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Trends Shaping Crisis Management

Trends Shaping Crisis Management

What influenced the tidal wave of goodwill from businesses during Hurricane Sandy? Some argue that heightened regulatory actions from the Consumer Federal Protection Bureau encouraged good behavior. While that assertion may be partially valid, it doesn’t explain why companies mobilized so quickly and gave so generously.

 

Three prominent trends are shaping the way companies respond during a crisis.

1. Customer expectations are higher.

Along with the information revolution came a dramatic increase in customer’s level of influence on business decisions. Through knowledge, information communication technology empowered customers.

The rise of social media gave these informed customers a place to not only speak their minds but to influence others on a massive scale. Consequently, customers expect companies to not only listen to their concerns but to alter business activities in response.

During a crisis, these expectations morph into a different dimension. Essentially, when something occurs in a crisis, or in a crisis recovery, that violates a person’s view of fairness, their reactions can be extremely strong. That’s because morality is a world of absolutes. Businesses who violate customers’ moral codes, ostensibly through selfish motives, will find themselves a target for moral outrage.

After Sandy rolled through New York City, Bloomberg Tech Blog reported that car service Uber had doubled prices to correspond with an increase in demand. New Yorkers criticized the price increase through social media channels, and Uber quickly returned to standard pricing. However, that decision cost the company $100,000 in additional fees to drivers in a single day.

And so Uber reversed its position again, this time reinstating the original inflated rate but waiving all company fees, which were given directly to the drivers.

Uber’s leadership explained their difficult decision in detail on the company’s blog.

“. . . raising the price is the only sustainable way to maximize the number of rides and minimize the number of people stranded – by providing a meaningful incentive for drivers to come out in undesirable conditions.”

This process of learning-through-a-crisis has ruined many careers and tarnished many brands. On the day of the original price hike, when customers voiced outrage, a series of articles were published that now form a permanent part of the company’s legacy. If Uber had anticipated customer sentiment during a crisis, and a more effective strategy, this incident most likely would not have occurred.

It’s important to note that social media is only one aspect of customers’ changing expectations of businesses. According to a 2011 Forest CSR Blog post, “83% of American adults agree that companies should accomplish their business goals while trying to improve society and/or the environment.” Importantly, this expectation is not based on a crisis scenario. It’s important to consider how this expectation plays out in a crisis scenario.

 

2. The business case is significant.

Business spend billions of dollars each year in the pursuit of strengthening relationships with customers. The aspirational goal is to not only attract more customers but to keep those customers throughout their lifetimes. Relationships, however, are built on trust. And demonstrating trustworthiness is no easy task.

According to Kantar Media, U.S. businesses spent in excess of U.S. $67 billion on advertising during the first six months of 2012. Kantar also reported that AT&T and Verizon each spent around U.S. $1.5 billion on advertising during the first three quarters of 2010.

By contrast, goodwill efforts are considerably less costly. Unlike advertising, goodwill actions during a time of need are not quickly forgotten. Additionally, they allow customers and employees to interact directly less formally and more personally. These authentic interactions increase employee engagement and brand equity simultaneously.

In the case of Hurricane Sandy, many citizens were without power for days, if not weeks. In addition to sending trailers with power stations into devastated areas, Verizon also offered free device charging and domestic calls at its retail stores. These are moments that customers remember, and they become part of a community’s memory of the storm.

 

3. Brand management is shifting to experience management.

In the heyday of mass production and mass consumerism, the practice of brand management was born. Brand is an identity that a business projects about its products and values. It is essentially a one-way communication process in which companies broadcast information out at people.

As Lewis P. Carbone explains in his book, Clued In,

Brand is by nature self-aggrandizing. It’s about projecting rather than providing.

Customer’s today are leery of businesses and people that project too much information about themselves. Increasingly customers expect to have a voice in business decisions. Instead of having information pushed out at them, customers want to seek out information on their terms, which puts them in control.

This two-way communication process changes the way businesses and customers interact. Instead of projecting information, the goal is to create experiences that enable customers to engage with a company on their terms.

The experience motif starts by identifying emotions that customers want to feel as a result of an experience,” says Carbone.

During Hurricane Sandy, companies demonstrated a willingness to provide experiences that meet customer expectations. The time to build trust is when people are in need, and that principle alone can dramatically change the way businesses plan for and manage crises.

For communicators, building trust during a crisis requires additional preparation and planning. All the essential functions of crisis communications must still be executed, while new questions must also be considered, such as: How can we adapt our services quickly in a crisis to help our customers? This additional layer of planning affects how resources are allocated and how spokespeople frame messages for the public.

 

CRISIS INSIGHT

Prior to Hurricane Sandy, customers did not expect banks to proactively waive late fees during a major crisis. No one expected mobile carriers to help stranded customers, either. In the next severe crisis, many people will expect this level of civic involvement from companies.

Additionally, while most financial services firms reached out directly to customers during the storm, a few did not. In this case, the absence of a message was more noticeable than the messages that were received.