RECALLS: A product crisis is the ultimate nightmare but, handled
sensitively, it need not turn into a disaster
THE FRONT LINE: Staff need to be well briefed to deliver a consistent
message once the recall begins
CASE STUDY: When the pesticide Roseclear was recalled, quick action by
Zeneca saw customer loyalty blossom
Product recalls are the stuff that corporate nightmares are made of, but
facing up to the crisis with swiftness, honesty and a well briefed
telephone team can often save the day. Wendy Smith reports
It’s the phone call everybody dreads. The client has a crisis situation.
Product X has been tampered with. A lunatic has been on the phone to
demand what is known in the trade as ‘sweetmail’. And just to complicate
matters for the hapless PR, it’s a Friday evening in the middle of
August.
The trouble is that this type of nightmare scenario all too often
becoming a reality for major companies. To exacerbate matters still
further, and bring beads of perspiration springing to the corporate
brow, journalists are baying at the press office door for details - and
they’re not the only ones. Once the story breaks, the frenzy will mount
as the suppliers want to know what to do and customers demand to know
where they stand.
The case that many would consider put the word ‘crisis’ into management
is Tylenol. In the 1980s bottles of the tablets were contaminated. The
tragic consequence was a number of fatalities. Every one of the product
was pulled from the shelves, the packaging was changed and Tylenol’s
makers Johnson and Johnson kept their customers’ trust.
As the years have passed, other companies have made headlines attempting
to handle their own product recalls. Whether they have lived to tell the
tale or disappeared into the ranks of trading has-beens has often
depended on the efficiency and skill with which all concerned - client,
the PR agency and telemarketing agency - have handled the crisis.
In the 1980s, it was the baby food industry that suffered product recall
purgatory; in the 1990s, it has been the turn of the drinks
manufacturers. This decade kicked off with the bubble bursting on
Perrier with a benzene contamination scare, which the company swiftly
dealt with. More recently, Burson-Marsteller’s crisis management
machinery was set in motion when client Heineken had to recall three
million bottles. In this incident it was feared that a production fault
meant some of the bottles contained tiny fragments of glass.
It would be wrong to think that product recalls are only confined to the
food and drink industry. Intel’s Pentium chip attracted press stories
about a bug in the chip. The flaw was minor in the extreme - a normal
commercial user would be likely to encounter that chip error once every
27,000 years. But, despite this, Intel was forced into a position of
defence and instigated a product recall that cost the company a reported
dollars 400 million (pounds 245 million).
Faced with the customer as king and the media baying for consumer
scares, crisis management and product recall is a growing problem for
companies, says Ray Gibson, business development director of Reading
Scientific Services. ‘In 1987, we started up a 24-hour analysis and
consultancy line to give analytical support in times of crisis to the
food industry. That year we handled 20 incidents. Last year we handled
300,’ he says.
A product recall sounds like the worst thing that could happen to a
company but, according to research carried out by the Henley Centre for
Forecasting, customer loyalty can rise by more than 10 per cent if a
consumer goods complaint is deemed to be well handled by the company.
But what exactly does the PR executive do when the crisis call comes in?
How do you sensitively handle consumer fears while promoting the company
as a responsible producer?
‘The first thing a PR needs to do is to analyse and grade the potential
risk,’ says Chris Woodcock, deputy managing director of Countrywide’s
Banbury office. ‘Then you need to set up a procedure that is workable.
The problem is that some companies won’t press that red button,’ he
adds.
‘We tell them that it’s a crisis until proved otherwise. Experience
suggests that it will always develop at the worst possible time,’ he
explains. ‘You need to form a crisis team and sit down and quickly do a
SWOT analysis of the situation. This is the time when many companies may
turn to the telemarketing company to help them out.’
Mike Seymour, managing director of issues and crisis management at
Burson-Marsteller Europe, rates telemarketing not only as a powerful way
to demonstrate commitment to the public but also as a method to monitor
their concerns.
Seymour suggests that companies need to balance the required response
against what their own capabilities are and whether this is likely to be
a long-term commitment. ‘You don’t want to block up your own system,
which makes it a strong reason for going out of house to source
telemarketing expertise,’ he explains.
Some PR firms may have an established relationship with a telemarketing
company. Countrywide, for example, works closely with telemarketers
Intelmark to offer a crisis management package called Reflex.
But despite the column inches on product recalls, some companies still
appear to see it as an expensive evil and hold back until it is almost
too late. Steven Jack, Intelmark business development manager, says that
many of their clients come to them as the result of a knee-jerk reaction
when the crisis has already arisen.
But other clients, says Jack, take a more proactive approach by booking
lines in advance just in case the worst should happen. ‘In this
situation we can be up and running in hours,’ he explains. ‘When clients
come to us cold, we can be talking two or three days.’
The first stage for Intelmark is to instigate a series of briefing
sessions to let the staff know about the product concerned. Many
telemarketing companies say that it is advisable to have the client on
site to cover any likely questions that may arise. Jack explains: ‘We
need a clear procedure plan. After that, our job is to offer empathy,
sympathy and reassurance and we need to assess that particular caller’s
problems.’
Initially, the response can seem overwhelming - one of Intelmark’s soft
drinks clients had 20,000 calls over a single weekend. However,
telemarketing activity for a product recall tends to last seven to ten
days. After the scale of the crisis has been assessed, it is necessary
to gauge what level of telephone service to make available to worried
customers.
Sally Penn sales director of Manchester-based ADS Telemarketing points
out that the simplest and cheapest way to get a message across is to
simply install a voice message. She adds: ‘This is not a particularly
good approach - but at least it is better than nothing.’
With products that are too complicated for a pre-programmed message,
Penn suggests a live operator: ‘The major skillset in operator training
is turning a negative into a positive. The aim is to leave that caller
reassured and glad they have spoken to the operator, with no negative
perception of that company.’
One way to ensure that the telemarketing company really communicates a
positive message is to make operators sound enthusiastic about the
company, says Debbie Hogarth, head of marketing at the Decisions Group,
another telemarketing specialist.
‘This is not an occasion for people with tip-top counselling skills,’
she explains. ‘ People are usually phoning for information. The idea is
not to talk for too long but to talk to everybody.’
The Decisions Group says as much as 20 per cent of its business is in
the crisis management and product recall field. ‘We run a 24-hour
operation with 370 workstations and we can be linked up to other call
stations if necessary,’ says Hogarth.
As consumer attitudes harden, the product manufacturer has good reason
to fear the onslaught of what is now termed brand rage. As telemarketing
company Merit Direct and its client Boots found out, consumer reaction
can be devastatingly swift.
A Boots scheme to issue sports equipment for school vouchers apparently
attracted complaints - and the attention of the BBC Watchdog programme.
Merit Direct set up telephone lines within 48 hours.
‘Having done that,’ recalls Merit’s marketing manager Kate Mather,
‘those lines were filled within ten seconds of the programme screening
the number. When you come up against a programme like Watchdog, you’re
in serious trouble. You need to have a plan in place. It’s quite a
chilling experience,’ she adds.
Mather maintains that Boots managed to resolve the issue by meeting the
situation head on, launching a better deal and demonstrating to
customers that the company did have the power to change.
Mike Regester partner of Regester Larkin, a specialist in crisis
management, says that this is a growing area because companies now
realise that if they do get it wrong, it will cost anything from a
product boycott to fall in share price or additional legislation imposed
upon the company.
The worst case scenario is that the company could go under completely.
‘Things do go wrong,’ says Regester, ‘but the golden rule is to tell all
and tell the facts and tell them truthfully.’
This point is echoed by Karen Hopewell, managing director of
telemarketing company Telelab, who stresses the importance of having a
clear, accurate brief: ‘We have to ensure there is message control -
that everybody is telling the same story. There is no point in keeping
anything back from customers.’
Total recall: Facing up to the crisis
The first steps to establishing telemarketing support in a product
recall situation
* When selecting a telemarketing agency, make sure that you visit their
premises to check out their capacity to handle calls and, if time
allows, take up references from other clients who have used their
services.
* Pre-plan for any crisis situation, especially if you are in a
particularly vulnerable market sector (food and pharmaceuticals, for
example). Brief a telemarketing company about your products. Consider
having a ‘just-in-case’ line allocated for your needs - at around pounds
300 a quarter, you may find that a small price to pay when set against
time and potential lost revenue and lost sales.
* Make sure you know about your telemarketing centre’s resource
availability. This doesn’t mean the total size of the call centre and
the number of workstations they have generally - but what amount of that
resource could be available to you at any given time. Call centres tend
not to call huge amounts of dormant resource.
* Check what overflow facilities the telemarketing centre may be able to
offer, such as auto-messaging, BT messaging and links with other call
centres.
* Make sure you have enough call handlers available. You need to allow
for full coverage and build in cover for the call handlers to take
breaks, go to the loo, and sort out any associated ‘wrap up’
(administration) that may be involved with some calls.
* Don’t screw up the whole operation by mixing your messages. Different
groups of people (journalists, pressure groups) will often phone up the
various consumer helplines advertised to check out the soundness and
sameness of the storyline. Any variation in message between media and
public could prove highly embarrassing and fundamentally damaging. Make
sure that you synchronise the message by making sure all parties
involved work closely together.
* Involve the client in the briefing and the training of the call
handlers and, if possible, encourage the client to remain on site with
the telemarketing company during the initial stages of the campaign.
* Don’t forget to plan question-and-answer sessions for all types of
call, and establish roles and responsibilities with the team for
handling these calls as soon as possible.
* Build in procedures to handle callers other than customers and
retailers. These calls may be more sensitive in nature and include not
only the press and lobby groups but also threatening calls.
Case study: Zeneca nips problem in the bud
This summer Zeneca sent out an announcement to the press that Roseclear,
a garden fungicide and insecticide widely used by gardeners over the
previous 14 years, was being withdrawn from sale, supply and use in the
UK. This followed what was termed as a ‘regulatory re-classification by
the Government’s Pesticide Safety Directorate’. The root cause was a
routine review of data on potential eye irritation.
Miracle Garden Care who were the distributors of Roseclear following the
divestment of the garden business from Zeneca were the first to hear of
the developments. Miracle chief executive John Wilson recalls: ‘This all
started when we got a fax from the Ministry of Agriculture on 18 June.
It simply said that they were revoking the registration of the product.
We immediately asked for clarification. We’d sold five and a half
million bottles over the product’s life cycle and received no complaints
of cases that needed medical treatment.’ Zeneca, adds Wilson, had always
been aware of the remote hazard of eye irritation which related solely
to the possible risk of undiluted Roseclear. Pack labels had always
warned of this.
It was a week later that the two companies hastily assembled their
crisis management team, which realised that the situation was looking
ominous and pressed the ‘red button’. By 25 June, the Ministry of
Agriculture had clarified that nobody should use the product and
informed the company to make ‘responsible’ notices.
‘That evening we got in telemarketing company Intelmark (part of CMP
International),’ says Wilson. As the hotlines were being set up and
potential questions worked out prior to going public with an
announcement of withdrawal at the end of that week, disaster struck
Zeneca. There was a leak to the media, which immediately alerted the
retail trade. By the end of that week, Intelmark’s lines took 8,000
calls from consumers.
Zeneca and Miracle established two freephone helplines. One was for
retailers, backed up by a product withdrawal notice which appeared in
the national press that weekend. The other was specifically for
gardeners advising them not to use Roseclear, with further advice on how
to return the product by 18 December - the date set by the Government.
‘We received around 30,000 calls from our customers and they are still
sending Roseclear back into us before the Government deadline,’ says
Wilson. A sealed bag was sent to customers to return the product and, as
a goodwill gesture, the company sent out a voucher for the retail value
of the returned item. This was despite the fact that a regulatory
change, rather than an actual product fault, was responsible for the
withdrawal.
‘Intelmark did a really good job for us,’ says Wilson. ‘We really had to
develop our script on the hoof. Over the first weekend, we stayed in the
phone rooms with the staff to be there for the calls.’
Today the companies have put the experience behind them as they get on
with their business. ‘At the end of the day,’ says Wilson, ‘it really
was a storm in a teacup. Our users were tremendously loyal. They’d been
using the product for years with no hiccups and they really wondered
what the fuss was about.’
Case study: The Hoover promotion that went horribly wrong
Most travel promotions follow the same pattern. In return for a proof of
purchase consumers get free travel to a desirable destination.
The economics are based on an assumption that only a small percentage
will claim the offer, that travel can be bought at a discount, and that
profit can be made from associated costs like insurance.
That was the proposition put before Hoover four years ago by promotions
company JSI. In return for buying a product for as little as pounds 100,
consumers would get two free flights to one of six European
destinations. Because of the stringent qualification criteria, the
agency estimated that just 10 per cent of customers would claim.
As many as 30,000 applications a week ensued. The agency was swamped,
despite installing 40 new phone lines. As consumers got frustrated, they
started to complain, adding to the volume of calls trying to redeem
offers.
Peter Le Conte, director of the Le Conte Company, says this should have
been planned for. ‘You need to set up procedures for white-mail. Any
promotion will generate them, from consumers who can’t find the product,
to product use enquiries,’ he explains.
The second problem was that no flights had been pre-booked. The
assumption was that surplus flights would be available at a discount.
But, with 35 per cent of customers claiming flights, and the agency on a
fixed fee regardless of how many flights were taken, bankruptcy ensued.
Problem number three was that a second campaign offering free flights to
America was launched. If Hoover had listened to its customers, it would
probably have never proceeded. But it hadn’t set up any kind of customer
helpline. ‘By using the phone, you have the chance to refine campaigns
on an ongoing basis,’ says Becky Kannreuther, business development
manager at promotional handling house, Granby Marketing Services. ‘The
response is immediate. By mail, it takes time to filter through.’
Hoover blamed the press for its problems. A circulation war in Scotland
between the Sun and the Daily Record, with each taking sides for and
against the partly Scottish based manufacturer, was blamed for fuelling
public anxiety, and helping to push response even higher.
‘Don’t give people information they don’t want to know,’ says Stewart
Baird, operations manager at telemarketing bureau, Readycall. ‘If
consumers know that everything is OK, or they can get their money back,
they are not interested in being told you are a reputable company,
despite what the press says.’
Hoover eventually let it be known that it would honour all valid claims.
It was good PR at such a late stage, but it pushed the cost of buying
flights even higher, because travel operators knew funds were available.
The same information could have been made available more discreetly via
a telephone information line.
Travel promotions are still widely-used, but they are better planned.
Many also have resources in hand in case things go badly wrong. ‘Many
large organisations now have dormant services with memorable telephone
numbers set up in readiness for any foreseen situation,’ says Robert
Dirskovski, sales and promotions manager at Broadsystem. All Hoover got
was a big headache.
David Reed
