“Misfortune tests friends and detects enemies.”
This unattributed statement neatly sums up the impact of unexpected calamity. If it were applied to a company undergoing a product recall, it would probably read: “a recall tests customer loyalty and detects weaknesses in preparation”.
The weaker a company’s response to a crisis, the greater the strain placed on customer loyalty. There is a clear way to avoid the worst from unforeseen misfortune; being ‘prepared’ is for Boy Scouts, in business you need to expect the unexpected.
No organisation expects their product to be faulty. It is this assumption that often puts companies on the back-foot when crisis does strike. However because speed is key in minimising the reputational damage of a recall, a company cannot afford to remain on the back foot for long.
Few things will destroy brand credibility quicker than indecisiveness when customer health and safety is at stake.
The ability to react quickly to unexpected events is an absolute necessity for retaining customer loyalty.
Every recall carries unique challenges, but effective recalls tend to follow a similar process:
- Identify the fault and the affected products
- Notify the relevant parties of the problem
- Respond to stakeholder concerns
- Retrieve and process recalled products
- Offer refunds, replacements and compensation to customers
For a business to execute a fast and effective recall, there needs to be contingency plans in place for every one of these steps. What medium will you use to notify your customers? What concerns are going to dominate each stakeholder group? What are the environmental regulations governing the processing and disposal of affected products? What types of insurance do you need to cover any losses?
Nowadays supply chains extend globally and individual regions have different regulations and quality assurance practices. These long and confusing chains mean that it is impossible to accurately predict every potential problem.
What you can do is prepare to react to your unknown threats.
It is an often-repeated trope that the Chinese word for ‘crisis’ can also mean ‘opportunity’. Though not entirely accurate, the statement still carries a valuable message for businesses executing a product recall: a recall crisis is an opportunity to strengthen your brand.
More companies than ever are administering voluntary recalls to protect their brand image. A voluntary recall, if handled effectively, can prove to the customer that a business is well organised, quick to react, and most importantly, concerned with customer welfare.
To bring us back to my opening thought, while a recall may test customer loyalty it can also detect the weaknesses in a company’s preparation for crisis. A well-handled recall should go through methodical steps and implement emergency protocols, such as customer communication channels. Recalls also direct companies towards additional quality control measures, which mitigate or eliminate these weaknesses. In essence, an effective recall can make a business even more resilient to the unexpected.
