A recall of any product potentially has a significant negative impact on its manufacturer. Recalls are expensive, not only from the financial hit they incur in lost sales and other direct costs, but also in the lasting impact recalls can have on a brand’s reputation. Without an effective online reputation management strategy, food producers can suffer even greater losses.
Determining the cost of a food crisis such as a recall is difficult, because it goes far beyond the hard costs. Food Safety Magazine identifies recalls as “the food industry’s biggest threat to profitability,” and the numbers back up that observation. The magazine reports that the average recall costs a company at least $10 million, which includes both the direct costs of recalling and destroying the food, as well as notifying the necessary regulatory agencies, the supply chain and the consumers.
The bill continues rising from there; there’s the expense of labor to complete all of the above actions, as well as the cost of running replacement product. But perhaps the greatest cost — and the one that is most difficult to manage — is brand reputation.
Online Reputation Management in the Digital Age
The round-the-clock environment of news coverage and social media has created an unprecedented network of information sharing. When food is contaminated, whether it’s through an airborne bacteria or a physical contaminant, word spreads quickly.
Within hours (or even minutes) of such an announcement, that information will be shared through network news programs and social media channels. And, while that is beneficial for protecting consumers from ingesting possibly contaminated food, it can be devastating for food manufacturers.
A Harris Poll found that 16% of customers would not buy that same product from a company after it had been recalled, even if the problem was resolved, and 17% would not buy any product from that manufacturer.
Even after a recall has been resolved, consumers are reluctant to trust the brand and are hesitant to purchase the same type of product from other manufacturers. A survey by U.S. Grocery Supplier found about 75% of consumers quit buying spinach and peanut butter — regardless of the brand — after both these products were recalled.
Perhaps even more significantly, a Harris Poll found that 16% of customers would not buy that same product from a company after it had been recalled, even if the problem was resolved, and 17% would not buy any product from that manufacturer.
Such statistics drive home the need for food producers to take control of their brand’s reputation management, particularly in the face of a crisis.
Tips For Managing Brand Reputation
There’s not a single solution for managing brand reputation during and after a food crisis, but instead there are multiple approaches that should be used in conjunction with one another. Here are five tips for managing your brand's reputation.
1. Have a Crisis Plan in Place
Long before a recall or contamination incident occurs, it’s important to have a crisis plan in place. Waiting until the crisis is happening allows little time for strategy and forces brands to react rather than take well-planned, decisive action. Such a plan ensures greater customer well-being, which also benefits the brand and the bottom line. A recall plan also is an effective way to reinforce to employees the company’s level of commitment to safety and standards of excellence.
2. Remember to Be Social
One of the top priorities in a food crisis should be to go to the same place consumers will turn: social media. Social media reaches across numerous channels and is a great way to share information about your brand. It’s also a way for consumers to share negative information, so brand leaders have to make sure they’re using social media as effectively as possible. Getting messaging out before news outlets deliver information to consumers is key; so is answering questions and responding to negative comments in an honest and non-defensive manner.
3. Maintain Transparency
Transparency builds off of honesty. Instead of simply addressing what already occurred, be forthright about how it occurred and what steps are being taken to address it. Getting in front of the problem and taking control of the situation can help disarm it. When customers know that action is being taken and that a company is willing to accept responsibility for the situation, it helps boost consumer confidence.
4. Act Quickly
Any time a crisis occurs, speed is critical. There’s no time to waste and brands that are sluggish to respond will likely pay a hefty price in the form of customer loyalty. In fact, a recent survey by FoodLogiQ found that half of consumers expect recalls to be resolved within two days.
Research also shows that how quickly a company responds to a recall or other food crisis has a direct effect on whether or not consumers will continue purchasing from that brand. This is where that effective recall plan makes a difference; with a game plan already in place, it’s simply a matter of deploying it.
5. Prevent the Problem
Of course, the best way to protect a brand’s reputation is to avoid having a crisis in the first place. When food manufacturers want to avoid problems such as food contaminated with foreign materials entering the supply chain, FlexXray can provide the services needed to ensure product is safe for distribution.