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Repairing Brand Damage

It doesn't take much to spark a public relations nightmare, even for a small business. Are you ready?
Chris Raymond

In the 48 hours before the most crucial sales pitch of his career, Tracy Myers barely slept a wink. He was busy consulting with his wife, his parents, his lawyers and the guys down at the shop. Myers owns a car dealership in Winston-Salem, N.C., and he had devoted considerable energy to making it a symbol of success. The walls were lined with awards chronicling his achievements. The dealership, Frank Myers Auto Maxx, was the cornerstone of a small family empire started by Myers’ great-grandfather. It had thrived for 83 years. Now it was in danger of collapse—all because of a news release.

On March 14, 2012, the Federal Trade Commission—the country’s consumer protection agency—had announced that it was taking “unprecedented action” to safeguard citizens in financial distress from deceptive car dealership ads. In a statement issued to members of the media nationwide, the FTC revealed that it was cracking down on Myers’ business for making the following claim in ads, including a YouTube video that stated: “Uncle Frank wants to pay [your trade-in] off in full, no matter how much you owe.” Now, on the surface, this seems like a fairly harmless pitch—especially coming from a used car dealer. But the FTC had learned that certain shifty dealers were using similar claims to scam their customers.

Here’s how it happened: When a down-on-his-luck owner went to trade in his SUV and purchase something more affordable, it wasn’t uncommon for the SUV to be worth less than he owed, particularly in the era of extended car loans. In the industry, this disparity is called “negative equity.” Some of Myers’ rivals were promising to pay off that negative equity and then were secretly rolling it into the customer’s new loan. Indeed, this is what the FTC accused four of the five dealerships cited in its news release of doing. The fifth—Myers Auto Maxx—got lumped in with the others simply for asking customers to pay the sum out of pocket before closing the deal. A reasonable request? You bet. But somewhat disingenuous if you take what you heard in the Myers’ commercials as the gospel truth.

What happened next is the stuff of nightmares, a horrific example of just how fast bad news spreads and how thoroughly it can ravage a brand in the age of social media. Public relations experts have plenty of suggestions on how to manage the fallout and repair the damage, but these days it pays to be proactive. If you’re smart, you’ll consider each threat and prepare a response as if you’re engaged in a fire drill. Because, as Myers can tell you, once the sparks start to fly, you don’t have much time to react.

When representatives from the FTC first approached him in fall 2011, he was happy to hear them out. After reviewing their concerns, he agreed to remove five ads—all with similar language—from his YouTube page. Not one single customer had come forward to voice a complaint about the claims in those ads, but Myers did not question the FTC’s authority. He applauded its efforts on behalf of the public. The negotiation took less than three days. Weeks later, he signed an agreement mandating that he refrain from using such language in the future. At no time was he charged with a crime or asked to pay a fine. The proceedings were cordial. So Myers was shocked when he read the news release stating that the FTC had reason to believe he had violated the Federal Trade Commission Act.

It turns out that the FTC issues news releases on every settlement, spelling out the allegations and what businesses agreed to stop doing. “We’re not singling anyone out,” an FTC official says. Sometimes more than one business may be included in a news release, and it can take some time after agreements are reached before a released is issued. The releases also state that businesses entering into settlements are not admitting any liability.

But by the time the media picked up the story, every bit of nuance had been stripped from the narrative. The NBC affiliate in Winston-Salem reported that all five dealers in the news release had deceived customers. So too did news outlets in Connecticut, Michigan, Texas, New York and Washington, D.C. The news soon spread to business, consumer and auto websites as well. The Better Business Bureau lowered the Myers dealership’s rating to a D. Just like that, the company’s 41-year-old proprietor found himself looking at a public relations disaster.

At first glance, this may seem like a unique predicament, the sort of thing you as a small-business owner could never imagine, much less anticipate. But that’s the wrong way to think. One lost package, an unplanned product recall, a few employees goofing off in a restaurant kitchen can quickly lead to a world of trouble. If a dissatisfied customer or a ruthless rival wants to damage your reputation, there are dozens of forums in which to do so. Facebook, Amazon, eBay, Twitter, Yelp, TripAdvisor, Angie’s List, YouTube. Don’t forget email, too.

In the wake of the FTC news release, Tracy Myers struggled with what to do. “We had always portrayed ourselves as consumer advocates,” he says. “We consider ourselves the good guys in an industry plagued with a bad stereotype.”

His attorneys advised him to sit tight. This will all go away in a couple of days, maybe a few weeks, they said. But Myers hated that idea. He knew he couldn’t take the FTC to court—he’d go broke trying to argue his case—but he couldn’t stomach the idea of holding his tongue. He was a community leader, a local celebrity, one of the few people on the planet who could wear an Uncle Sam top hat on TV without looking foolish. “Right or wrong,” he says, “I just went on gut instinct. I was in survivor mode.”

At 7:40 p.m. on March 15, he sat down behind a video camera in his office. He wore a crisp, white button-down shirt with the dealership logo to one side. His eyes were weary, but he looked straight into the lens as he began to speak. “I think that it’s important that I share the rest of the story with you,” he said. “I want you to know what I stand for and what this dealership is all about.”

For the next 11 minutes, he laid out the facts without disparaging the FTC. He apologized for any misunderstanding and said, “We never meant to mislead anybody or deceive any consumer.” In closing, he invited people to contact him by phone or email with questions. Before calling it a night, he posted the video on YouTube. Was it enough to save his company? He had no way of knowing—not yet anyway.

 

In many ways, Tracy Myers’ video is a testament to the wisdom of brand management. His quick response, his candor and his customer-centric focus were all hailed by experts in the field. But it’s instructive to look at a less successful effort, too. Consider the saga of Dave Carroll and United Airlines.

On March 31, 2008, Carroll was sitting on a plane at Chicago’s O’Hare Airport when a woman across the aisle glanced out her window and said, “They’re throwing guitars out there.” Carroll had checked two guitars—an Ovation Elite and a $3,500 Taylor 710ce—with his luggage. He was on his way to Nebraska from his home in Nova Scotia to perform on a one-week tour with the band Sons of Maxwell. Carroll tried to report the incident to three airline employees. No one had the time to hear him out. When he arrived in Omaha, it was after midnight. He had a van to catch at 6 a.m.

At sound check the next
day, he discovered the damage. The Taylor had been stowed in a hard-shell case outfitted with an extra layer of protection, a 1-inch foam cover that zipped snugly over the top. When he pulled out the guitar, there was a 4-inch hole in the base, right where you plug in the electric cable. The cedar face was cracked and separated from the sidewalls. In the end, it cost him $1,200 to repair.

For nine months, Carroll tried to get United to take responsibility for the mishap. He was directed to a call center in India, told to return to Chicago to present his guitar for inspection, shuttled from one unsympathetic representative to the next. Finally, a woman named Ms. Irlweg informed him in a series of emails that his request for $1,200 in flight vouchers had been rejected. An airline waiver Carroll never received allegedly absolved United from treating his prized possession with respect. The musician conceded defeat, but only after vowing to write three songs about the experience and post them online.

“I decided the verses would lay out the facts as though I were reporting a crime to the police,” he later explained in a book titled United Breaks Guitars. The first song, written in a vintage Hank Williams tempo, got right to the point.

 

United, United,
You broke my Taylor guitar.
United, United,
Some big help you are.
You broke it, you should fix it,
You’re liable, just admit it.
I should have flown with someone else or gone by car
’Cause United breaks guitars!

 

Carroll’s video rendition of the song cost him $150 to produce. His friends played the on-screen roles. One clip includes a crime-scene-style chalk outline of a guitar with a broken neck. Another features three burly men in fake black mustaches, sombreros over their hearts, mourning the instrument in its case. The finished work was posted on YouTube on a Monday night in July 2009. Carroll wrote an email and a Facebook post to let his friends know it was there. By Friday, it had recorded 1 million views. Two days later, it had reached 2 million. When it surpassed 3 million in the second week, Carroll placed the song for sale on iTunes. “Thirteen million views later,” he says, “it’s still trucking along.”

A genuine Internet celebrity, Carroll has been hailed in taxicabs in Australia and cheered in Siberia. “I get stopped all over the world,” he says. “If you ever wonder if there are cameras in airports, you don’t have to anymore. Because by the time I got to the security belt in Glasgow, the head of security was standing on the other side of the metal detector, waiting for photos and autographs. He saw me coming.”

If United had been as observant, it would have saved itself from a heap of trouble. The day the video logged its millionth viewer, the company called to offer the songwriter $1,200 in travel vouchers and another $1,200 in cash. He turned the offer down. United later presented a $3,000 donation in his name to the Thelonius Monk Institute of Jazz. The company eventually apologized, conceding on Twitter that Carroll’s song “struck a chord.” It promised to screen the video in staff training “to ensure all customers receive better service from us.” But throughout the crisis, United was routinely late in its response—leaving an outraged public to bemoan what it perceived as stonewalling, deaf ears, insincerity and lame excuses.

To be fair, though, the Carroll-United affair happened at the dawn of a new era, back in the days when YouTube, Facebook and Twitter were just beginning to alter the dynamics of customer service. Remember the Comcast repairman who fell asleep on a customer’s couch while waiting on the phone to consult with colleagues in the office? That 2006 video of his nap drew just 200,000 views in the two weeks before The New York Times reported on the story. The Domino’s Pizza video showing a kitchen employee inserting strands of cheese up his nose logged just over 1 million views before it was removed from YouTube. The pizza video preceded Carroll’s YouTube video by only three months.

Even Dave Carroll sees his video’s rapid success as a tipping point. In a span of weeks, thousands of people reached out to him with their own horror stories. Before the year had ended, he was invited to speak to the customer service executives for 700 worldwide brands. He delivers two talks a month now, often in far-flung destinations such as Dubai. This past February, he launched a website named Gripevine.com to help companies big and small resolve complaints. Customers file their grievances (using photos and video if necessary) and select a preferred solution (an apology, compensation, replacement or repair). The company is notified. The two parties use a private messaging system to settle the dispute.

More than 100 firms have signed up for the service. United is not among them. In June, a 10-year-old girl traveling alone from San Francisco to a summer camp in Traverse City, Mich., landed at O’Hare Airport in Chicago to discover that the escort her parents had requested was nowhere to be found. The girl said she tried to explain her predicament to United employees, but they were too busy to steer her to her connecting flight. Hours later, after the plane had landed in Michigan, the camp’s counselors informed her parents that she was missing. Once again, United was slow in responding to a crisis. In August, the family took their complaints to the Bay Area’s NBC affiliate. United had no choice but to respond in public, offering apologies, a refund of frequent-flier miles and the $99 unaccompanied-child fee and a promise to review the matter. The Internet buzzed with the story for days.

 

With consumer power growing by the hour, it’s no surprise to find that brand management is a thriving business. The media research firm BIA/Kelsey estimates that small and mid-sized U.S. businesses spent $1.6 billion a year ago to expand and protect their digital reputations. By 2015, it predicts, that figure will exceed $5 billion. These days, people rely on the Internet to help them choose the right car, hotel, insurance, restaurant, wedding venue, plumber, camera and TV set. They place great faith in what they read on the web—even though, by some estimates, up to 30 percent of the comments are bogus. A video game retailer got hammered with one-star reviews on Amazon not long ago after its outsourced marketing rep engaged in a hostile email exchange with a dissatisfied customer. A short time later, the rep was begging forgiveness.

Dozens of brand management firms assert that they can bury negative publicity in Google’s search results. Some even claim they have the power to remove unflattering statements from sites such as Angie’s List. A few say the competition is so intense that they themselves have been smeared by fake reviews. In March, Patrick Ambron—a 25-year-old Syracuse grad—unveiled a new version of the website BrandYourself.com to take much of the mystery out of the process. His easy-to-use interface walks you through the steps of search engine optimization. It’s a low-cost way for online marketers and real estate agents to take charge of their own results.

Ambron discovered the need for this service when a college buddy (now a co-founder) had a rough time landing a summer internship. It turns out there was someone with the same name who rated even higher in online searches—and that guy had a criminal history. To distance himself from this evil twin, Ambron’s buddy would have to pay a service like Reputation.com thousands of dollars—with no guarantee that he’d be the clear frontrunner the next time Google updated its algorithms.

The secrets of social media and SEO can be dizzying, especially when you’re pressed for time. According to a survey conducted by Oracle, people on Facebook expect a reply to their complaints within 24 hours. On Twitter, they’re willing to grant you two hours. That’s why Tracy Myers finds himself in high demand on the speaking circuit these days, too. He has written a 22-page case study outlining his response to the FTC crisis. His YouTube statement was a fine first step, but he had to keep hustling to put it in the public eye. “All we focused on for 48 hours was making sure that that video was seen,” he says. He posted it on Facebook, promoted it on Twitter and reached out to the local NBC affiliate—the one that had burned him—and asked it to include the clip on its well-trafficked website. Myers told his supporters to go there to make their comments. “That was huge,” he says. He used Google Alert to monitor the response. He also gathered his staff together, 33 employees in all, and screened the video for them, fielding questions about the FTC’s actions and the dealership’s response. He advised them not to talk to the press. “We don’t need anything spinning out of control,” he explained.

Most of the tips in Myers’ case study are familiar. He stresses the importance of getting out in front of the story, of being honest and transparent. But one bit of advice bears repeating. To spread your message effectively, it’s essential to have your support group—what Myers affectionately calls “the herd”—in place from the start. Your loyal customers—the die-hards—are your greatest allies. If anyone’s going to argue on your behalf, it’s them. “Once something like this happens, it’s too late to get the troops together,” he says. “You need to do it now.”

Instead of inserting your brand into conversations with strangers, says Amy Lanigan, vice president of client strategy at the digital agency Fluid, it’s better to start with people who know and admire your work. After reading a post praising its coffee, Starwood Resorts surprised one guest by plastering his room with packets. Etsy reached out to a customer who tweeted that she wanted a vintage wedding dress like her grandmother’s and helped her to find it. The online retailer Bonobos has been known to send a six-pack of beer to apologize for delivery snafus.

Peter Hirsch of Ogilvy Public Relations takes the proactive approach one step further. An expert in crisis management, he has counseled global companies such as the Bank of Tokyo, GlaxoSmithKline and Hewlett-Packard, not to mention the governments of Greece, Puerto Rico, the Philippines, Colombia and Cyprus. He advises his clients to start working on their battle plans before trouble arrives. Granted, it’s hard to foresee a collision with the FTC. You should consider the most obvious threats—a rogue employee, a pricing error, a poison scare—and prepare a response. “Sometimes when you look at the risks,” he adds, “you end up saying, ‘Huh, maybe that’s one I don’t need to run; maybe I can change something about the way I do business to avoid it entirely.’ ”

Hirsch also warns against declaring victory prematurely. When you’re holed up in a bunker, it’s easy to forget about a consumer’s feelings, to overlook the fact that he or she sees the issue from a different perspective. You may think that a $1,200 voucher and $1,200 in cash from your airline is a generous offer, but you can easily be mistaken. “You can fix the harm, but if you haven’t also fixed the pain, you haven’t necessarily solved the problem,” Hirsch says. “Don’t forget about the emotional and psychological ramifications.”

 Myers can attest to that. “We lost a lot of sleep and got some gray hair,” he says of his brush with the FTC. “But other than that, our business has been on an incline for the past three years.” Yes, his efforts to restore his brand paid off in the end. But, as Myers is quick to point out, he also benefited from a stroke of luck: The federal government is one of the few organizations that people dislike more than used car dealers. 

Post date: 
Nov 13, 2012

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