Don’t lose your customer during a product recall

We are in the middle of the largest recall of Toyota cars that we have seen in a lifetime, which currently stands at over 8 million and counting. For years, U.S. automakers have been the ones fighting a reputation for being less reliable than their Japanese counterparts, with the best-known recalls generally involving U.S. cars such as Ford Explorers with tire problems. While its competition is enjoying some schadenfreude, Toyota is using every means including Youtube to help rebuild the trust with customers. The latest recall involving jammed accelerators may ironically mean brakes being applied to the growth of the world’s largest car maker. During a speech in autumn, Toyota president Akio Toyoda mentioned that “Toyota has become too big and distant from its customers” and was on the verge of “capitulation to irrelevance or death“. A candid admission for a chief exec, but the question remains, how much will others learn from Toyoda’s humility?

Product recalls are not isolated events. The US Consumer Product and Safety Commission website lists recalls and warnings for hundreds of consumer products every month. A product recall can cause devastating damage to a company’s brand name and profitability. No matter what its size, industry, location or reputation, a company can be left in ruins if it does not manage a product recall well. These days, customer activism and advocacy groups coupled with the ubiquitous social networking mean companies can no longer use geography to cover up a product recall. Recently Maclaren strollers which conducted a selective product recall in US was forced to issue customer advisory to its UK customers after a media storm.

So how can companies ensure that product recalls don’t adversely affect their standing in the eyes of the consumer? According to a study by Georgia Institute of Technology and the University of Manitoba examining more than 500 toys recalls between 1988 and 2007 Recalls undermine trust in a specific brand and it can take the company a long time to recover from the damage to its reputation. Interestingly the study also concluded that reducing the time it takes to recall a product will have a positive effect on consumers‘ willingness to purchase other products from the same company and if the recall is handled well, the stock price may recover to the same level as before the incident. An HBR blog on Maclaren recall suggests four simple steps that Maclaren could have done:

  • Engage a reputable, independent, outside investigator;
  • Hire a crisis management expert;
  • Call the babies’ families;
  • Announce the recall in paid advertisements.

To minimize the costs and mitigate the associated risks of such an incident, companies must proactively assess and manage their product recall risks. Active management strategies like ‘Mock Product Recalls’ and ‘Track and Trace’ can help an organisation prepare. In the unfortunate case of a recall, companies should learn from the Tylenol tampering case in the 1980s. Johnson & Johnson demonstrated that the safety of consumers was paramount by swiftly recalling the product, cooperating fully with regulators, and communicating openly about the issue. Subsequently, the firm undertook a series of operational and design measures to ensure that such tampering would not occur again. The J&J action is therefore considered as a textbook case of how to rebuild trust while manage a recall.

PS: Link to an excellent article on how to stop a car with a jammed accelerator.

(This blog appeared in Capgemini’s Customer Experience Blog in Feb 2010)

Engaging the customer in less than 160 words

“Hello! Welcome to Mumbai. The UK embassy can be reached at +91xxx . For any assistance call +91xxx. Happy to help.” This is the text message from Vodafone that I was greeted with when I switched on my UK mobile phone while stepping off a plane in Mumbai this Dec. During my travels, I am prone to get text messages from roaming operators, but what differentiates this message is the fact that it provides a very useful bit of info i.e. the phone number of the UK embassy in India.

In the space of 160 characters, Vodafone has been able to engage with me and ensured that we start off our brief relationship on the right note. When a roaming phone joins a network, the operator is aware of the owner’s home network – this is basic data. Going from data to insight needs a bit of thought around customer needs. When I am in a different country, I would want to know how I can reach the UK embassy in case of an emergency – this is insight. Vodafone (and some other operators in India) have married data and insight with SMS technology to deliver a perfect customer touch in 160 characters.

During my stay in India, I realised that a lot of companies in India are now using SMS to engage their customers. For example: As soon as you withdraw money from an ATM, you are likely to get a text saying ‘Rs xx has been withdrawn from Account 123xx via ATM at 12pm’. Similarly credit card companies allow customers to set limits, wherein customers get a text message as soon as a credit card is swiped – great if you are worried about credit card theft. Airlines, Train, Courier and Taxi companies now provide status updates via SMS. The best part of this deal is that it’s free!!

The west has been a bit slow in adopting SMS for customer service as well as a sales engine. Emerging economies like India and China have the advantage of seeing ‘new generation’ banks where the core banking systems are integrated with SMS and other social media tools, while banks in the West have legacy core banking systems that are difficult to re-engineer for the newer channels. But, we are starting to see Western businesses take SMS more seriously.

Using SMS is a good idea since text messaging has the ability to immediately reach a customer anywhere and is fairly low cost. It can also help save money. In the UK, NHS Trusts loose an estimated £614 m each year due to patient no-shows. Some NHS trusts are now using SMS based appointment reminder service to help cut no-shows. Considering the fact that according to the NHS, young men in their early 20s are the worst offenders for no-shows, the use of SMS and other mobile phone based reminder service is a very good idea.

In conclusion, it is not very difficult to craft a bland sales or service message in less than 160 words based on basic data. But companies like Vodafone India, that use insight rather than just data will be able to engage customers better than simple data churners

(This blog appeared in Capgemini’s Customer Experience Blog in Jan 2010)

Customer Experience and Lean Six Sigma can be bedfellows

Last week, I have had a few conversations with IT Advisors and CRM practitioners around the merits of using Lean Six Sigma while approaching customer and IT transformation projects. On the surface, Lean Six Sigma (LSS) and Customer Experience can only be two dramatically opposite ends of the spectrum. Traditionally, Lean and Six Sigma have been synonymous with Manufacturing and in the Operational Excellence space which is seen as being number driven, while Customer experience is seen as a people driven exercise. So does it have a role in the Customer Experience or IT Advisory space? Continue reading

Social Media: a bad marketing strategy?

Every few months, a jargon comes along that forces a wry smile. Till recently, TGIF would translate to how you felt on Friday or would mean an American fast food chain. However, in the web enabled flat world, it stands for Twitter, Google, Internet and Facebook. While this is gaining currency in the US, it will surely make it way to this side of the pond very soon. In one of the finest article I have read recently on this topic, branding guru Al Ries argues that Social Media Not The Answer For Weak Brands. He is spot on!! Continue reading

The various days of Christmas..

The holiday season is finally upon us. George Ritzer famously described Modern malls as the new Cathedrals of Consumption. With shopping increasingly becoming a cultural activity, he likened customers to worshippers, a credit-card constituency voting with their feet and wheels. One of the ways to know that Christmas is here is by the number of emails and post from companies sending Christmas greetings. All sorts of things are turning up in the post including invitations to pre-sale previews, exclusive events etc. Everyone is trying to outdo their rival to reach out to the customer. In their frenzy to gain wallet share, we have seen the emergence of ‘blockbuster sale’ days: Black Friday, Cyber Monday, Boxing Day Continue reading

Dell helps make my last purchase this decade, a good experience..

The noughties have come to an end with us having seen the worst economic situation in a generation. Front line sales and marketing staff took the brunt, while customer service was forced to deliver more with less. Training budget have been slashed while free coffee & biscuits have all but disappeared from offices. Continue reading

Airline upgrades: ensuring customer experience means more business

Every airline wants to ensure that they retain the exclusivity around Business and First Class travel and rightly so. However, on countless trips, they end up flying an empty business/first class, while they have oversold their economy class giving them the moniker of ‘cattle class’. The check-in desk then has to make the difficult decision on who they can upgrade. Their selection criteria can be very arbitrary ranging from ‘are you a gold customer’ to ‘how smartly are you dressed’. From a customer experience point of view, every time I get a complimentary upgrade, I want to fly the same airlines more often. I think they like me. Continue reading