Maintaining brand loyalty when crisis strikes
Kiran Khalap
Partner, Chlorophyll Communications

• Brand. Loyalty. Crisis.
  In trying to understand the subject, let us begin with the three operative words in the topic of the article I have been commissioned to write.
  At the cost of sounding like an elementary primer, let’s begin with Brand.
  At its most basic level, a Brand is a mark of ownership. The etymology of the word itself suggests that: Brand in any language, whether Old Norse, or Friesian, or Old German, means, “mark with hot iron”.
  Once upon a time, companies ‘owned’ brands.
  In turn, the brands ‘owned’ attributes and values.
  Mercedes Benz owned ‘The finest engineering’, Volvo ‘safety’, BMW ‘exhilarating driving’.
  As time passed, consumers starting owning brands… as much as the companies.
  Companies remained legal owners, consumers turned into psychological owners.
  Most of us know what happened when Coke attempted to change its ‘taste’.
  Every day, there was a barrage of over 25,000 phone calls, 12,000 faxes…sarcasm and anger burnt the communication wires to the Coca Cola Company. The company capitulated, and returned the Classic Coke taste to the consumer.
  Closer home, in the same category, Thums Up prospers, despite the presence of the two global biggies. “We Indians are liking the taste of Thums Up, thank you, superly with our Old Monk, I say!”
  Let’s turn to Loyalty.
  Why would a consumer be loyal in a market where there are three-figure options in any category?
  Last I heard, there were over 1000 brands of detergents in India, over 200 brands of TVs…
• Consumers are loyal when the brand is loyal to them.
  The brand, not just the advertising!
  I think that is where the greatest change has taken place, and companies that are not aware of the change are getting trapped. There are three changes here:
  1. Change One is in the depth of information about the company now available to the consumers
  2. Change Two is the speed with which it is available to consumers.
  3. Change Three is the attitude of the new generation: This generation wants to be active not passive, they want to take a stand, not be sitting on fence.
  Once upon a time, advertising used to be the dominant source of information about a brand. Today, advertising is reduced to a weak force.
  News hungry channels are sniffing for stories and the ungoverned democracy of the web allows communities to learn about the misdemeanours of companies at the speed of light.
  Let me simplify the net result for you:
  Today, all brands, whether durables, consumer or service…all brands are in a way corporate brands.
  Consumers are demanding that the corporations that make brands live up to the values that the consumers hold close to their hearts.
  Here’s quote by the head of US $ 21 billion company to amplify what I am saying:
  “I truly believe that my ability to keep shareholder faith in our company depends in the end not on whether I make the quarter but on who I am, what my guiding principles in life are, and my behaviour. What counts is who you are, personally.”
  Daniel Vasella, Chairman and CEO, Novartis
  In fact the list of brands that do not use advertising and yet are successful, is growing. Body Shop made five promises to the world, and became a two billion-pound brand. Zara, the fastest growing retail brand, relies on no advertising.
  What the new breed relies on is keeping their loyalty to the consumer: Body Shop pledges Support for Community Trade, and sure enough, it sources raw material from ethnic communities rather than organised manufacturers. Zara promised democratisation of fashion, and sure enough, every three weeks (instead of the industry average of nine months!) they bring out a new line of fashion!
  That brings us to the last of the three operative words:
  Crisis.
  If we agree with the definition of the brand, and of loyalty, above, then crisis is simply a crisis of faith: The bond between consumer and brand is under threat.
  So if the example given is the example of Cadbury’s packaging in India, it is clear what is happening in the minds of consumers: “My kids eat it…how can I have doubts about it? And what is the company doing about it?”
  Let us look at the best case of crisis handling in the history of crises:
  Tylenol, a Johnson and Johnson brand in the US, had a 37 per cent market share of painkillers.
  In 1982, seven people died out of consuming Tylenol. It was discovered that someone had tampered with the bottles and injected cyanide in the pills. Panic spread. Hospitals in the area received 700 phone calls in one day. 270 more copycats spread more panic.
  Advertising genius Jerry Della Femina told NY Times, “I don’t think they can ever sell another product under that name”.
  In making that statement, Jerry was displaying an out-of-date belief about branding: That advertising is the only tool for branding.
  But how did Johnson and Johnson react?
  In Phase One, instead of arguing their case or announcing that it wasn’t their fault or pointing fingers at the retailers, the company recalled 31 million bottles worth 100 million dollars.
  In Phase Two, J&J used every trick to rebuild the breached walls of trust: They advertised their enhanced packaging, urging consumers not to buy if the seal was broken. 2000 odd of their executives made explanatory presentations to the medical community. They offered discount coupons to encourage trial.
  Result? Tylenol is still one of the Top five in its category. Jerry was proved wrong.
  If we now analyse what the company did, we can easily draw the lessons on what to do and what not, when faced by a crisis of faith.
  The lessons are simple: Go back to the values that consumers look for in any relationship, not just a relationship with a brand.
  1. Go back to Honesty: The consumer will respect honesty more than clever arguments. The company needs to be open. Because anyway, in today’s 24x7 environment, the consumer is going to find out. As the old saying goes, “You can run, but you can’t hide”.
  2. Go back to Empathy: Business is about consumers, profits are by-products. When Firestone Endeavour tyres were held responsible road deaths, company spokesmen went on TV explaining quality control, rather than apologising.
  In contrast, Tylenol said, “I care for you so much, doesn’t matter if I’m actually not at fault…”
  3. Go back to Humility: In the nineties, when Ranbaxy and Infosys discovered that they had used shareholder cash to play the markets, they went back to the shareholders, and said, “We are sorry…it will never happen again!” Stakeholders respected them for that.
  Of course, in a complex market like India, not all segments of consumers will be equally aware of the company values and corporate behaviour, or equally bothered either.
  But the writing is on the wall: Want to retain loyalty? Pay the price for it, not pay lip-service to it.

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