Surviving Brand Calamaties Requires a Foundation of Trust

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I was 5 years old when our neighbor's parents drove my friend and me home from school on a fall day in 1978 when we rounded the bend toward my house and saw a giant ball of flames. The town's volunteer firefighters had already arrived on the scene and were extinguishing the fire that started from the fuel tank defect in my family's Ford Pinto.
Customer Loyalty

I was 5 years old when our neighbor's parents drove my friend and me home from school on a fall day in 1978 when we rounded the bend toward my house and saw a giant ball of flames. The town's volunteer firefighters had already arrived on the scene and were extinguishing the fire that started from the fuel tank defect in my family's Ford Pinto.

My family's car was one of 1.5 million recalled that year by Ford for defective fuel tank designs that made the hatchbacks susceptible to fire. After numerous civil suits and criminal charges, Ford's reputation also was about to burst in flames.

Ford managed to survive the brand crisis, and today Ford boasts a loyal following of customers. At Polk's annual Customer Loyalty awards in January, Ford outperformed all other automotive companies. Polk measures loyalty by determining when a household returns to the market to buy a new vehicle. When the household purchases or leases a new vehicle of the same model or make, then its loyalty to the company or brand is confirmed. For the 2013 model year, 7.4 million consumers returned to the market, up sharply from 5.9 million in 2012 for a 26 percent increase.

This summer, GM has been prominently in the news due to recalls linked to faulty ignition switches. In today's 1to1 Media feature article, "How to Salvage the Customer Experience After a Recall," Judith Aquino, talks with David Mingle, executive director of North America customer experience at GM, about how the automaker is making a "significant investment" around the customer experience with in-depth communications to customers to keep them informed and up to date about its latest recalls.

But in the article, Edmunds.com Retail Experience Editor Matt Jones points to how even when a company strives to improve the customer experience, there is no quick fix for winning back customer loyalty after a major mishap. "Even if you're proactive about reaching out to customers about a recall, that doesn't guarantee that your customers will come back," he says.

Why do some automotive brands emerge from a recall better than others?

Robert Passikoff, founder and president of Brand Keys, says the answer can be found in a marketing model called "The Rule of Six," which is related directly to consumers' levels of emotional engagement, and thus loyalty, to a brand. Essentially, brands that possess higher levels of engagement and loyalty before a crisis are six times more likely to be given the benefit of the doubt after some catastrophe transpires.

Therefore, automakers that can overcome a failure more easily than others typically have fostered a trusting relationship with customers prior to any recalls occurring. This can be achieved by building customer loyalty through proactive communications, delivering efficient and targeted service, training knowledgeable sales reps, and conveying the overall feeling that the dealerships care for their customers.

So what does the latest GM recalls teach other companies about dealing with negative brand perception? To overcome it, companies need to establish new procedures, hire new personnel, and communicate to the world that this will never happen again. But long before that, they must already have connected with customers on an emotional level through individual one-to-one trusted relationships that stand strong during calamaties.

EXPERT OPINION
EXPERT OPINION