What Nestle & Unilever can learn from Flipkart on dealing with brand crises

Lessons from Flipkart's 'Big Billion Day Sale'in 2014 and how they handled customer disappointment and prevented a social media disaster

The ongoing Maggi controversy over the past few months, pertaining to the alleged higher than permissible limits of lead content, resulting in Nestle India having to withdraw its much loved 2-Minute noodles from retail outlets, has raised many questions. Did the company effectively communicate with its stakeholders and could the damage to the brand’s reputation and business have been minimized, if the communication was handled differently?

Since the Maggi issue has been covered virtually everyday in media, I am not going to touch upon all the issues that have emerged. Suffice to say, that though Nestle India has had to walk a tight rope in dealing with the authorities on food safety, it does appear that the company lost precious time in taking stock of the situation as it emerged and planning its strategy, giving rise to speculation and doubts. The issue was widely discussed on social media from day one. More credible and timely content could have been put out by the company to reassure its wide base of loyal customers about product quality and safety. However, the company ‘s first interaction with the media only took place several weeks after the first recall was asked for in Lucknow, with it’s global CEO addressing the media. 

Where has all this left the company and the wide base of Maggi customers? The brand has been withdrawn from retail stores across the country, the company has spent huge amounts of money on collecting the packs from the market, destroying them and has reported its first ever loss in its financial results. It is difficult to imagine that a much-loved brand has moved into the“ I am not sure” category in just a few months.

The Maggi controversy, the Unilever Kodaikanal Mercury poisoning issue with Sofia Ashraf’s rap song, the Uber crisis and several other crises that brands have faced, clearly demonstrate that reputation is fragile and it takes one mistake to cause significant damage to your company/brand‘s image, specially in the digital world, where absolute transparency and high customer expectations reign supreme. 

E -commerce giant Flipkart’s biggest marketing initiative ‘The Big Billion Day Sale” on October 6, 2014, offering huge discounts and aggressively promoted for several days, turned out to be a huge disappointment for the rush of online shoppers as products were not available, servers crashed and social media was agog with stories of dropped orders of ‘Flopkart”. Customers were not able to cash in on the promised shopping bonanza  despite spending a lot of  time in trying to place orders. 

Flipkart co–founders Sachin Bansal and Binny Bansal who claimed to have created e-commerce history with sales of US $ 100 million in 10 hours, were quick to send an email apology to every customer the very next day, accepting that the customer experience was less than pleasant and that Flipkart did not live up to the promise it made.  They claimed responsibility, apologized and promised to work on the issues  and regain its reputation for customer service excellence. Quick, credible action from top management.

Soon thereafter, Flipkart began strengthening its quality assurance team and improving its organizational structure. It also began working with companies providing cloud-based technology solutions to handle the massive traffic increases on days of big sales.

For protecting and enhancing corporate reputation, companies need to not only communicate effectively in the social media age, but also to listen and respond, aligning with both brand and customer expectation on an ongoing basis. Giving serious consideration to the following could help to make that happen:

1) Corporate Reputation and Brand Performance: There is a growing inter-play between corporate reputation and brand performance, with more and more consumers wanting to buy products of companies they trust and respect. Global studies have proven this. Damage to corporate reputation is likely to have a direct negative impact on brand sales. E.g. Kingfisher Airlines.

2) Commitment to customer delight: The need for strategically planned, timely PR communication to key stakeholders on the company’s commitment to quality and customer delight, needs to be integrated into the PR program. E.g. Indigo Airlines commitment to on time departures and arrivals .

3) Crisis Planning: The need for senior management of a company to plan for crises (specially those in the food and personal consumption space) and work closely with partners to have an effective crisis management plan and team in place. The team could comprise of senior managers from PR, HR, Legal, and Marketing etc. It would be even better to also have a crisis prevention plan, in which the company anticipates all the possible crises that could impact it’s brands and plans on how it can prevent them. It is also important to effectively communicate with employees in a crisis situation as they are the best ambassadors of the company’s reputation.

4) Ongoing corporate PR: There is great value in planned, ongoing corporate PR, round the year to enhance the overall reputation ofa company. Timely communication on innovative employee practices, contributing to environmental preservation, CSR initiatives etc.  Also, personalizing the corporation through a well-respected spokesperson is an advantage (like the daily press briefings of the Press Secretary in the U.S. White House).  Stakeholders and the government perceive such a company as being professional and transparent.  E.g. Tata Group, Godrej , Marico

5) Credible Opinion makers: It pays to build and strengthen a network of well-respected, credible opinion formers / influencers, who are passionate about your brand and who can with conviction communicate on behalf of the brand, especially on social media. 

6) Spokesperson Training: It is critical that company spokespersons who interact with media in crisis situations are able to articulate the company’s/brand’s key messages effectively and respect the role of media. 

Every business makes mistakes, but having a strong plan in place to address negative backlash in a crisis, in a timely, transparent, caring and convincing manner will help preserve your company’s reputation. It will also confirm yet again that you are a business that cares about its customers and is willing to go that extra mile to make them happy and live up to your reputation.

Veena Gidwani is strategic PR Consultant & former CEO Madison PR