of soft drinks recalled, a $60 million charge in the second quarter and a total revamping of quality control efforts in Europe. But that's peanuts relative to the real damage done, caused by the way Coke handled the crisis.

Coke was "charged" in the press and by public officials with being defensive, in denial, slow-to-act and even covering up information. The company neglected signs of problems that surfaced up to a month before the crisis spun out of control. Coke even publicly showed test results that "proved" the impurities found in the Coke products were too small to be a health risk, even as people throughout Europe were getting sick.

Clearly, the company was not prepared to handle a crisis, and it may be paying the consequences for some time. Yet if handled well, a crisis can even strengthen a brand, as was the case with Tylenol. Handled poorly--think Exxon and Perrier-a crisis can damage a brand for years.

According to surveys my company has done, fewer than half of companies today have any kind of contingency or crisis plan in place if something negative happens to their brand. That's an abdication of brand stewardship that can be averted by following seven straightforward principles:

1. Be up-front and honest; you'll be found out if you're not.

2. Respond quickly; the longer you delay, the worse the crisis becomes.

3. Show empathy and be caring; most often, this is about human lives.

4. Don't be defensive or challenging: you'll only fight a losing battle and waste valuable time.

5. Detail action steps the company will take to help remedy the current situation, and provide consumers with action steps as well: help lines, compensation or funding, on-the-scene spokespersons, etc.

6. Detail action steps the company will take to avoid similar occurrences in the future.

7. Deliver public messages of this magnitude from the highest level within the organization.

Be prepared; even rehearsed, because whether or not you handle the crisis well will be determined the minute the press gets hold of it. For better or worse, that is how consumers make their decisions about companies and the brands they offer.

Many would say that Exxon and Perrier will never recover the asset value of their brand because of the way they handled it, while others like Tylenol and Amoco continue to flourish and grow following similar tragedies. Consumers accept mistakes if they are handled well. Let's hope Coke learned from this tragedy that it always pays to be "the real thing."

COPYRIGHT 1999 BPI Communications, Inc.
COPYRIGHT 2000 Gale Group