It’s every CEO’s worst nightmare: For whatever reason, the CEO’s company is engulfed in negative publicity that threatens to damage its brand name, harm sales and alienate customers for months or even years to come.
The negative publicity can hit suddenly, seemingly out of the blue, or it can come in relentless waves, over a prolonged period of time, like a series of storms battering a coastal area, one after another. Wells Fargo and United Airlines have both been facing such an onslaught in recent weeks and months.
How does a company respond? How does it go about repairing a damaged brand name and winning back customers?
While I know very little about these particular situations apart from what I’ve read, seen, and heard via various media outlets, I know how difficult it is to change consumers’ minds about a company and its products – and how winning back “trust” is easier said than done.
Five years ago, my colleagues – Gui Liberali of the Erasmus School of Economics in Rotterdam and Glen L. Urban at the MIT Sloan School of Management – and I jointly published a study, “Competitive information, trust, brand consideration and sales: Two field experiments.” Here’s what we learned.
Regaining customer trust
Over two years, we closely tracked four marketing field experiments by an American automaker whose brand had suffered from decades of negative publicity over the quality of its products. The experiments focused on company actions to earn back trust.
In one experiment, the automaker provided an opportunity for potential customers to test drive competitor’s cars so that they might compare them with the company’s own lineup. Another experiment provided an unbiased internet recommendation system to help customers find the car that met their needs, even if that car was not made by the automaker.
Other experiments included customized relationship management and a moderated community to enable customers to speak to one another about all the cars they were considering.
The theory, and it was a good one, was that the new offerings by the automaker were much better than customers perceived them to be. The automaker believed it would win in a fair match-up and set out to enable customers to make the comparison.
Why they succeeded
What we found is that it’s simply not enough to tell consumers that they can and should trust a company. It’s critical to actually prove, again and again, that a company and its products can indeed be trusted – and customers must be provided with tangible, observable proof that a company has changed its ways and the quality of its products.
The automaker’s experiments enhanced trust, which – more importantly – led customers to consider and purchase its cars.
Today, this automaker works to provide competitive information to customers when there is good news and when it is cost-effective to do so. For example, customers are encouraged to test drive cars for longer periods of time. Dealers hold…