Reputation. Whether you realize it or not, your reputation is built with every product manufactured, sales presentation given, telephone call answered, advertisement placed and article posted on social media. Everything you do―and, conversely, everything you don’t do―shapes your reputation and ultimately your brand equity. And there’s rarely a more important time to have a stellar brand reputation than in the event of a product recall.
As I mentioned in my previous post
, recalls are expensive on many fronts―product return and/or replacement, consumer compensation, and legal fees, to name a few. But the loss of consumer trust can impact sales for years to come. Many companies survive a recall, but many others do not. Why? The difference often comes down to how consumers feel about a company and how much they blame internal firm-related factors, according to a recent study published in the American Marketing Association's Journal of Marketing Research.
The study finds that consumers’ positive brand beliefs contribute to brand resilience in the case of an adverse event such as a recall. Consumers will refrain from immediate blame for brands they like, and these consumers are much more likely to seek out other possible causes for the defective or dangerous product. Companies without strong reputations that are less well-liked do not enjoy the same consideration.
The frequency of recalls also plays an important role in shaping consumer perceptions. In industries where recalls are common―such as toys, children’s products, automobiles and healthcare products―the study found that consumers are less likely to lay blame on a specific company if similar incidents have plagued other companies. But once again, companies that are not well-liked don’t benefit from this consideration.
In industries where recalls are less common, a product-harm crisis stands out and requires explanation. Even here, however, consumers will treat a recall from a well-liked company as an exception, a rarity or an accident, but they will blame a less well-liked company for a similar incident.
That said, having a good reputation only goes so far. Consumers can forgive a company for one misstep, but repeat incidents will not be seen as an exception or accident. Consumer confidence will wane and they will find new, more trustworthy sources for making purchases.
So what does this research mean to you as a promotional products professional? Part of your reputation-building initiatives should include having a comprehensive compliance program in place to reduce the risk of a product recall. Additionally, you can reduce the impact of having a recall by having an effective recall policy in place to proactively address any product quality or safety issues.
Building your brand’s reputation takes years. But it can be destroyed overnight with a product recall. The best defense of your reputation is a solid set of comprehensive policies and procedures that are effectively executed and strictly followed to prevent product recalls.D E Fenton is executive director - compliance for Quality Certification Alliance, the promotional product industry's only independent, nonprofit organization dedicated to helping companies provide safe products. With more than 20 years of compliance experience, she offers practical advice and actionable tips that help make the complex concept of compliance easier to understand so companies can implement compliance into their daily business practices. She can be reached at email@example.com or visit www.qcalliance.org for more information.