Brands and businesses have a huge influence on consumer behavior. Each brand tries to find a way to fit in with its target audience’s imagination.
Brands use advertisements, social media content, and even celebrity and influencer endorsements to attract a target audience and build an image.
Brands spend massive amounts of money trying to create this image so they can nurture customer relations, so what happens when this image-building exercise goes wrong?
Let’s take a look at what a “brand crisis” is and how it affects customer behavior.
What is a “brand crisis”?
A brand crisis is a situation where a brand faces negative publicity because of false or unsubstantiated claims. Brands and businesses have certain missions, visions, and core values that they establish to create a bond with their target audience.
When these values are portrayed falsely through public relations, it can be damaging to the brand. False propositions, misunderstandings, and miscommunications can severely harm a brand’s market reputation and thereby affect customer behavior.
How Can Companies Handle a Crisis?
No brand can ever be immune to a reputational crisis. In today’s digital world, information travels at the speed of light, so brands have to be extremely careful about the kind of content and insights they share.
However, it takes a second (and no preemptive time) for an unexpected event to occur, which can damage a brand’s reputation, and the primary impact this has is on customer behavior and perception.
For example, imagine a social media influencer posting content about a product they ordered from a brand and how poorly it was delivered. Perhaps the packaging was broken or the item was damaged.
Some companies use social listening tools to manage crisis and get to know what their target audience members are saying about them.
Now, there’s no way to prove that this claim is true or false. The brand can swear that they delivered the goods in perfect condition; however, the news has already traveled.
People following this influencer have viewed this content and would then be wary of ordering products from the brand—in a matter of seconds, the brand has lost out on customers and followers.
So how can a brand manage this kind of crisis?
- Damage Control: Whether the claim is true or false, a brand needs to first control the damage that has already been caused and can’t be reversed. To do this, every brand needs to have a public relations manager or a brand manager who can fix mistakes by knowing what to communicate to the customers and the media, and how to prioritize fixing the mistake. In the example above, the crisis can be handled effectively by the brand manager reaching out to the influencer to understand the issue they are facing.
- Damage Assessment: The second step is to assess the damage – brand managers need to understand whether the crisis is a one-off event, or if it is likely to happen again. If the problem seems persistent, then they need to understand the long-term damage to the brand. In the short term, a brand crisis can affect sales, and the confidence of customers and give competitors a boost to use the crisis to leverage themselves. Therefore, at this stage, a brand manager needs to understand how to recoup the lost revenue, earn back customer loyalty and trust, and deal with the competition without getting swept away by the frenzy.
- Action Plan: Once the damage has been immediately controlled, and then further assessed, a brand manager needs to come up with a long-term action plan of how to avoid letting the damage affect the brand’s image in the long run. For example, this could include internal policy changes, meetings with stakeholders, revamping social media, or the brand taking a particular position in the market to uphold its reputation. For example, recently, a brand let go of one of their executive management level employees because the employee was in the media for having an affair with someone else from the workplace. The rest of the management decided that this was not in line with their overall brand image of promoting integrity and honesty, and decided to let go of the employee who was having the affair.
How does a brand crisis affect consumers?
The biggest loss for any brand or business is when it starts losing customers and sales. Brands rely on customers not just for revenue generation but also for networking and marketing.
Poor brand crisis management can lead to customers harboring misconceptions and badmouthing the brand, avoiding using the brand’s products and services, flocking to competitors, or even indulging in badmouthing the brand and causing more damage.
A brand provides customers with familiarity and helps shape their perceptions. Therefore, if the image itself is not right, the customer’s perception will be clouded.
The better a brand’s image, even in terms of handling a crisis, the better the chances of fostering loyal customers.
Customers tend to make purchases from brands that have social proof. Social proof is when influencers, celebrities, or even regular customers testify to the brand’s worth and value in the market.
This can be done through social media content, reviews, or testimonials. Customers are more likely to purchase a product based on someone else’s review, be it a customer’s or a celebrity’s.
In much the same way, customers are highly likely to avoid purchasing a product from a brand that has faced a reputational crisis or is receiving negative publicity in the media.
The influence of crisis on buying habits
Buying habits and consumer behavior are heavily influenced by brands; the better a brand’s image in the market, the quality of its products, or even its association with customers, the better its chances are to affect consumer behavior positively.
On the flip side, poor market reputation, quality of products, or bad relationships and customer support can lead to a brand crisis, thereby hurting the very brand itself.
Consumer behavior has the power to make or break a brand; if a brand loses its consumers, it is likely to stop operating.
Think of restaurants or clothing companies—how many of them have shut down due to poor brand crisis management?
When it comes to a brand facing a crisis, it’s not just the brand making the wrong move; it’s also the brand ensuring that any poor publicity or negative media is handled the right way.
Customers won’t know what to believe unless the brand handles false claims or substantiates misrepresentations with evidence.
Examples of Brand Crisis Management
Every brand must have a proper crisis management plan or strategy in place, even if they hope to never use it. You never know when a crisis can hit.
No fire is the same, and therefore a brand can never be completely aware of what disaster might strike; however, in the event it does, it’s important to have a plan that can mitigate the risk to a large extent so that the brand’s customers and their behavior towards the brand remain unaffected.
In the recent past, there have been several instances of brand crisis management. Here are a few examples.
Southwest airline engine explosion crisis
Southwest Airlines in the US underwent massive commotion when one of its flight’s engines exploded, causing a tear in the fuselage.
Many passengers ended up sharing footage of the incident across social media, causing a media frenzy and making customers doubt the airline’s safety. This caused a loss of customers and sales in the short term; however, the airline company handled the crisis well.
The company immediately suspended its social media platforms and instead focused on ensuring the passengers were safe and well taken care of, despite the accident. This helped passengers feel reassured, and for every piece of bad publicity, some customers testified how well they were taken care of instead.
KFC warehouse accident
In 2018, KFC faced massive backlash in Ireland when there was a major accident near one of its warehouses, leading to delayed food deliveries and prolonged customer wait times.
Customers were extremely frustrated with the wait time; however, the brand acknowledged the event and put up a helpline to aid customers more quickly. This led to customer behavior getting back on track.
To avoid a brand crisis, it becomes important to evaluate a brand from time to time. A brand crisis can cause serious damage to a customer’s perception, and as they say, one customer gone can mean many losses.
It’s important to identify a brand’s weak points and vulnerabilities so that any crisis it faces (be it in a controlled or uncontrolled environment) can be averted or managed.