I’m sure many of you have seen or heard about the strategic makeover retailer JC Penney went through during the year of 2012. Unfortunately for its shareholders, employees, and clients, the change did not go to well. The CEO in charge of the change had to resign, the company had to retract on some of its strategic moves, and most importantly, JC Penney lost a third of its clients. In an effort to go back to the way things were and reconnect with its longstanding clients, the company released an apologetic TV commercial basically begging its customers to give it another chance. The ad went viral and got a lot of attention from the media; it also inspired me to write this post about crisis management.
When running a business, crises are inevitable. From bankruptcy to dissatisfied customers or employees seeking revenge, small-business crises may not be as public as those of larger companies; however, a crisis is a crisis. It can have long and negative effect on the business’s performance, reputation, and often existence. Therefore it is important to take a hands-on approach and manage the crisis in order to minimize its effect. Here a few tips:
When dealing with customers’ complaints, the best strategy is to apologize and compensate. Once you realize a customer had a negative experience with your company, you must react immediately to fix it. Contact the customer and, instead of trying to explain the mistake, simply apologize and move on to solving the problem. Moreover, you can leverage customer-service mishaps by offering a high value and tailored give-away that will minimize the negative customer experience and exceed the client’s expectation.
However, when things become public, as they often do nowadays due to social media, other strategies might be more relevant. First and foremost, you must to prepare your business for a crisis; define your business’s core values and mission statement, get to know your target audience, and be an active member of the community. Once a crisis erupts, these steps will support you as you overcome it—your values and mission statement will help you prove your business’s intentions were good, knowing your target audience will help you minimize the damage with key stakeholders, and being an active community member can support and help you maintain or, if needed, rebuild your reputation.
Once you are faced with a crisis, the most important thing is coming up with a turnaround plan. Don’t think that the crisis will eventually resolve itself or that people will just forget about it; act and come up with a way to turn things around. Analyze the crisis situation in order to understand its essence and source; learn which issues are critical to the turnaround, and focus on them.