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Crisis communications: What to say to stakeholders when it’s all going wrong

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Portrait image of Benedetta CrisafulliDr Benedetta Crisafulli is Senior Lecturer in Birkbeck’s Department of Management with expertise in crisis communication. She shares insights from her research on how to plan for and handle a crisis.

No organisation is immune from crises. While in an ideal world crises would be avoided altogether, in practise that’s not always possible. Invariably this means that it’s essential to have a plan for situations when things go wrong.

In the literature, we tend to distinguish between three main types of crisis:

  1. Corporate Social Irresponsibility – when an organisation is affected by a scandal due to disregard for the environment, employees and/or community at large.
  2. Service Failures – when an organisation fails to deliver on its brand promise.
  3. Product Harm – when products are suspected to be dangerous to customers and have to be withdrawn from the market.

The way companies handle a crisis determines their reputation, sales and ability to recruit top talent. Much of my research in collaboration with top scholars including Paolo Antonetti, Jaywant Singh and Stan Maklan examines the response of various stakeholders when crises occur, and what happens when organisations and their brand representatives do something in an attempt to overcome such events.

What are the most important PR actions for an organisation facing  a crisis?

If you find yourself failing to deliver upon your brand promise in a way that causes customer dissatisfaction and anger, a very important step to revert the situation is to fix the problem. A very recent case in point in the UK concerns Heathrow baggage crisis last summer. In such circumstances, an offer of compensation is somehow futile unless the problem is fixed and any compensation is provided in a timely manner, by an empathetic and polite brand representative. The empathy, concern and politeness of the company, or its representatives, does matter regardless of the channel of communication – it matters even in technology-mediated interactions, as our research shows.

Crucially, we should remember that customers are not always complaining with the aim to gain some form of compensation. Customers often seek reconciliation to be able to re-use the company services, and are not always ready to take revenge. In our research on anger, we could identify not only a vindictive form of anger, but also a supportive form of anger following service failures. Supportive anger can be beneficial to companies as signalling consumers’ willingness to find a resolution to the problem and show continued patronage. If anger is not always negative, as we find, then companies should be ready to listen to customers’ complaints.

Do some organisations weather crises better than others?

It is important to note that not all crises are the same: if there is no attribution of responsibility to the company, customers tend to be more tolerant. For example, if a flight is cancelled due to extreme weather conditions, customers are unlikely to blame the company. That’s quite intuitive.

When it comes to crises exposing companies’ social irresponsible practices, however, market leading companies tend to be somehow less affected. Such companies still suffer, but less so when compared with smaller companies. With Prof Paolo Antonetti at NEOMA Business School, and Aybars Tuncdogan from King’s College London, we addressed this specific question in our published research in the Journal of Business Ethics. In particular, we were interested in job seekers’ reactions to corporate social irresponsibility events concerning dominant companies, which are leaders in an industry. Our research shows that dominant companies are comparatively less negatively impacted than non-dominant companies, especially so when job seekers feel very certain about their attitudes towards the organization.

While market dominance does not give companies a license to do what they want, investments in building a dominant brand can have a return in being able to navigate crises more easily.

What mistakes have organisations made in the face of crises?

The case of BP managing a crisis is exemplary. In 2010, the Gulf Coast was hit by a huge oil rig explosion – the biggest oil spill in US history. BP failed to report the facts with transparency and good intentions, stating that the oil rig was leaking 1,000 barrels of oil a day. That number was in fact closer to 5,000. Being perceived as dishonest in responding to the crisis would have most likely further damaged BP’s reputation.

Another example of a questionable crisis response is the case of United Airlines, when a guitar owned by the band Sons of Maxwell was broken during baggage handling. After being frustrated by repeated failed attempts to get compensation or reach a resolution, singer Dave Carroll took to YouTube to publicly shame United Airlines through a series of songs, which went viral.

Is there any way to turn a crisis into a positive story?

In service failure literature, there is some evidence to support what is called the Service Recovery Paradox, wherein customer satisfaction after a failure and subsequent recovery is even higher than satisfaction prior to the failure. In practice, the evidence assumes that crisis response of companies is exceptional (not simply good enough), yet that’s costly. It also assumes that the failure is low in severity and unlikely to happen again in the future.

Pepsi successfully bolstered their reputation following a consumer backlash when a needle was allegedly found in a drink in Washington. Pepsi produced a number of videos demonstrating the way the drinks canning process is carefully managed, thereby reminding consumers of the brand’s excellent production standards and goodwill.

What kind of preparation can organisations do to support the handling of future crises?

There is no one size fits all approach for crisis communications, but there are some guiding principles:

  • Companies should try their best to behave ethically and responsibly to avoid crises to start with.
  • Make sure there is a plan in place for crises that commonly occur in your industry. For example, customer service industries can measure consumer sentiment via historical data or social media listening to identify the kinds of crises they should plan for.
  • Have a crisis communication plan detailing what steps you will take if a crisis occurs. The plan should include fixing the problem and communicating empathetically with customers in a way that conveys genuine, not manipulative, motives.
  • If a customer asks for compensation, it is usually because they deserve it, so don’t be parsimonious!
  • Work on building, maintaining and reinforcing market dominance as that can somehow attenuate the negative effects of crises, and still make you attractive to job seekers.

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To trust or not to trust: the role of social media influencers in corporate crisis communications

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Dr Benedetta Crisafulli, Lecturer in Marketing, shares the findings from her latest research in collaboration with Professor Jaywant Singh, Dr La Toya Quamina and Dr Melanie Tao Xue.

Zoe Sugg, social media influencer

As anyone with an Instagram account will know, social media influencers (SMIs) play a prominent role in modern day marketing. Over two thirds of multinational brands plan to increase expenditure on influencer marketing within the next few years, with global spending in the area expected to reach $15 billion by 2022. 

Despite the enthusiasm from marketers to partner with SMIs, scholarly evidence on the efficacy of such a practice remains sparse. Is it always wise for brands to employ SMIs to get their message across? What about the role played by SMIs in corporate crisis communications? Our study entitled ‘To trust or not to trust: The impact of social media influencers on the reputation of corporate brands in crisis’ looks into whether brands would be wise to employ SMIs during times of corporate crisis. 

When crisis hits 

Highly negative events such as corporate crises emphasise the ‘bad’ character of big brands, putting their reputation at stake. Whether it’s a potentially harmful ingredient in our make-up, or using our data for profit, crises shake our trust as consumers and can damage our relationship with a brand. 

In this study, we were particularly interested in how a brand’s ingratiation response to the crisis, whereby customers are reminded of the brand’s past goodwill, works in minimising negative responses, and whether the presence of an influencer improves or rather worsens the brand’s efforts. We asked consumers to evaluate a corporate crisis situation and consequent crisis response from the brand alone, or from the brand and an influencer. 

Social media influencers: hindrance or help? 

There is thus far evidence to suggest that SMIs boost consumer engagement with a brand. However, we find that, like salespeople, SMIs can be seen as acting out of their personal financial motives, and solely in the interests of the brand. This is especially the case in the event of corporate crises.  

Far from passively absorbing the marketing content that surrounds them, consumers are often aware of persuasive attempts from brands and actively resist these. From a very young age, consumers develop what is known as persuasion knowledge. Such knowledge allows them to identify and resist persuasive attempts at manipulating their behaviour. Our findings suggest that consumers overwhelmingly interpret the contribution of an influencer in crisis communications as a persuasive tactic of the brand to try and make consumers believe that the crisis is not as bad it seems. Such an attempt is perceived as manipulative, thus rejected. 

What does this mean for influencer marketing?  

Our study suggests that influencer marketing might not be as effective as claimed by previous research and highlights the need to exercise caution in the use of SMIs during crisis communications. Brands, therefore, need to be particularly wary of involving SMIs in any attempts to bolster reputation in crisis communications.  

The study also suggests practical ways in which companies can think of engaging SMIs to support brands during crises. We find that an effective way for SMIs to support a brand in crisis is by making the genuine, values-driven motives behind the brand-influencer partnership known to consumers. Consumers are more likely to respond positively to messages which are dictated by motives of altruism. 

The citation for this study is Singh, Crisafulli, Quamina & Xue (2020). ‘To trust or not to trust’: The impact of social media influencers on the reputation of corporate brands in crisis. Journal of Business Research (In Press).

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Peace-making in Colombia beyond the ratification of the peace agreement: political or market solutions to peace-making?

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This post was contributed by Dr Olivier Sibai, lecturer in marketing in Birkbeck’s Department of Management. Dr Sibai recently published a paper entitled ‘Marketing as a Means to Transformative Social Conflict Resolution: Lessons from Transitioning War Economies and the Colombian Coffee Marketing System‘ in the Journal of Public Policy and Marketing

Colombian peace agreement: is it really the end of the longest civil war?

After four years of negotiations, the Colombian government and the representatives of the FARC signed a historical peace deal this summer. The deal was ratified by the house of representative on the 30th November, officially ending 52 years of a civil war which has left up to 250 000 people dead and over 5 million people displaced. The peace deal was hailed by the international community as a major achievement. High Commissioner for Peace Sergio Jaramillo described it as a miracle and the country’s President, Juan Manuel Santos, received the Nobel Peace Prize for his role.

While the peace agreement is clearly a great achievement, voices are already raising concerns about the risks of ex-fighters joining criminal gangs. Clearly, the agreement is only the first step of a long peace-building process. As long standing civil war deeply changed Colombian society, peace-building will be a challenging process, necessitating the overcoming of many hurdles over many years.

Peace-making: a political challenge with a political solution?

Peace-making in Colombia is clearly a political challenge. Civil wars developed because, 50 years ago, the state was dysfunctional to the extent that it failed to provide certain public goods required for societal well-being. In particular, security manifested as physical safety, wealth, and welfare was limited to small segments of society – typically affiliated with the ruling party or class. In the wake of this situation, rebel parties emerged, fighting the state to implement a different political order.

Peace-making, therefore, typically involves achieving three objectives: restoring the ability of the state to provide public good,  undermining the ability of the rebel parties to challenge the state through war-making, and facilitating reintegration of the actors actively engaged in the war in a state-centered society. The peace agreement ratified in Colombia addresses those three political issues through political solutions. The Colombian state will redistribute land and invest in rural development, set up of a transitional justice system to judge and formally reintegrate the former rebels, and guarantee the FARC a place in democratic debates as a political party. International political organisations will also be involved, with, for example, the United Nations overlooking disarmament in the coming months. Civil society is already contributing to peace-making, facilitating community dialogue and communicating the benefits of citizenship and law-obedience within sensitive communities.

Peace-making: a market problem – with political or market-based solutions?

While political issues must undoubtedly lead the peace-making process, markets will also necessarily play a significant role in turning the peace-making initiative into a long-term success or a failure. As the civil war continued, the Colombian economy transformed into a war economy – an economic system adapted to the context of violent conflicts and functioning largely outside the rule of law. As the war economy itself continued, it stabilized itself as the new economic order, making it difficult to return to a peace economy. The markets of the war economy became institutionalized and business actors became dependent on the continuation of war to sustain their livelihood, producing short-term economic interest in perpetuating the war economy. The actors of the combat market accumulate their wealth from trade activities that directly fund the war (e.g. trade of money, arms, equipment, and fuel; taxation of licit and illicit economic activities). The actors of the shadow markets accumulate theirs from lucrative entrepreneurial activities on the margin of it (e.g. drug trafficking, smuggling, mass extraction of natural resources, currency exchange, and manipulation of aid resources). The actors of the coping markets (e.g. wage labor, petty trade) depend on the combat and shadow markets to eke out a living and reimburse their loans.

As business actors are embedded in the war economy, they are often viewed as a significant force working against peace-making. Typical approaches to fostering the transition from a war economy to a peace economy are therefore political, involving policies and interventions aimed at controlling market actors. The peace agreement for example foresees the states collaborating with the international community to crack down on narco-traffickers.

Yet, in the past 15 years, governmental institutions in countries afflicted by civil wars have been criticized as kleptocracies manipulated by elites embedded in the war economy to retain power and wealth. Markets, by contrast, have increasingly been recognized as including the potential to be the pro-social forces contributing to peace-making in such contexts, promoting cooperation, inclusion, security, social justice, and sustainable prosperity. Some have argued that business people have more interest in building a deeper peace than transitory international peacebuilding officials as they have a long-term personal investment in the country. Others have depicted business sites, such as plantations or large mines which remained “islands of civility” in times of war, as representing spaces in which trust and hope can redevelop in post-war periods.

Envisioning market-based solutions to peace-making

If market-based solutions can complement political solutions to peace-making in Colombia, we still need to understand how markets can contribute to stabilizing Colombia into peace rather than destabilize it back into war. And today, we still know very little about that.
My colleagues and I argue that, for markets to contribute to transforming the war economy into a peace economy, marketers need to shift their perspective. They need to view themselves not solely as economic agents guided by profit but as policy agents or corporate diplomats, equally interested in promoting social wellbeing through the market. From this perspective they must design peace-making markets rather than just design marketing tactics in existing war markets.

Now, what would a peace-making market look like? To get a first picture of this, we investigated the fair-trade coffee market system in the Colombian civil war. Overall our analysis shows that promoting individual empowerment, communication, community building, and regulation within markets represented useful anchors for marketers to design a peace-making markets, contributing altogether to legitimizing the government as a provider of public good, weakening rebel forces and helping market actors from the war economy to transition to a peace economy. Let us look at each anchor in turn.

  • First, the Colombian fair-trade coffee market system has empowered individual actors from the shadow markets engaged in illegal entrepreneurial activities on the margin of the war, providing them with the necessary resources and capabilities to reintegrate into the peace economy. For example, it has given farmers a viable “way out” of cocaine production.
  • Second, it has fostered the development of resourceful communities that incentivize actors from the coping markets, struggling to eke a living, to embrace the peace economy. For example, fair-trade coffee certification came along with training, increasing poor farming communities’ knowledge and expertise and the provision of education and health care for communities.
  • Third, the marketing system promoted communication between/among market actors and government bodies, enhancing the legitimacy of the state. For example, governmental methods to eradicate cocaine fields which damaged crops pitted the government against coffee farmers suffering from it, breaking ties between them. The democratic requirements of decision-making in fair trade coffee cooperatives motivated negotiations with the governments which successfully led to developing less destructive ways of eradicating cocaine plantations, relegitimizing governmental activities.
  • Finally, the fair trade coffee marketing system promoted the development of self-imposed market regulations that promote the view that prosperity can be attained through the peace economy. Governmental support of such regulations further legitimized the state as a provider of public good.

We do not contend that the anchors identified will necessary be the same in different contexts as there is no one-size-fits-all approach to peace-making. We do not contend either that market-based solutions to peace-making are alternatives to political solutions to peace-making. However, they represent a useful and necessary complementary approach. Markets will play an important role in the actual long-term pacification of Colombia and it seems unlikely that the war economy will transition in a peace economy without peace-making initiatives from market actors themselves. It is therefore essential that the Colombian government and the international communities consider carefully how they can promote and leverage market-based peace-making initiatives when working towards peace-making.

 

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