No brand is immune to falling from grace even beloved brands have come under fire for both serious misconduct and things that are completely beyond their control. Some have managed to regain consumer confidence while others stumbled for years or even completely faltered. In today’s conversation, we’re talking about how brands need to address negative consumer perceptions, i.e. what to do when people hate your brand.
Announcer: This is “Think Retail,” a podcast where top designers, strategists, thought leaders, and business people discuss what’s coming next.
Melinda: Hi, I’m Melinda, and you’re listening to “Think Retail.” No brand is immune to falling from grace even beloved brands have come under fire for both serious misconduct and things that are completely beyond their control. Some have managed to regain consumer confidence while others stumbled for years or even completely faltered. In today’s conversation, we’re talking about how brands need to address negative consumer perceptions, i.e. what to do when people hate your brand. And I’m here with SLD’s president, Jean-Pierre Lacroix, also known as JP. So, JP, let’s kick it off by talking about all the reasons brands can find themselves on the outs with consumers.
Jean-Pierre: Well, first of all, I wanna make sure that the people listening to this podcast don’t hate us. Yeah. I think all we have to do is look at the past couple of years and how our organizations have responded to COVID, and also those that kind of capitalized on the crisis and how consumers have reacted negatively to them. All you have to do is look at the banking industry as an example where the motivations of the employees were, you know, contrary to the benefits of the customers and we’ll name the banks, but quite a few of them, including some Canadian banks, were heavily penalized, but interesting enough, they’ve all recovered from some of these negative reactions from consumers.
Melinda: Yeah. It’s interesting because certain types of challenges such as having a really mercurial leader who has a really strong personality can attract a lot of attention, but it may not necessarily have as much of an impact on the actual product or service, and yet it can really taint the way consumers feel about a brand. And I’m thinking about Elon Musk as an example, very controversial leader, and people either love him or hate him. And was that gonna have an impact on how people feel about Tesla?
There’s also external factors that are beyond the control of a company. So, say, for example, things like climate change, where, you know, if you’re an oil company, you don’t have any control over that. So, those are other things that brands don’t really have much control over.
Jean-Pierre: Well, they don’t have control over, you know, climate change, although they can influence, obviously. And the petroleum industry energy also have come under a lot of scrutiny. For example, in Ontario, they’re gonna be closing a nuclear reactor in Pickering. And there’s a lot of controversy and negative towards the government regarding how are you going to replace something that is more environmentally friendly with what they’re talking about, which is gas burning generator.
So, you know, there’s always two sides to the equation. What I find though is transparency and being honest about what you’re doing is the only way up. There’s always going to be negative comments and negative vibes and things you’re gonna do that’s going to offend a certain segment of the population like it or not. But what allows you to overcome those challenges is to be transparent and honest about what are the motivations, you know, what drove you to make these decisions?
Why are these decisions in the best interest of employees and customers? And how is that going to be resolved long-term if these are issues that are either temporarily or long term like climate change, environmental sustainability, which are long-term issues? You know, what is that governance and the direction of organization on the long-term on solving these issues? And those are the things that consumers can appreciate. They know that, you know, companies can’t turn on a dime, that they can’t be one way one day and then something totally different the next.
But leadership needs to communicate very clearly, what is the vision of the organization. How are they gonna overcome these issues and why? And in the case of maybe bad actors, if you look at the banking industry and some other sectors, energy was another one, these bad actors, how does the organization deal with these situations? We had most recently the Suncor CEO resigned because of employee safety, they had another death. He did the right thing of resigning and letting the board find a replacement for him to give the organization I call a second chance to get it right.
And that’s one of the things that you see often is that when these crises and issues arise, you know, the board’s too quick to terminate the CEO. They should allow that individual to map out the solution out of the challenge, and then obviously politely resign from the organization allowing another leader to take the mantra and take it to the next level. But it’s about this transparency.
Melinda: Yeah. Yeah. I mean, I think leadership is a place where you can either win or lose. And I’m thinking about times where, you know, an individual leader, either their personality or their behavior damaged a brand reputation and really famous examples, Enron. And the CEO at the time, Kenneth Lay was found guilty of insider trading and fraud, and the company really never recovered from that. But if we think about, you know, some brands like the example that you just gave, and I’m thinking about Uber in their current situation having had this kill switch, which allowed them to evade different laws in different regions.
So, aside from, you know, okay, sure, we wanna get rid of this one particular individual, but that one individual didn’t necessarily make all these choices alone. So, what are some other ways that companies can overcome a situation like that where it may look like it’s just one individual and you can certainly have a scapegoat and have that CEO resign, but what are some ways that other companies have managed to get out of this where there’s a particular individual who’s at fault?
Jean-Pierre: Well, you know, when you look at these challenges and issues that cause a brand to be viewed in a negative light, a lot of it is tied to the culture of the company. So, the first thing the organization who has been tarnished or challenged or have received ongoing negative feedback is to look, what is causing that negative feedback and negative view of the brand, and to look at culture as being one of those culprits. Maybe in the case of Wells Fargo, the culture was one of sales growth was the most important thing. And everything that employees did was tied to a compensation towards growing sales.
Well, obviously, employees took advantage of that situation creating fake accounts, and that’s led to a negative reaction of the overall brand. And that was a culture issue. I would say, Elon Musk and his organization at Tesla and Uber, it’s a culture issue. You know, the leader does set the tone for the culture and the direction of the organization. And so when you get into the circumstances where there’s issues, significant issues, the first thing that the organization need to do is look at is the culture sick. If it is sick, how do we change? And changing cultures is so difficult. You almost need to fire everybody in the organization and then start from scratch. Clean slate. Create a new culture.
Melinda: Yeah. So, accepting responsibility, apologizing, taking specific action to remove this particular individual, and bringing in a strong replacement that’s setting a different tone, but talking about that cultural change, where do you start with something like that? Let’s say you are the person who’s been brought into rescue a company from this kind of thing, where do you even start?
Jean-Pierre: Well, I think one of the best examples of an organization that was under incredible negative reaction from consumers is Maple Leaf Foods. And as you remember, the similar, you know, infections, people were dying. I think there’s 20 or 30 people that died because of the similar infections. And it was due to, you know, cleanliness of the maple leaf plants. Michael King confronted the challenges head-on, closed the plants, I think spent close to six months ensuring a high level of security and food safety. He compensated the families without being asked.
So, he was proactive and met with these families that family members had passed away. And then put systems in place and adjusted the culture of the company to ensure that it would never happen again. And ironically, that happened what, 10 years, 15 years ago. And the brand has done extremely well at rebuilding the trust with consumers and continues to grow today. And that’s an example of a leader that met the challenge head-on, didn’t hide from it, didn’t play the legal game, and talked to my criminal lawyers Melbourne.
And I’m sure that his legal advice, you know, challenged him not to be so open, so vulnerable, but kudos to him that he did that because it’s these brave actions of leaders and employees that can turn the tide for brands that are under scrutiny right now.
Melinda: Yeah. I’m also thinking about Volkswagen and the defeat devices because they’ve actually done a really good job of taking things in a different direction. And what they did is they decided to shift everything to EV and this was ahead of the game. So, they’re now in the strongest position to really challenge Tesla. And they shifted their focus away from their European business, which is where the scandal was most upsetting to consumers, and focused more on China and North America. They got rid of everyone who had been involved, got a completely new leadership, and this consistent approach over time has really put them now in a strong position with EVs.
So, a similar sort of approach, maybe a little bit less about transparency, but really taking a hard look at their business and deciding to do things really differently.
Jean-Pierre: Yeah. And you can contrast that with what happened to Boeing.
Jean-Pierre: The 737s. You know, they hid the issue. The accelerated, you know… And again, the dollar was more important. Revenue was more important than people’s safety. And so they compromised a lot of decisions and testing to get the product to market to compete with Airbus. And it came back to haunt them in a big way. And finally, after four years, I think it’s even now five years of a lot of turbulence within their company with a new CEO, they’re finally coming out being able to have a product that people feel comfortable with.
Do I feel comfortable with Boeing flying on a 737? Absolutely not. You know, if I have a choice between Boeing right now and Airbus, I’d probably pick Airbus. So, they have a long way to go, especially, you know, when you look at a crisis, you could think of it in a ladder. There’s a trust crisis. You know, somebody took advantage of somebody and they weren’t honest. I would say that’s at the bottom of the ladder. But when it comes to people’s lives and safeties of their family, that goes to the top.
And so when an organization puts at risk people’s health and safety, those are big issues organizations have struggled to overcome because they impact people’s view themselves and the need to feel safe. And so Boeing gets penalized a lot more than Volkswagen because Volkswagen was more about fuel efficiency. They weren’t forthright on really what…you know, the efficiency of diesel engines. But at the end of the day, did anybody die because of that? No.
They misled consumers buying their cars. Absolutely. They misled the governments. Absolutely. And did it increase impact on carbon? Absolutely. But did anybody die? Absolutely not. In the case of Tesla and their automotive, you know, self-driving car where people have died, that’s a bigger scrutiny and a bigger impact. And, obviously, today, under a lot more government scrutiny because of that.
Melinda: Yeah. Yeah. It’s interesting because I think when we look at things like safety, obviously, we expect these companies to have our best interests at heart. We expect that, of course, you’re flying people around an airplane or driving them around in a car, obviously, safety has to be paramount. And so when that is violated, it is definitely a much harder thing to climb back from than, you know, somebody stole a few dollars from someone else. So, going back to sort of…aside from scandals, let’s say we’ve covered scandals here.
Jean-Pierre: Well, that means we’re eliminating all actors.
Melinda: What about things that are beyond their control, things that are causing changes in consumers’ attitudes and behaviors? So I’m thinking of things like plastic once was heralded as this wonderful thing that was gonna change all our lives and make everything so much easier, and now we discover, well, it’s destroying our planet. So, if you’re in the plastic business or if you’re in the tobacco industry or even fast food and fast fashion, consumer attitudes towards these categories for different reasons are really, really changing. So, what can you do to innovate your way out of this kind of a problem?
Jean-Pierre: Well, when you look at plastic as an example, and it’s a great point to raise that, there’s two ways to solve the problem. Elimination of plastic, which is unrealistic. I mean, plastic will be with us for a long time because it still serves a purpose. However, the issue is in plastic as much as how plastic is being recycled and only a small percentage of plastics are actually being recycled. Either the plastic itself is not recyclable or the recycling facilities can’t handle the volume of plastic.
And so really organizations who leverage plastics, single-serve beverage companies, packaged good companies, the opportunity really is to partner as they’ve done…Coke and Pepsi partnered in Europe to build their own plastic recycling plants to take the burden off the government and local municipalities and deal with the issue head-on.
Melinda: Right. It also brings to mind tobacco companies like Philip Morris now has another brand called Altria, which it has seemingly completely opposing goal of eliminating…making a smoke-free America is their slogan. And on the surface, this seems like completely incongruent. Like how could these two things…how could you be a tobacco company and then also at the same time have another company that’s trying to get people to stop smoking? But, of course, they have tobacco products, but they’re just safer tobacco products.
So, they’re seeing the writing on the wall and are probably gonna end up migrating their business over to this new direction. So, I also think about future-proofing and how that can help brands foresee these types of things before they happen. Can you talk a little bit about that?
Jean-Pierre: Yeah. We call them lifeboats. You know, at the end of the day, when you see that your category is gonna have to dramatically change because of impact you’re having on the environment and on people’s health, the strategy…you know, it probably takes an organization 10 to 15 years to make those major changes. If you think of reducing salt by keeping the taste or reducing sugar and maintaining that taste, it took manufacturers a long time to perfect that. And now the big zero, you know, in the Cola category of eliminating sugar, you know, it’s a journey, right?
But the journey started five or six years ago with a focus on knowing that these are important changes that have to… So, having that strategic foresight, that plan to look at the future and say this is gonna be an issue and we need to have a plan in place starting now, maybe 5, 10 years before it becomes an issue in place so that when consumers pay attention and identify that as a problem organizations have a solution to solve that problem.
The other dimension of, you know, the strategic foresight looking at the future is also understanding that potentially, the category they’re in is gonna change dramatically. And think of single serve, maybe that category’s gonna go away. Now, consumers are gonna be much more value-driven and maybe there’s a different format or a different way of being able to access the product. You know, we did this big study last year on sustainable packaging and one about the role that the kitchen plays in consumer’s home on recycling.
And what was interesting is consumers are now willing to move towards more bulk purchases as they see that as twofold, a reduction of packaging, but also a plate towards value. And so, you know, as you look at strategic foresight, some of these major consumer pain points or environmental issues will go away because the consumer behavior is shifting and what has been the issue is going away because their behaviors has changed.
Melinda: Right. So, I mean, obviously, avoiding a scenario where people hate your brand is the ideal situation. So how can brands safeguard against actually getting to a crisis situation in the first place?
Jean-Pierre: Well, you look at Apple, right? Twenty years of sustainable growth. The success of that brand, even when they’re under scrutiny right now with the way they handle their Apple Pay and also their apps channel is that they have created raving customers, passionate customers who are willing to overcome some of the blemishes because a lot of consumers say, hey, listen, you know, every company has blemishes, but what’s in it for me? What have they done for me that enhances my life? And Apple’s done a great job of creating these, I am one.
You know, fanatic fans, we love their product. Can’t wait for the next iPhone. Can’t wait for the next laptop. The products themselves deliver. And yes, they’re concerned about sustainability. A lot of their laptops are using recycled aluminum and every product that they sell, they talk about the sustainability aspect of their brand. They’re being respectful of consumers’ needs and wants. But at the end of the day, consumers are willing to forgive them because the brand is so powerful and there’s such an emotional connection to the brand.
So, where brands get into trouble is that first of all, they gravitate to being a commodity. And when you become a commodity, there’s no emotional connection to that brand. And so the consumer’s not willing to give them the benefit of the doubt or give them a second chance because the relationship is very functional. So, if brands really wanna kind of weather the storm and avoid some of these challenges of falling out of fate with consumers, they need to build a stronger emotional connection. And they need to tie that emotional connection to a need the consumer has, maybe it’s a need of belonging, maybe it’s an aspiration, but it’s answering some of these emotional needs. And that’s where most brands have failed.
Melinda: Right. And that emotional connection is not something that you can just…you know, you don’t just build it once. It’s something you build every single day with every single thing that you do. It’s with the product development. It’s with whatever value you’re delivering. It has to happen every day. And that’s what I think Apple has done so brilliantly. And even when Steve Jobs knew he was gonna be dying and the way that he had, you know, his successor trailing along behind him for years because he understood that he needed to pass on this legacy and this approach, you know, that’s culture, leadership down, right?
So, definitely hard to imitate a brand like Apple, but definitely, a really great aspirational model to look up to. Well, thanks for your thoughts today. And listeners, we love to hear from you. Tell us about brand mishaps and how you think brands have recovered well.
Jean-Pierre: Thank you.
Melinda: For more information about “Think Retail,” you can reach us at email@example.com. For more episodes, visit us online at sld.com/podcast.