When bad recalls happen to good companies

Seeking to put end to a major product liability scandal, Takata Corporation last week pled guilty and proposed to pay $1 billion to settle allegations related to nearly $100 million in allegedly defective airbags.

But the story won’t end there. It was reported on Monday that at least four automakers – Ford, Honda, Nissan and Toyota – knew of the defective airbags for years yet continued to use them in their vehicles.

These are companies with internationally known brands, loyal customer bases and millions of dollars earmarked each year for product design, safety and development. Yet somehow, even with teams of engineers dedicated to building safe products, bad things happened.

Product recalls are nothing new, and no company that produces consumer products is 100% immune from them. The list of companies that have had recalls in recent years includes some of the most recognized names in Corporate America: Samsung, Chipotle, Toyota, Cuisinart, Ford, General Mills, Nestle, Volkswagen and Lululemon. The smartest companies know product recalls will happen and are prepared when they do.

What does a “good” recall look like from a communications perspective?

Companies and their PR counsel have succeeded in dealing effectively with a recall if their messages:

• Are truthful, concise and easy to understand

• Minimize the threat of litigation

• Minimize the harm to their brand, reputation and bottom line

• Adhere to the Consumer Product Safety Commission guidelines for communicating about a recall

How do you prepare?

First, companies should invest the time and money into developing crisis communications plans. We recommend performing a communications audit, which should survey a company’s customers, avenues of communication, and relevant reporters and industry thought leaders. Spokespeople should be designated and a communications plan should be tested. Furthermore, plans should be updated and refreshed regularly as teams change and people move.

The first steps should include:

• Assembling a Recall Response Team

• Building a webpage that can easily be updated with specifics of a recall, securing a toll-free number and email address for recall response and communication

• Getting to know the right people at the CPSCs Office of Communications and familiarizing the company team with CPSC guidelines

• Finding out retailer requirements for recall posters and notices

• Identifying thought leaders on social media who could help tell the story and communicate with customers

Messaging

Messaging following a recall should be swift, transparent and thorough. What does that mean?

• SWIFT: Control the messaging by being the first to talk about it to internal and external audiences.

• TRANSPARENT: Do not hide from the problem; identify what happened and why. Have the legal team approve all outward-facing messaging and minimize litigation exposure.

• THOROUGH: Review all communication channels utilized to reach customers and make it easy for them to communicate with you.

A company should put itself in the shoes of its customers when communicating about a recall. If you’re a parent, for instance, what would you want to know about the car seat, toy, high chair etc. that is being recalled? The communication should also include what actions are being taken to prevent such an incident from occurring again.

Last year, IKEA recalled 29 million chests and drawers with a serious tip-over hazard after the deaths of multiple children. Even though the furniture items contained a wall-attachment item, IKEA remained open and responsive in the dissemination of the recall, including an advertisement campaign on securing furniture items. This behavior maintains reliability of the product and thoughtfully balances the concerns of parents. Lastly, the messaging was consistent in assuring the safety of the product – a statement that spoke directly to customers and parents.

Prepare, prepare, prepare

Recalls go poorly when companies are not prepared or pretend the issue will not happen to them. Rather than wishing the problem away, companies need to offer open communication and engage proactive PR counsel.

Takata’s guilty plea will not let automakers off the hook in the eyes of customers. Trust in these companies will continue to deteriorate if they maintain their current unresponsive state, refusing to help customers understand where things went wrong. It’s not a new problem, but the easy solutions –accepting responsibility and asking forgiveness – continue to evade even the largest of companies who often think their customers will forget in due time. Guess what? They don’t forget.