21 July 2011

How to manage a crisis

Andrew Davies Editor 2011

Editor Andrew Davies on protecting brand value when it all hits the fan...

The past few weeks have been an interesting lesson in the ability of the kitchen and bathroom industry to throw up surprises just when you thought it was all just about bogs and cookers.

You know it's getting a little bit more spicy than normal when two KBB-related stories turn up on the national news in virtually the same week. That's pretty unprecedented in my experience.

Firstly, of course, we had what has now formally become known as 'The Collapse of the Homeform Group' or TCOTHG as it's now called around these here parts. We're looking in full at all the comings and goings in that saga on so far in the August issue of kbbreview.

And then we had Beko's burning fridges, a situation that, no matter how unlikely it is to occur, has still directly contributed to the death of one unsuspecting owner.

Both of these situtations provide interesting examples of what companies should and shouldn't do in a crisis. Firstly TCOTHG shows how to systematically alienate and anger every single person that works for you, supplies you and buys from you. It's actually quite difficult to create that kind of perfect storm and even more difficult to salvage any kind of goodwill from it. One could say that the way Homeform handled its final weeks and days did as much to undermine the potential value of the brands to interested buyers as several years of internet reviews and editions of Watchdog.

General trends in consumer confidence were a real concern for the KBB industry before TCOTHG happened, but its effect on consumers' confidence in handing over a deposit to anyone selling a kitchen, bedroom or bathroom must have taken a major dent. Time will tell whether that's just a short-term issue, but Homeform left 2,700 people with outstanding orders when it went into administration, and every single one of them will tell anyone who'll listen what a nightmare it has been to try and buy their kitchen, bedroom or bathroom.

For Beko, the blow to confidence is potentially just as great, perhaps more so as it's an ongoing brand. Problems like faulty components and product recalls or modifications are not unusual, but unfortunately for Beko it resulted in some serious fires, one fatal.

Perversely, what followed and the handling of the situation was probably more damaging to the brand than the fires themselves. The conflicting messages from the company and the London Fire Brigade concerning exactly when Beko knew of the fault and its potential to put people in danger, and when it decided to act became the story, rather than its apologies and promises to put everything right.

Equally, the fact that it did not anticipate, or was caught out by, the Fire Brigade's announcement, and the sheer volume of calls it would get from concerned owners of any fridge with the word Beko on the front, also led to the need for further apologies for how it handled the situation it had already had to say sorry for.

The directors at Beko must have been thanking the News of the World every day for providing a much bigger story for the press to focus on. A couple of weeks later and we'd be have been well into the 'silly season' when news slows down and suddenly 'Fridges of Death' would be quite a tempting headline.

Both TCOTHG and Beko just show just how important a strong brand is, but also how essential it is to know how fragile it can be if a crisis isn't handled properly.

Email: Andrew@kbbreview.com

Twitter: @andrewkbbreview

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