The importance of reputation: when it goes right, and when it goes wrong

Charlie Spargo's picture

Reputation is a slippery thing, something that it can feel unnecessary to manage when things are going well - but crucial to never lose sight of.

Publicity and discussion after a company’s misstep can last far longer than anyone expects, and the mantra of “all publicity is good publicity” seems to fall short of what happens in reality. As well as being embarrassing, a reputation-damaging mistake can hurt financial fortunes significantly too.

Simultaneously, companies that manage their reputation well sometimes bounce back quickly and more strong than before - using honesty and positivity to recover from even big setbacks.

Even when they seem set in stone, reputations can be damaged irreparably in an instant. It seems simple, but it sometimes isn’t - those who do best rely upon being straight-up, while those who fall down have been cynical or lacked transparency.

Next week, Prolific North is hosting ‘The Power of Reputation’ roundtable in association with Smoking Gun PR to discuss just that. To emphasise how important reputation is, let’s look at five instances of serious reputational errors, and five times brands got it right.

Getting reputation right

1. KFC

Last year, KFC faced a big issue - following operational issues with its supplier, the fried chicken retailer simply ran out of chicken.

Instead of panicking or doing anything rash, KFC managed to keep the crisis under control effectively. With great humour, KFC admitted culpability with a memorable ‘FCK’ ad in The Sun and Metro. “A chicken restaurant without any chicken. It’s not ideal.”

It also launched a website to help hungry KFC fans find the nearest shop that was selling chicken at the time. Once the shutdown was over, KFC had won more fans and created a masterclass in crisis management.

2. Johnson & Johnson

A classic in reputation management, in the early 80s a tragic case of poison being put into medicine bottles faced Johnson & Johnson. Extra-strength Tylenol capsules had been maliciously tainted with cyanide, killing seven.

In response, Johnson & Johnson immediately pulled $100 million worth of the drug from shelves, halted production and advertising. The lengths J&J went to - offering a $100,000 reward for information on the killer and concurrently introducing tamper-resistant packaging - made the general public feel safer.

3. Nike & Kaepernick

After American Footballer Colin Kaepernick protested the US National Anthem, Nike decided to get behind the cause. It released a dramatic and unforgettable ad featuring Kaepernick, with the tagline ‘Believe in something… Even if it means losing everything’. In many quarters, it was not well received, with the brand’s share price dropping by 2%, and some people launching a boycott.

Nike stood firm, standing up for something it believed in even in the face of high risk. In the end, it paid off - with sales jumping by 31% after the ad.

4. Morrison’s Milk For Farmers

In 2015, there were extensive concerns about the state of British farming, and the amount that consumers were paying for products like milk. Taking a gamble, Morrison’s released Milk For Farmers - a bottle 23p more expensive, with all of that difference going directly to the faming community. Other supermarkets followed suit when it turned out that many consumers were willing to pay more per litre of milk when they knew who it would be supporting.

5. Starbucks 

Two black men in a Philadelphia Starbucks outlet, who were waiting for a friend to arrive at the cafe, had the police called on them - setting off a serious racism controversy.

Starbucks managed to contain the problem - immediately its chairman, Howard Schultz, said: “I’m embarrassed, ashamed. I think what occurred was reprehensible at every single level.” To add to this, the coffee chain announced it would close more than 8,000 stores for a day to conduct racial bias training for 175,000 employees. It was an honest admission of wrongdoing and a considerate attempt to make things right.

Reputation, done wrong

1. Pepsi

In 2017, there were repeated protest movements across the world grabbing headlines. Pepsi made the decision to try and get some traction out of this. The advert it released seemed to have it all - a lead in the form of high-profile figure Kendall Jenner for a start. It showed a non-descript protest not making any identifiable points at all, before Jenner seemed to break down boundaries between police and protestors with a can of Pepsi.

It seemed to pastiche real campaigns with vital reasons behind them, made no comment about the realities of police responses to protest, and was pulled almost immediately. However, the damage had been done.

2. Ratners

Doing a Ratner” is still a by-word for a massive PR slip-up. In 1991, the CEO of jewellery retailers Ratner Group, Gerald Ratner, was addressing the Institute of Directors in London, and described the products his company sold as “total crap." In the end, he lost his role at the head of the group, and the company nearly collapsed after losing nearly £500 million.

3. TSB

Early last year, TSB attempted an IT upgrade that would involve its online services not being usable for a weekend. However, it did not go to plan, and users were locked out for at least a week, with many having issues up to a month afterwards. Not only this, but TSB attempted to downplay the issue - saying intermittent issues were affecting only a few, even as vast numbers complained online.

The age of Twitter has led to a power shift that means keeping quiet on any issue can be a bad idea. In the end, Chief Executive Paul Pester admitted TSB was “on [its] knees” and was hauled twice in front of an Treasury select committee.

4. Volkswagen

Volkswagen, in 2015, was found to be engaging in underhand tactics that gave its vehicles better results on emissions tests than they deserved. The engines were programmed to detect and activate their emissions controls during laboratory emissions testing and at no other time, to meet emissions standards. It was found out and a notice of violation of the US Clean Air Act was served to VW. It led to a huge drop in trust for the car manufacturer and a big fall in its stock price.

5. Samsung Fold

It was a hotly anticipated piece of tech, but overzealousness led Samsung to have to postpone the release of the Samsung Fold. Revealed in February, the Fold was meant to have a movable hinge allowing for users to open up their phone and have a full-width screen inside. Review handsets, however, were found to break easily and included a film over the screen much resembling a screen protector, that in fact led to damage on the phone when removed.

It’s not the first time that high-profile Samsung phone releases have run into problems. The Galaxy Note 7 saw sales suspended in 2016 after reports of phones overheating to the point of causing fires, and all handsets were recalled around the world in October 2016. It was estimated that the total project would have lost Samsung $17 billion in revenue.

Prolific North and Smoking Gun PR will host a roundtable, ‘The Power of Reputation’, in Manchester on the morning of September 26th - covering how to build and protect a reputation, and more. If you’re from a brand and would like to discuss involvement in the event, please email Rebecca Waterhouse.