The worst thing is not the losses, is the damage to reputation and brand value. What is it that this company must do to come out alive?
A company crisis of the magnitude that had the Samsung, with their recent "affaire Galaxy Note 7", is like a thunderstorm.
does Not end with the collapse of the price of the stock, an alert counters for loss of profits in a quarter and call the users to return the failed product.
none of that: the shock waves of the first "thunder", the problem of design of the Note 7, will be felt for years and cause untold damage in the reputation the south Korean company.
- why explode the battery phone Galaxy Note 7 Samsung
The marketing experts point out that what is at stake for Samsung is your brand value. What in the jargon is called brand equity, the commercial value that derives from the perception the user has of the company and its values, rather than on the product or service point that it sells.
The concept brings associated ideas of loyalty of the client, prestige and positive identification of the mark.
For large corporations, this brand value is one of your most valuable assets and climb out of the abyss generated by a corporate reputation damaged can be an issue in the long, painful and very expensive.
If you do not look at the German automotive Volkswagen, which is still trying to clear his name following the scandal of the emissions last year.
By then, it was revealed that the company had been manipulating for years tests for the emissions of their cars in diesel in the united States.
Or think of Whirlpool, you have to modify five million clothes dryers failed who are at risk of catching fire.
And then there is the case of the entertainment company Merlin Attractions, United Kingdom, owner of the Alton Towers theme park, which last month received a fine of$ 6.1.
The penalty was a result of the accident in a roller coaster that caused serious injuries to four people, among them two teenage girls who suffered amputations in the legs.
But what to do with a reputation damaged? What is the best way of trying to wash it and recover the good image in the eyes of consumers?
‘ Do what needs to be done"
Tim Ward, ceo, Quoted Companies Alliance, the body that represents small and medium-sized companies of United Kingdom that are listed on the stock market, says that just unleashes a crisis, the entrepreneurs must resort to their departments of public relations (RR.PP.), before you call their lawyers.
"It’s come out to the front, taking the first step with the right foot, and have a clear plan on what could be the possible eventualities," he tells the BBC. "The basis of everything is the adequate communication."
In a poll conducted among members of the alliance, the majority of executives noted that at the first sign of scandal turns to her team of RR.PP. and not to their legal department.
experts in the field still study the case of Johnson & Johnson en 1982, an example of management of corporate crisis.
Your pain medicine best-selling, Tylenol, caused the death of seven people in Chicago, with capsules of the drug, contaminated with cyanide in a case of sabotage, which until today, has not been clarified at all.
By that time, the process of pulling out of the sale a damaged product and request a refund to those who had bought (what we in the industry are calledproduct recall) was not common.
And Johnson & Johnson put the consumer on any other variable and withdrew 31 million bottles of Tylenol in the market.
Few thought that the mark would be afloat after the tragedy. But a year later, the value of its shares had recovered almost completely and the president of the company, James Burke, had become a hero by their skill in the handling of the crisis.
"If one has integrity in their management of the business, then this is the place from where we must act," says Ward.
"to Speak is a common place, but it needs to do the right thing. As he said (the american tycoon) Warren Buffett, it takes years to build a reputation and just minutes to destroy it."
Double error
Neil McLeod, a consultant in the business of crisis management and management of reputation PHA Media, believes that Samsung will have to suffer first, before regaining the trust of the users.
Especially because after the first problems with the Note 7 is not stopped the production: that it was only when the repeated fires of the teams that had been delivered as a replacement, brought the crisis to another level.
"they Are a technology company, and seemed not to have any idea what the problem was," says McLeod.
"there Is talk of a deficit of US$ 17,000 million in their long-term accounts. Samsung can absorb that loss, but it really depends on if you can get your clients to trust in their other lines of products."
His immediate reaction, match analysts, it was not the that left the south Korean company better stop.
"I Think Samsung had to act fast to stop the flow of damages that affected the company in a broad sense, the decision to insist with the product(and give phones replacement)".
"it Is evident that something went very wrong inside the company… to Do it wrong once is quite harmful, to do so a second time is incredible."
Put a name, face the music
McLeod says that, from a public relations perspective, it is important for companies to have a visible face when they are facing a crisis, something that has not yet happened in the case of Samsung.
"I have seen statements and press releases from Samsung, but I have not seen the face of Samsung in all of this," distinguishes. "I have not seen a director-general who brings tranquility and I do not know who is handling all of this."
"In any crisis scenario you need a strong leader to move forward and to reassure the population with its tone, presence and response to the crisis".
Dimitrios Tsivrikos, a psychologist specializing in consumer and business from the University College of London (UCL), says companies need to realize that asking for the return of your defective product is only a first step.
"it Is to be fast and to have confidence and take responsibility. companies can no longer deny what is happening. Those who have tried to hide these things in the past have paid a much higher price in terms of loss of consumer confidence."
And once a company loses its status of "desirable" to the eyes of the customer, is "left with nothing", adds Tsivrikos.
Taking responsibility and asking for forgiveness
At the offices of Merlin, the parent company of Alton Towers, the director of corporate affairs James Crampton points out that, while the theme park had contingency plans in the event of an accident such as last year’s, there was always the hope that they would never have to be put in place.
"Never underestimate the severity of the incident, and our responses, both immediate and subsequent, were driven by the desire to do what I thought was the right thing for all the victims ", says the executive.
The executive director of Merlin, Nick Varney, attended immediately to the scene of the accident in Alton Towers, and assumed in person the responsibility of communication.
to Admit the responsibility in the fact, says Crampton, was an important part of the process, and the company took full from the first day. And chose, in addition, do not start a long process of consultation with lawyers and other advisors: get out and give the face.
"we don’t try to hide behind lawyers," he says.
the rules of The RR.PP. they say that there is no other way out at the crossroads of a crisis.
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