Maclaren takes a financial bath, but will it lose the baby as well?

November 10, 2009

Maclaren buggyMaclaren, the British baby pushchair brand, has just landed itself in the biggest crisis of its 44-year history after mishandling a recall of its products.

I do not know how much of Maclaren’s sales the umbrella-style stroller models in question account for, but it must be a lot. One million of them are being withdrawn from the US market, after 12 children suffered amputations after getting their fingers caught in the retracting hinges. Given that the pushchairs retail at an average of over $400 each, that the US is MacLaren’s largest market, and that it will have to fit plastic protective coverings to the hinges of each and every one of the recalled strollers, we can easily grasp the financial scale of the crisis.

But money is not the really important issue here. Maclaren markets itself as “the world’s most safe, durable, innovative and stylish baby buggies and strollers”, so the recall is a huge slap in the face. The strollers are an iconic representation of the company, on which its reputation stands or falls. And the way things are looking at the moment, it’s likely to plummet.

Why? After all, taken step by step, Maclaren has done some of the right things. It has clearly assessed the risk issue over a number of years, and found it to be infinitesimally small from a statistical point of view. Once adverse publicity began to affect its sales, it readily co-operated with the US Consumer Product Safety Commission and organised a voluntary recall.

What it has not done is reassure customers in its other markets, particularly its home one, that it will treat them on the same level. It has also failed to communicate its point of view, let alone a comforting message. Instead, we have virtual radio silence. In short, Maclaren has given the impression that it is at once arrogant and timid: not a winning combination for the future.

It’s arrogant, because it seems to be saying that the rest of the world doesn’t matter as much as its US customers. All right, we know the extenuating circumstances. There aren’t nearly as many mangled fingers over here; and trading standards officers have not put the same pressure on Maclaren for a recall. Lastly, and most cynically, we may guess that Maclaren has more to fear from ambulance-chasing shysters in the US than anywhere else in the world.

Even so, the lame suggestion that UK and European customers can make do by contacting the company and acquiring a safety kit free of charge simply won’t do. We should be so lucky. The company website was inaccessible when I tried it and the phone lines are most likely permanently engaged.

In a major brand crisis, a bunker mentality is the last thing you need. Anticipation, not calculated reaction, is the name of the game. Put out a message of reassurance. Let it come directly from the chief executive. Don’t hide behind PR flunkies. Engage with the media personally. Apologise (even if no apology is strictly warranted); and do it in print, with newspaper advertisements (they’ll get picked up on Google soon enough).

That’s exactly what Mars (not a company you naturally associate with humble pie) did a few years ago when it took a wrong turn on one of its key confectionery ingredients. Mars made an careless mistake when it decided, without consultation, to start using animal rennet, so alienating a vocal minority of its customers – vegetarians. After 6,000 people complained, Mars UK md Fiona Dawson personally took charge of a remedial campaign that involved asserting unequivocally “The consumer is boss” and spending millions of pounds on broadcasting an apology. She even gave out her personal email address.

What Mars seems to understand, but Maclaren so far doesn’t, is that small things are everything in marketing. Small things like the minute amount of benzene that destroyed Perrier’s primacy as a mineral water brand; the minor changes to a syrup formula that nearly did for Coke; the minute amounts of salmonella found in Cadbury’s plant; or – even – 12 little fingers. When commercial success relies on something as emotionally charged as a child’s safety, the importance of a caring attitude towards your customers cannot be overemphasised.


BP brand plunges from Deepwater to Ground Zero

May 11, 2010

I’m beginning to feel sorry for Andrew Gowers. Having had an exemplary career at the Financial Times, he had the misfortune to become its editor. In the wake of a complex and expensive libel case, he was ‘let go’  by senior management in 2005. With contacts like his, why worry though? A glittering future in PR beckoned.

And so it proved when he became head of communications at blue-chip investment bank Lehman Brothers London. How was he to know that, in two  short years, he would be at the epicentre of the global financial meltdown? Never mind, pick yourself up, dust yourself down and move on to…BP. Weeks later, the Gulf of Mexico explodes into uncontrollable life.

Avoiding reference to Jonah, I’ll confine myself to the observation that, for a man with Gowers’ peerless experience of crisis management, he seems to have been pretty slow on the uptake. Yes, he’s been indefatigable on the airwaves, mainly pointing out that it’s not all BP’s fault. Which it isn’t: try the Swiss-based company which leased the rig to BP, and the US maintenance outfit which passed the defective shut-down valve as fit for purpose. Also, BP is only a two-third investor in the oil well. But no one wants to hear about that; certainly not President Barack Obama and the American people.

What Gowers, and his colleagues, conspicuously failed to do was mobilise their chief executive fast enough. The oil rig explosion took place on April 20. BP may not have known the leak’s rate of flow, but it certainly knew this was a very serious industrial accident indeed. Yet it was not until three days later that the company released its first statement from group ceo Tony Hayward and, as far as I can make out, not until May 3 that Hayward himself made a broadcast public statement.

Did it really take that long to determine this oil spill is quite possibly the worst man-made ecological disaster to date? Not in the minds of journalists who – like nature – abhor a vacuum, and fill it with speculation. And not – crucially for any crisis management specialists these days – in the social media space, where any half-way decent speculative theory gets magnified a gigafold. Does Gowers or BP viscerally understand this? I suspect not. Until very recently, if you had looked up “BP Oil” on Google you would have found hundreds of references to the incident – on blogs, Twitter, YouTube and the rest, but almost none seeded by BP itself. Does BP imagine its investors take no notice of all this? £19bn knocked off the share price suggests otherwise: they will get their information wherever they can.

Credit where credit is due, Hayward is now cleverly framing the disaster as a common threat, with BP in the front line of resistance. His language has an appealing Churchillian ring to it. But the initiative may already be lost.

Of course, from a corporate standpoint, BP’s caution is entirely understandable. Make light of the disaster while it is still unfolding and it projects an uncaring image which will do endless damage to the brand later. Rash admissions, on the other hand, will expose it to years of litigation, with its toll on management focus and corporate profits. No one knows this better than Hayward, who has spent three years cleaning up the company’s reputation and settling claims after the March 2005 explosion at  BP’s Texas City refinery, which killed 15 workers and injured about 170. Corporate negligence ill fits the image of a company that has struggled hard to position itself as environmentally friendly with a cuddly logo and a $4bn alternative “Beyond Petroleum” energy initiative.

And yet all that misses the point. The speed of mass communications these days no longer permits – if ever it did –boardrooms to dictate the pace of events. Another fine example of crisis mismanagement, admittedly on an infinitesimally smaller scale, reinforces the point. Johnson & Johnson is rightly considered a model in consumer marketing circles for the way it dealt with the 1982 Tylenol scare, in which seven people died after some pain-killer capsules were laced with cyanide. But now it has come a cropper, after the US Food and Drug Administration warned that some of its proprietary over-the-counter medicines for children (including Tylenol) had too much active ingredient in them, and thus failed to reach the acceptable public safety benchmark.

Although there is no evidence of anyone being harmed, and J&J acted promptly and efficiently in organising a voluntary recall, it failed to explain itself to anxious parents, who have become increasingly restive. They quickly availed themselves of Twitter, Facebook and various parenting blogs to express their frustration at not being able to get a straight answer out of the company about what was going on. This is only the latest of a number of poorly explained recalls, which could have catastrophic knock-on effects for the company’s reputation. As one parent, quoted in the New York Times, put it: “Another recall for baby Tylenol. Well no more baby Tylenol, back to generic brand.”

Although J&J can scarcely blame the forces of nature for its self-inflicted disaster there are, nevertheless, parallels with the BP situation. In both cases, the companies seem obsessed with procedures and asserting internal control, which conveys the unfortunate impression that cover-up rather than communication is the ultimate agenda.

As I commented in my blog post on the Maclaren baby pushchair crisis last autumn, a bunker mentality is the default company reaction in these situations, and it’s actually disastrous. True, some crises are worse than they seem; acting upon them could aggravate their severity, whereas left alone they may quietly subside. But can you really afford to take that risk? Suppose this is the big one, the corporate reputation-wrecker?

Whatever you do, don’t hide behind PR flunkies and hope it will go away. Get the chief executive out there early, personally engaging with the media. Maclaren didn’t do that, with disastrous results for sales in its main market, the USA. BP and Toyota eventually did, but I bet they wish they had wheeled them out earlier.

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