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Toyota's Troubles: Crisis or Opportunity?

When it's crunch time, how your business responds determines whether customers stay loyal.
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Is a crisis always bad for a brand? The jury is out on Toyota, which built an incredibly strong brand for decades, only to see it buckle under its current troubles. But while we all want to avoid crises, savvy organizations that take the long view can often respond in ways that make their brands stronger, rather than weaker.

First off, your response to a crisis needs to be "on brand." That is, the reason people value your company's products are reflected in the way you face the crisis. The integrity, communications and thought leadership you promise to customers--plus speed--need to show up in the approach you take to your crisis response.

The classic great response to crisis was Johnson & Johnson's recall during the Tylenol poisonings in 1982. J&J took $100 million worth of Tylenol off the shelves, did it quickly and changed the face of over-the-counter drug packaging as a result. Today, Johnson & Johnson's market share is as high as it was before the incident. Jack in the Box was linked to E. coli in the early '90s (including some deaths). It has since become known in the industry as a champion of safer meat supply chains. Jet Blue, after stranding people on the tarmac for hours, helped champion a Customer Bill of Rights and answered every letter on the subject personally to demonstrate that passengers were important to the airline.

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Toyota--with its unprecedented response of stopping sales of certain makes, massive recall and letters to customers--has shown its customers that it is as serious about quality today as in the past. But it's taking another hit now due to a problem with its green-leading Prius, making its customer relationship work that much harder. Despite criticism that it is doing too little too late, I believe the standard Toyota is expected to hit is unreasonably high. The good will it has historically generated with customers will provide more cover than the media is willing to give the company. Toyota is trying to repair the bond its customers have with the brand; time will tell if it's enough.

For smaller crises, not linked to safety, the way a company responds often can actually increase brand loyalty. If you've been to a restaurant and had a meal comped for something that went awry, chances are you feel better about the restaurant after the mistake than before. And deep brand loyalty built up over years can help organizations ride the wave of a crisis. I heard a story on National Public Radio recently about customers being concerned but still wanting to stick with their Toyotas. One woman traded her car in because she didn't want to worry about the fix really working--and bought a bran-new Toyota. That's brand loyalty.

Of course, there are ways of not doing it well. Firestone and Ford merely pointed fingers at each other rather than work together to solve their problems when they had a crisis over blown-out tires. Apple's early iPods had some major battery-life issues, which Apple didn't resolve until after litigation. (Not that Apple's brand has suffered mightily as a result. But if the company makes a habit of responding that way, the tide of trust could indeed change.)

Here are the three things I think every company can do in a crisis to maintain brand loyalty:

  1. Move quickly to solve causal operational issues, erring on the side of overcompensating.
     
  2. Look at the crisis as an opportunity to demonstrate your unique promise in the industry (you certainly have the attention of the press now), and build brand loyalty. Demonstrate your value and your promise in your response to the problem. And use your brand community to rally to your side.
     
  3. Find larger industry issues you can take the lead on as a result of the wakeup call the crisis provided.

This last point is really what divides the winners from the victims in a PR crisis. Thought leadership that ups your organization's value in the entire supply chain demonstrates strategic thinking, and gets your value closer to what customers care about. It takes a visionary company to truly do thought leadership. But as Johnson & Johnson and Jack in the Box have demonstrated, market share and brand loyalty can not only spring back but rise to levels even stronger than before the crisis, if approached strategically. Remember that this is about the long view, not just the crisis at hand.


Lynn Parker is co-founder of Parker LePla, a brand strategy consulting firm in Seattle. She's also the author of The Reluctant Entrepreneur, and co-author of Integrated Branding and Brand Driven.
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  • The strategies that work for the 'big' brands can also work for personal brands. Think of celebrities who have had rough patches in their career - both personally and professionally. With the right positive and consistent steps, they regain their brand recognition and reputation.
    Lisa Hromada, Personal Brand Strategist & Designer, http://www.lisahromada.com
  • I think this could certainly be a chance for Toyota to shine. They kind of got off to a slow start in terms of response time but if they really act in good faith I think it can strengthen their image. I wrote a bit about it on my own blog as well http://www.brandojo.com/blog.
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