Introducing Crisis Management

Digital Marketing - Study Notes:

What is crisis management?

Crisis management is a set of strategies and processes for dealing with unexpected negative situations. In such situations, the brand’s reputation is at risk, first from the crisis itself, and then from how you handle the crisis. In the short term, you need to determine how urgent the crisis is. Then your focus moves to solving the immediate problem. In the long term, you need to deploy a strategic process of repairing brand reputation and rebuilding consumer trust.

No matter how many safeguards and processes you put in place, you could suddenly find yourself facing an unexpected crisis. Any business can become engulfed in bad publicity when a crisis hits. In today’s social media environment, news travels fast, and you must respond promptly and proactively. Even if you don’t have a social media presence, your business is likely to have other digital assets today, such as a website and online shop, or digital PR.

Causes of crises 

Crises can originate from a number of sources, and by their very nature are totally unpredictable. There are some common categories of incident that you need to be prepared for. 

Natural disasters

The first, and perhaps most well-known, type of crisis stems from natural disasters. These include earthquakes, storms, tsunamis, and so on. Also, be mindful of social and political shocks, such as war, terrorism, coups, or violent protests.

Cyber-attacks

Obviously, digital assets are vulnerable to cyber-attacks. Many companies have been hit by distributed denial of service (DDoS) attacks. Cyber-attacks can also lead to breaches or leaks of users’ personal data. Such leaks can severely erode customer trust in a company.

Misdeeds

A company that is exposed for conducting misdeeds, such as criminal or moral transgressions, is going to face a serious crisis. For example, the company might have defied regulation, or worse acted in a clearly unethical way. Customers are unlikely to want to buy products from a company that has been found guilty of illegal activity. 

Financial crimes are a particular category of misdeeds. These relate to a company’s financial matters, and often their tax affairs. This can be a PR disaster for a company, because its financial management might be clearly seen to be at odds with the values that the company proudly promotes in its marketing literature. Most customers regard it as unethical for companies to avoid paying their fair share of taxes, especially if the company’s senior executives are being well compensated with large salaries and generous bonuses.

Supply chain failure

A failure in your supply chain can lead to stock shortages and empty shelves. Initially, you might be able to spin this as evidence of booming demand for your products. However, if the problem persists, it will be seen simply as a symptom of poor planning and bad infrastructure.

Product recall

One crisis that all companies fear is a high-profile product recall or safety scare. People quickly lose confidence in a company if its products are found to be defective. This can present a major brand risk. 

Example: Johnson & Johnson 

Remember when Johnson & Johnson had to recall Tylenol back in 1982? This was its branded paracetamol (called acetaminophen in the US) product. The company moved fast to address the crisis. It took a huge commercial hit in the short term, in order to earn consumer trust back in the long term.

Staff crises

Don’t forget about staff crises too. Strikes and layoffs lead to bad optics for a company. They create the impression of an ailing company that has lost the loyalty of its workforce. If these employees then go online to vent their frustrations, this can become a brand’s worst nightmare. 

Example: HMV

Because of the changing musical landscape in the new millennium, in 2013 British music and entertainment retailer HMV laid off many of its staff. Employees were given little warning of this move. Staff took over the brand’s main Twitter account to provide a running commentary in a deeply bitter tone. Instead of trying to control the message and reassert its brand image, the company simply deleted the tweets and failed to fully address the reasons for the redundancy. This made a bad crisis even worse.

Disclosure failures

A more recent type of crisis that companies have faced centers on the issue of disclosures. This is particularly important in the realm of influencer marketing. In some cases, influencers or brand ambassadors have not been sufficiently clear about the fact that they are taking part in marketing when they are promoting a particular brand. This can damage a brand and put its dishonesty on public display.