Threatened Reputation: How To Manage A Brand Crisis | Vietcetera
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Apr 13, 2021

Threatened Reputation: How To Manage A Brand Crisis

We asked a PR and communication expert about the ways brands can successfully navigate through a crisis.

Threatened Reputation: How To Manage A Brand Crisis

Negative brand reputations are hard to forget and forgive. | Source: Shutterstock

The back-to-back controversies that hit H&M have been the talk of the town the past week. After attempting to correct an “error” on a map on its retail website that angered the Chinese government and consumers, H&M ended up upsetting Vietnam, which shares a 1,200-km terrestrial border with China. The changes made by the fashion retail chain on the “problematic map” showed the controversial nine-dash line, which covers islands in the South China Sea that are claimed with patriotic intensity by many countries, including Vietnam.

"All propaganda forms and content promotion that go against historical facts and international law hold no value and cannot change the fact of Vietnam’s sovereignty over the Truong Sa (Spratly) and Hoang Sa (Paracel) islands," Foreign Ministry spokeswoman Le Thi Thu Hang said last week, urging global brands to respect the country’s sovereignty and laws.

Vietnamese netizens expressed outrage on social media, bombarding the H&M Facebook and Twitter pages with angry reactions and demands for boycotts.

H&M is not the first international brand to face fervent clamor in Vietnam, where the young population has grown to love Western brands — whether in fashion, cosmetics, gadgets or food.

In 2019, Burger King came under attack after spiking racist chopsticks. The company removed the ad immediately and acknowledged it was insensitive. Still, #BurgerKingGetOutOfVietnam trended.

Both calls for boycotts did not seem to have huge impacts on the sales. But while Vietnam is considerably a small market, with only a dozen stores of H&M and 13 Burger Kings, negative brand reputations are hard to forget and forgive.

We asked public relations and communication expert Ivy Nhi Chau from Vero, an award-winning digital marketing, creative and PR agency in Asia, about the ways brands — foreign and local — can successfully navigate through a crisis.

The Vietnamese government is urging global brands to respect the country’s sovereignty and laws. | Source: Shutterstock

Some global brands are currently facing backlash and boycotts. How and why do issues against brands arise?

Brands have never been as exposed to PR crises as today. The rise of digital ecosystems including online shops and social media has empowered customers to become media operators, which grants them the power to voice their concerns and demands to be heard. This has drastically changed the PR landscape, which traditionally took place mainly within traditional publications. With customers becoming influencers, PR happens at every brand touch point, not just with journalists. If a customer or an employee has a bad brand experience and publicizes it, that could be the foundation of a crisis.

Social media has also incentivized brands to interact directly with their customers, often publicly, which has led to the formation of brand personalities, thus heightening consumers’ emotional response to the brand, which could mean a stronger connection or a wider disconnect. If several people with significant online followings respond negatively to a brand’s personality, that could also become a crisis.

How do PR crises affect a brand’s identity and sales?

It can go both ways, and it depends how well prepared a brand is to face a crisis. Brands today know that they can’t try to please everyone, but maintaining trust is more important. How can you trust someone who has contradictory opinions all the time? Of course you can’t, so some brands have chosen to upset one group of customers to please another.

The Nike/Kaepernick case was a game-changer, not just in the US but globally. In teaming up with an activist athlete, Nike knew that there would be a large backlash. And yet, their choice paid off in terms of sales and brand image among their chosen audience. Two months after the partnership announcement, Nike’s sales were up 61%. ​The purchase-intent among Millennial viewers of the ad was over 200, +2X the average of all viewers of the ad. I find this interesting because it questions the definition of a crisis. When the ad went out, tens of thousands of customers and media attacked the company, with thousands of videos of people burning their Nikes in protest. But Nike anticipated that backlash and managed to leverage it to better connect with their core customer group. It also helped that, while their audience is global, they knew the backlash would be largely confined to the US.

Can you cite some of the biggest PR crises in the last few years? What are the usual issues encountered by brands?

Today, it is expected that brands take a stand on social issues. This inevitably exposes them to some degree of backlash. As people are increasingly aware and vocal about such issues, attempting neutrality is in itself a stance. Often brands are forced to choose one side or the other, as they cannot please both.

In the case of H&M, they accepted the consequence of backlash in China when they said they would not source cotton from Xinjiang. Because the plight of people there is an issue with high global awareness, they seem to have decided that they could stand to lose Chinese business to hold onto their reputation in the West. In contrast, in the recent crisis related to the “nine-dash line” map, H&M seems to have made a calculated decision to favor China, knowing that it would cost them business in places like Vietnam and Taiwan.

Another issue that we see these days is crises caused by brand ambassadors. Members of Gen Z in particular tend to feel strongly about influencers, which means that a brand ambassador’s scandals can easily taint the brand in their eyes. Brands must be more careful than ever about whom they choose to represent them.

Is the idea that “there is no such thing as bad publicity” still valid?

I don’t think it is. That sentiment comes from a time when brand publicity was mostly paid for (a la the series Mad Men). What it means is that bad publicity gets your name in the news without you having to pay for it.

Now we live in an age where brands have become social animals, and where they can earn publicity without paying for media exposure – assuming they have the right PR consultants, so there is no more an incentive to create bad publicity for the sake of free coverage.

The H&M example is a good one, as bad publicity is damaging both their sales (customers are boycotting) and their distribution capacity (websites are de-listing their products). If it continues to grow, authorities could step in and arbitrate whether the brand is right, which would be a commercial disaster.

It has become easier for people to raise their sentiments, especially with the popularity of social media. In cases of uproar, how can brands manage these situations? Should they release statements immediately or let the issue die down naturally?

One thing that brand leaders don’t appreciate enough is how important it is for them to be vocal about the brand’s stance. It is rarely in a brand’s best interest to stay silent, as it lets stakeholders speculate on the brand’s position, which can cause even more damage. When attacked, a brand should ensure it has a voice in the debate expressing its position. Even if the brand does not know yet the cause or the full context of a crisis, it should still say that it is investigating and will share information as soon as possible.

Once that information is ready, the brand should decide how to position itself and share that position loudly. If it fails to do this, then the media will speculate and the brand will lose control of the narrative. “Did H&M upload this map intentionally, or are they careless? Do they genuinely care less about Vietnam than about China? Why would the brand decide to stay silent if they have nothing to hide?”

What can brands do to avoid controversies?

We believe it’s becoming increasingly difficult for brands to avoid controversies, as there will always be groups of people that will disagree with a brand’s messaging, goals, or actions. Instead, brands should assume that they are in constant “crisis watch” mode and operate as such. Rather than try to avoid communication challenges, I believe brands should be well prepared to face inevitable ones. That is to say:

  1. Consistently monitor brand sentiment in media and social media
  2. Consistently refine brand messaging so it responds to developing social issues and aligns with the brand’s activities and values.
  3. Train all brand operators, including the executive team and the operators of the brand (retail, social media managers, brand representatives) to deliver these messages consistently.

How important is it for companies to have a well-established PR team or hire a PR firm?

For any brand that faces public scrutiny (which is nearly all brands these days), it’s extremely important to have a dedicated PR team, whether internal or external.

First, a good PR firm helps brands to be more knowledgeable about the issues and key subjects that matter to their customers. This is why, at Vero, we’re rolling out access to social sentiment analysis dashboards for all our consulting teams, so they are plugged into conversations and better able to assess brand risks and opportunities.

Second, a good firm should also help a brand prepare in advance for potential crises with a proactive approach to corporate messaging. Our consultants help brands understand how they should position themselves on certain issues, what questions they might be asked, and how they can formulate answers that their customers will accept. We also train executives to interact with media and to leverage the messaging we develop when they represent a brand. We have teams that conduct comprehensive audits of brands’ communication touchpoints and develop recommendations for brands to prepare well ahead of a crisis.

And third, a good firm has a structure ready to react to a crisis and support the brand as it navigates the turmoil. If well prepared, the firm is able to quickly develop recommendations for messaging and tactics on going public (how, when, with which media, which journalist, which spokesperson, which messages) and leverage its network to execute the strategy.