GUEST POST: Is Your Recall a Crisis? Only if you Handle it Wrong

flaming car
GUEST BLOGGER:  Jim Martinez, RightStoryGroup

What’s the worst thing that can happen to a car, truck or recreational vehicle company? Recall, right?

Not necessarily.

Recalls, handled well, can strengthen a customer’s relationship with a dealer or manufacturer, demonstrate a brand’s integrity and reassure consumers they made the right choice. Unfortunately, few companies handle them well.

Literally millions of U.S. vehicles are recalled each year. Traditionally, dealers and manufacturers approach a recall the way a child approaches a flu shot – reluctantly.

Recall announcements tend to be highly legalistic and share just the information required by law or government regulation. National Highway Transportation Safety Administration (NHTSA) protocols dictate much of the content.  As a result, recalls tend to be viewed – by both consumers and the industry – as an admission of failure.

Americans are not starry eyed when they buy cars, trucks, RVs or anything else. Consumers expect problems to emerge.  Their satisfaction with a brand – and loyalty to it – stems from how the seller or manufacturer handles those problems.

Hiding behind legal and regulatory jargon is precisely the wrong way to handle a recall.

The most damaging recalls are those in which companies try to avoid accountability. The automotive world has experience some very visible, painful examples:

In 1987, Audi recalled Audi 5000 model cars produced from 1978 to 1986 over sudden unanticipated acceleration issues. The company had spent several years denying fault, but sales plummeted from a peak of more than 74,000 cars in 1985 to just over 12,000 in 1991.

In 2001, Ford recalled Explorer SUVs produced from 1991 to 2001 because Firestone tires installed on several models were prone to tread separation that could result in rollovers. The tire maker denied responsibility, but its share price plummeted from $25 in May 2000 to $7.50 a year later.  Meanwhile, Explorers were among the most traded-in vehicles in the federal “cash for clunkers” program.

In 2009, Toyota spent nearly a year fending off questions about unintended acceleration before finally recalling Camry and six other models produced between 2004 and 2010 because a floor mat could trap the gas pedal. The following year, it recalled another 2.3 million vehicles over sticky accelerators. Toyota’s U.S. market share dropped by more than 8 percent in 2010.

These aren’t history’s biggest recalls, but they are memorable because these companies first tried to blame their vehicles’ problems on consumer error. Customers understand that mistakes happen in manufacturing.  They don’t understand – or like – being blamed for those mistakes.  That breaks customer faith in a manufacturer or dealer.

It’s easy to understand why companies want to avoid product recalls. They appear to be an admission of wrongdoing – and can be expensive.  In the case of vehicles, they involve the cost of parts and repairs.

But the cost of doing a recall badly can be even higher – resulting in lost sales, increased marketing to overcome tarnished reputations and ever bigger incentives to recapture consumers.

It’s time to reengineer vehicle recalls to make them the best example of a company’s commitment to customer safety and satisfaction. No consumer likes getting a recall notice, but a note explaining that a carmaker recall is designed to protect a consumer or her family makes the news far more acceptable. And an expression of concern makes a customer feel better about their dealer and manufacturer.

Done correctly, recalls can distinguish vehicle manufacturers and build loyalty for them and their products. I’ve worked with several companies involved in recalls and want to share some best practices:

Do not delay. Err on the side of consumers by addressing problems quickly.  No company should risk the media publicizing an issue before it communicates with customers directly.

Demonstrate compassion. Recognize that recalls can inconvenience customers, but remind them that the recall is meant to protect them or their investment in a vehicle.

Explain motivation. Manufacturers need to emphasize that a recall keeps consumers safe or corrects a problem that could reduce the value, reliability or durability of their vehicle.

Encourage timely action. Encourage consumers to schedule remediation quickly, to make sure the underlying issue does not linger and to demonstrate your commitment to them.

Use consistent language. Make sure consumers hear one message by sharing talking points with everyone from customer service reps to service managers.  Emphasize safety and value.

Follow up with customers. A follow-up call or letter reinforces that you care about the customer. It also provides a reason for additional contact.

Handling a recall correctly does not compromise your ability to defend against relatively rare lawsuits and does not acknowledge culpability. But it does reassure your customers that you value their business and that you stand behind your products.

Jim Martinez is an experienced crisis manager who has worked with some of the nation’s biggest brands on a variety of business-threatening issues. He can be reached at jim@rightstorygroup.com

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Filed under Best Practices, Customer Experience, PR & Branding, Risk Management

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