With the sharp increase in social media platforms, we can now categorize the potential severity of a crisis by how quickly it’s trending on Twitter and Facebook.
And the ability to turn from issue to crisis with such fervor makes brands much more susceptible.
Even though it may be through no fault of their own (i.e., the Tide pod challenge), a common reason companies may face a crisis is the result of broken consumer trust.
Some of the more memorable brands to face crisis after crisis in recent memory are United Airlines, Uber, and Facebook.
They faced swift and severe backlash after a few incidents. It took a toll on their stock prices, and in some instances, consumer confidence…at least temporarily.
The fact of the matter is, companies can go under if they fail to regain consumer trust following a crisis.
But established brands can handle far more shake-ups than those without a loyal customer base.
So, do brands that endure multiple crises, especially in quick succession, slowly erode consumers’ trust?
How long does consumer outrage really last after a crisis?
Let’s take a look at some of the short-term effects.
United Airlines Draws Unwanted Attention
After a recent crisis where a physician seated on a United Airlines flight was violently dragged off the plane, consumers everywhere feared for their personal safety.
The issue was severe enough to draw attention from Congress. And it was the cause for a decline of more than $1 billion to the airline’s share price.
It also dropped their consumer perception score to its lowest levels in more than 10 years.
But ultimately, the company stock price did rebound.
However, the more recent crises—the death of a dog placed in the overhead bin and another dog sent to Japan rather than Missouri—revealed a much larger problem for the brand.
Once again, the company broke consumers’ trust and, as a result, saw a dip in its stock prices.
It also resulted in their favorability score dropping by 13 percentage points immediately following the incidents.
Facebook Faces Increasing Scrutiny
In mid-March, news reports surfaced that Cambridge Analytica, a political advertising firm, harvested data from more than 50 million Facebook users (now thought to be 87 million users, according to Facebook).
Because of it, Facebook CEO, Mark Zuckerberg, appeared in Washington last week to determine why the company failed to catch the unfettered access by Cambridge Analytica.
While #DeleteFacebook also started trending, it’s unclear how many users actually took the plunge and chose to delete their accounts.
Facebook also recently dealt with issues relating to peddling fake news and allowing Russian propaganda groups to circulate false information during election season.
Even though the Russian propaganda crisis didn’t hurt stock prices much, the Facebook data problem resulted in a steep decline in shares not seen since 2015.
Uber Ultimately Loses Market Share
Uniquely, Uber dealt with numerous issues during the years it was navigating the newly formed ride-sharing industry.
In the span of a few years, Uber experienced reports of drivers sexually assaulting passengers, a data breach (and cover-up), toxic work culture, and most recently, a fatality when one of their self-driving vehicles hit and killed a pedestrian.
In early 2017, the #DeleteUber campaign began trending on Twitter, and their rival, Lyft, gained significant market share during the ensuing crises.
Even though Uber is still the Goliath of the ride-sharing industry, these crises have begun affecting customer loyalty.
The company lost an estimated 200,000 users in 2017.
And unlike United and Facebook, the Uber IPO hasn’t seen its launch yet.
But, its valuation has taken a 30 percent hit in just 12 months.
What Does a Consumer Crisis Mean?
In each instance, the brand broke consumer trust by failing to prepare for these types of events.
Ultimately, when a customer does business with these types of companies, they understand there are risks to using convenience services.
However, the customer expects the company to have sufficient preparation in place for any potential issues they can avoid.
When that doesn’t happen, crises serve as a reminder of the fragility of consumer loyalty.
This is especially true when swift and adequate corrective actions do not happen.
And companies may face severe repercussions if they don’t learn quickly from their last crisis.
Less established brands, such as Uber, have more to lose when a crisis occurs. This is because they may not have loyal customers to help them rebound.
Additionally, backlash may be more severe and longer lasting, depending on which company was first to make headlines.
For example, Southwest Airlines faced a similar crisis as United after forcibly removing a passenger from one of its flights, though it didn’t garner nearly as much attention from either the media or Congress.
Following any crisis, companies should always follow key steps to recover.
By addressing the issue, apologizing, showing empathy, and implementing change, they can move forward quickly.
Will Consumers Really Boycott the Brand?
Even though consumers may have negative perceptions of a brand during a crisis, that might not stop them from buying products and services.
As major players in their respective industries, consumer outrage is primarily tied to one of convenience.
This is especially the case when looking at the most established brands.
United is a major carrier. If its flights are less expensive and the most direct option, consumers will continue to fly them.
Facebook is the largest social media site. And even though people are upset by data collection for targeting purposes, will they really delete their account?
Would they truly give up one of the easiest connections to their friends and family? It’s highly unlikely.
On the other hand, Uber is the market leader in ride sharing. But when availability and price are nearly equal between Uber and Lyft, which will a customer choose?
Company stock prices and profits may take hits in the short run. But consumers will continue to express outrage on social media without taking action offline if it isn’t convenient.
In a Crisis, Only Time Will Tell
Time will tell whether these companies face long-lasting effects because of their crises and the steps taken to remedy them.
In the meantime, brands must prepare accordingly for any high-risk possibilities.
And by having a communications plan in place, they’ll be less likely to tempt fate and draw public scrutiny for these avoidable situations.
How do you think the age of convenience affects companies experiencing crises?