It’s official! Effective social media reduces the impact of product recalls
Incidents are an inevitable part of life for food and consumer goods manufacturers and retailers. Although clearly it is better to prevent them from occurring, there is no such thing as perfect systems and processes, people make mistakes, machines break down. It happens. Some incidents lead to recalls, many of which are fairly straightforward – notify regulators, contact customers, get product back, replace it with good product. Some however quickly escalate into a crisis and social media is often seen as the corporate boogey man that causes that to happen. Many companies look on as their brand and their reputation is dragged through the mire seemingly helpless to do anything about it.
It doesn’t have to be that way.
Social media is one of the most important means of communication that a company that has at its disposal and is critical when it comes to managing incidents, recalls and crises. Use it well and it provides an opportunity to enhance your brand. Use it poorly – or worse pretend it is not there, and incidents quickly escalate into a crisis that can have a devastating impact on the reputation of the business and its brands.
In a study of 405 consumer product recalls between 2000 and 2012 in the United States released in May 2015, University of Chicago researchers found that companies that engage stakeholders over social media reduce the impact on their share price and reduce future loss of sales.
The reasons for this are clear.
Firstly, social media is faster and more effective in getting critical information to consumers. As long as that message is clear and well crafted and reflects appropriate action being taken by the company, this reiterates that the company is responsive and does actually take consumer health and safety seriously – and does in fact care!
Secondly, social media provides a means of engagement. While traditional communication methods are one way, social media enables multiple communications. Not only are you engaging in a conversation rather than telling, many others are watching the conversation and are able to engage as well. It means companies can quickly identify concerns and expectations and get on with managing them rather than leaving these concerns to snowball over time, picking up more and more mis-information.
The thought of engaging in a conversation over social media however fills many companies with a sense of dread! How do you control the conversation? The short answer is you don’t, but you can’t control that conversation anyway! Whether you like it or not, consumers will be talking about your company and brands and yes, some of it will be negative. You have the ability to influence that conversation if you are engaged. It is much better being part of the discussion, dispelling mis-information, keeping people informed, addressing concerns and managing expectations than watching from the sidelines as your reputation takes a beating!
A number of recent recalls have provided good examples of the dangers in not responding to consumer comments and concerns. In several cases, consumers having been talking about a recall, expressing very real safety concerns both on the company’s social media sites as well as the myriad of interest group sites that provide a forum for discussing product safety but it has taken days for the company to respond. In those days, consumer express their frustration at not being able to get information from the company, start speculating on causes and what the company might be hiding. The company has left a vacuum that many are quite happy to fill. By the time the company responds, even if it is good information, it is often too late.
Companies with effective incident management processes and systems investigate incidents quickly, assess risks, anticipate the concerns and expectations of key stakeholders, develop an effective response strategy and use various mediums, particularly social media, to communicate with those stakeholders, address their concerns, manage their expectations, implement the recall effectively and leave themselves in a position to return to market faster.
What should food and consumer goods companies be doing as far as social media programs?
1. Develop and maintain a social media monitoring program.
This provides an early warning system for potential incidents. Identifying these signals early, having good processes and trained people to investigate, assess and respond to them before they escalate can resolve the incident before it goes anywhere.
2. Make sure social media communications are a key part of your incident management processes.
When it comes time to respond, you are prepared and you are engaging consumers over your own Facebook and Twitter sites as well as external forums immediately after you have had those critical discussions with regulators and customers. Your messages are consistent, your operators are well briefed but responses don’t looked canned – they look like they are coming from a company that is made up of people that really do care and it is clear to everyone that you are the doing the right things and getting on with resolving the problem.
This fast effective response ultimately reduces the negative impact on the company. Shareholders recognise there will be an impact but the company will recover. Customers such as retailers recognise the company as being responsive and responsible protecting their relationship – and future sales. Most importantly consumers maintain their trust and ultimately their loyalty to the company and its brands providing a platform for a return to market often bigger and better than prior to the recall.
 The role of Social Media in the Capital Market: Evidence from Consumer Product Recalls, University of Chicago, Journal of Accounting Research, Vol 53, No 2, May 2015.