When the infamous Tylenol murders hit Chicago in 1982, Johnson & Johnson quickly jumped into crisis management mode. And understandably so. Seven people died suddenly after taking extra strength Tylenol capsules that had been contaminated with potassium cyanide. The case remains unsolved, and no suspects have been charged with the murders. Johnson & Johnson even offered a $100,000 reward, but it has never been claimed.
Despite this terrifying incident, to this day millions of people around the globe continue to pop Tylenol every day, without thinking twice, to relieve their aches and pains. A lot of credit has been given to Johnson & Johnson crisis management. Media outlets praised the drug company for its swift and honest communication during the crisis. In addition, Johnson & Johnson collaborated with the Chicago Police Department, the FBI, and the Food and Drug Administration during the investigation. Although the drug company's market share would collapse from 35 percent to 8 percent that year, Johnson & Johnson rebounded quickly, and Tylenol would become the most popular over-the-counter pain medication in the United States.
Johnson & Johnson's swift action is a paradigm in the crisis communication field. However, with the growing popularity of social media, the approach dramatically changes the damage control. "We live in the world of real time," explains Michael Fauscette, group vice president of software business solutions at IDC. "The expectations are much faster than they would have been in a world with no social Web. You have to be prepared with an emergency response plan that can be quickly put into place."
"You have to be very attentive to what’s happening," David Gergen, senior political analyst for CNN and former adviser to four U.S. presidents, told CRM magazine. "You have to act quickly. The longer you draw out one of these crises and let it drag on, the weaker you get."
Domino’s Goes Viral
One of the biggest fears marketers have of social media is that it can foster a sudden and widespread attack on their brand. For Domino's Pizza, that fear was realized in April 2009 when two rogue employees from a Conover, N.C., franchise posted a revolting YouTube video of one of them intentionally tainting food that supposedly was going to be served. The video went viral, and the company's brand had been attacked overnight. However, the lesson for marketers is not how severely the company's image was damaged, but how the company responded. This set a new standard for crisis management in today's socially connected world.
The company's response to the viral video didn't start off well, though. Actually, Domino's Pizza didn't respond at all within the first 24 hours of the offending YouTube post, an omission that proved to be a critical mistake. With Twitter and Facebook users sharing the video, it received more than 700,000 hits on day one. In fact, a national study by HCD Research revealed that 65 percent of respondents who would previously visit or order Domino's Pizza were less likely to do so after viewing the offensive YouTube video.
Clearly, Domino's had to act. Its response came a few days after the YouTube posting, as the company met the miscreants on their own turf with a YouTube video response from CEO Patrick Doyle. In it, he apologized for the incident, thanked the online community for bringing it to the company's attention, chastised the now-former employees, and outlined steps that Domino's was taking to deal with the issue. One such step was to temporarily shutter the restaurant so it could be sanitized. All of those steps are essential to an effective crisis management response.
The company didn't stop there. In an effort to make the food production process more transparent, the company rolled out the Domino's Pizza Tracker, enabling customers to place their orders online and track them. Customers are even told exactly when their pizza is put into the oven.
"If you look at what happened with Domino's viral video that went out, they were very open and have done things in a much more open manner," explains Brent Leary, cofounder and partner of CRM Essentials. "Part of their marketing campaign is open and transparent with being able to show actual people and telling us what they are responsible for."
The company also invested in prime Times Square real estate in New York, allowing customers to submit feedback that is broadcast in real time on its billboard. Domino's features a real-time video of the billboard on its Web site. "People were refreshed with the whole idea of having a rolling list of user comments in such a public fashion," Leary says.
The campaign seems to be working. According to Bloomberg Businessweek, Domino's reported second-quarter 2011 earnings of 42 cents per share (excluding some items), beating the average analyst estimate by 22 percent. In addition, Zack's Investment Research reported that total revenue increased by 6.2 percent year over year, to $384.9 million.
Southwest's Crack Under Pressure
In April, Southwest Airlines flight 812 was forced to make an emergency landing after a large hole developed in the plane's fuselage, dropping the cabin pressure. The flight from Phoenix never made it to its final destination, Sacramento, Calif., and several of the 118 passengers on board snapped photos and videos on their cell phones of the frightening malfunction. Unfortunately for Southwest, that was not an isolated incident. The airline went on to cancel about 300 flights and grounded 79 planes for an "aggressive inspection effort in cooperation with Boeing engineers." In addition, the airline updated its social media channels, informing fans and followers about the investigation.
"Anytime we have a crisis, it is essential that we communicate as quickly as possible," says Brandy King, a spokeswoman for Southwest Airlines.
The airline relies on a crisis template to "fill in the pertinent details" after updates become available, she says. The template provides such basic information as the number of passengers on a flight, the type of aircraft involved, the arrival and departure times, and a toll-free phone number that people could call for more information. All of that data would help to build other documents, most commonly a press release. The template also would instruct the media on how to reach the airlines, as well as provide a link to a Web site that Southwest would use to post updates on a given crisis.
"We have something that goes out immediately," King says, "and then follow-up details as a situation unfolds."
In addition, King describes "a pretty hefty crisis manual" that defines Southwest policies and procedures in the event of an airplane accident. "That can include an aircraft overshooting a runway," she says, citing one of the scenarios covered by the manual. In addition, less serious events, such as an airport closing or severe weather, are covered. This book "provides a starting point to address those situations," King notes.
While King says "each situation is unique," it's essential to be as "transparent as possible" while taking care of customers. "We are an airplane service, but the customer comes first," she notes.
"The way they handled that [the hole in the fuselage incident] was kind of textbook, and people really appreciated their rapid response at the time," Leary says. "They were also viewed as a company that was open and transparent about things. I think that plays a big part in how a misstep played out. If you have the right kind of approach to a misstep—being open, being honest, being transparent about it—people respect that a lot more than trying to cover up a misstep."
By February 2010, product recalls significantly hampered Toyota's sales and reputation. The largest recall, which affected 5.2 million cars, was due to out-of-place driver-side floor mats, which could entrap foot pedals. An additional 2.3 million vehicles in the United States were recalled for sticking accelerator pedals, as well as 1.8 million vehicles in Europe and 75,000 in China. According to reports, certain accelerator pedals had the potential to become "harder to depress or slower to return to the closed position" as well as "become stuck in a partially depressed position." Finally, a smaller recall was initiated for hybrid anti-lock brake software in 2010 Priuses as well as Lexus HS250h hybrid vehicles, which affected roughly 150,000 Toyota owners in the U.S. Still, mounting pressure from the U.S. Department of Transportation, the U.S. National Highway Traffic Safety Administration, and the media forced Toyota to recall more than 9 million vehicles worldwide.
The bad publicity naturally sparked consumer concern, and Toyota's brand took a significant blow. After the recalls, a USA Today/Gallup Poll maintained that 31 percent of respondents claim it is unsafe to be in a Toyota or Lexus.
What could Toyota have done differently? Some maintain the company was too slow to react. When public safety is involved, it's imperative to "come clean, come clean fast, come clean as openly as you can," Fauscette says. "No matter what it is, having a very immediate response and being very open and very public about your response is very important, but when public safety is involved, it's even more important."
"You have to look at the customer who might really be seriously worried or have a reason to worry about the safety issue; then you actually have to market directly to them," adds Kimberly Collins, a Gartner analyst specializing in CRM. "So you do have to take a little bit different of an approach. It just depends on if it’s something that has a broad or specific impact to an individual and determine how to address these things."
Eventually, Toyota temporarily suspended sales of models affected by the acceleration pedal recall. It also launched a television ad campaign, promoting its commitment to safety. And, in a prepared statement presented to the U.S. House Committee on Oversight and Government Reform, the president and CEO of Toyota, Akio Toyoda, expressed remorse for letting the company's growth cloud its commitment to safety. He added, "Our basic stance to listen to customers' voices to make better products has weakened somewhat…. I regret that this has resulted in the safety issues described in the recalls we face today, and I am deeply sorry for any accidents that Toyota drivers have experienced."
Additionally, Toyoda, who is the grandson of the founder, reaffirmed his commitment to safety and his plan to manage quality control.
However, despite Toyota's efforts, Fauscette still harbors negative feelings about Toyota's response. "Frankly I feel this way because it seemed like they were trying to cover something up," he says. "As long as you leave people with a feeling like you are trying to hide something, then they are going to believe you are trying to hide something. That's an easy thing to believe about a corporation because we are kind of conditioned to think, 'perhaps they are hiding something.'"
However, some suggest that Toyota's brand is strong enough to withstand the mistakes associated with the recalls. Al Ries, chairman of Ries & Ries, an Atlanta-based marketing strategy firm, wrote in an AdAge blog, "Will Toyota ever regain its leadership perception in consumers' minds? I’m not convinced that Toyota has ever lost it. To many consumers, the unintended acceleration and the other problems were 'just one of those things that could happen to any brand.'"
He cites people who have strong personal brands and suffered a public setback from their transgressions—Bill Clinton, Tiger Woods, and Martha Stewart. However, they managed to bounce back. "PR is extremely effective in building a brand. But once a brand is built, PR has little effect on a brand's long-term position…. Bad news won't kill a good brand. Nor, unfortunately, will good news resurrect a bad brand. Once a brand is strongly entrenched in the mind, it seems to resist change, either good or bad."
While this theory has proven true for some celebrities, it's probably not worth testing on your company's brand—unless, of course, you have no choice.
—Additional reporting by Greg Lupion and David Myron