6 Crisis Management Mistakes to Avoid

August 10, 2011

Crisis Management Process Flow Chart

Has your company done a crisis risk assessment to identify which crises are most likely to affect its business? Have you evaluated a crisis’ potential impact? And has your company developed a crises management response strategy for the most likely and/or potentially most catastrophic crises? If not, your company should take a cue from recent crisis management nightmares experienced by Airbnb in its rogue customer vandalism complaint and Amazon during its EC2 power outage. Fortunate for Airbnb and Amazon, the crises management teams in each of these situations were eventually able to gain control of the situation and resolve the problem. However, the management teams’ poor crisis management early-on in each of these situations led to lots of negative publicity that hurt each company’s brand and cost the organizations lots of money and time.

Below are 6 crises management mistakes your team must avoid making:

  1. Publicly ignoring the situation or delaying acknowledgement of a crisis. If you ignore or delay acknowledgement of a crisis, then matters will only get worse. In today’s day and age, a customer’s negative experience can go viral via a blog or a social media site and become a public relations disaster in a matter of minutes. Brian Chesky, Airbnb’s CEO, can tell you this firsthand, as he witnessed a San Francisco host’s vandalism complaint become a company-wide crisis last month when the host decided to post a complaint publicly on her blog after she was not satisfied by his customer service team’s response to her complaint.
  2. Being insincere. Customers will tune you out unless your response is sincere. When Amazon’s EC2 outage happened, the company notified its users of its outage, but did so in unfriendly attorney verbiage that appeared as if it was only trying to pre-empt any SLA law suits that would ensue after the outage. This obviously did not sit well with Amazon’s EC2 customers and made matters worse.
  3. Avoiding the subject matter with your team and investors. Your team and investors are most likely going to hear about the crisis, so you should be the one to tell them about the crisis and how the team is planning to respond. This will ensure that they hear the truth about the situation and know that you are on top of it. Investors and employees understand that crises happen and sometimes take place unexpectedly, so the key is to show them that you are dealing with the situation in a logical and controlled manner. If you don’t, the crisis could lead to employee retention problems and/or loss of venture funding.
  4. Not publicly documenting the crisis and your response from the beginning. Customers, companies, reporters and victims will often lie in times of crisis to make sure their voices are heard. To pre-empt this from occurring, make sure to set the record straight from the start by acknowledging your mistakes and publicly documenting the details of the crisis and response, so as to make sure that the details of the matter are on record.
  5. Losing touch with the affected customer base. You need to be in constant communication with all customers that could be affected by the situation, so that you can effectively assess their needs and incorporate them into your response. Airbnb made the mistake of not staying in constant contact with the complaining customer and this ultimately led to a public customer complaint via her blog that went viral and negatively exposed the Airbnb brand to millions of people.
  6. Being dishonest. Making commitments that you cannot stand behind can buy your management team time to respond to the situation, but they almost always will blow up in your face and exacerbate the crisis. In today’s day and age, every individual has a voice and in times of crisis people like to talk, especially when things are not going well. It only takes one blogger or tweeter to expose a lie and cause the situation to completely unravel.

Don’t let your team be the next Amazon or Airbnb! Know your risks and role play what to do prior to a disaster happening so that your team is ready to respond to crises when they happen. Crisis management is a chance for your company to shine and build its brand. Companies and leaders that succeed in managing crises in a quick and non-obstructive manner improve brand loyalty and/or personal reputation. Just ask Rudy Giuliani how important his September 11th response was to his success as Mayor of New York.

If you are interested in learning more about crisis management planning and resolution, you should read John Bernstein’s crisis management blog. Similarly, if you are interested in learning more about customer relationship management and customer service, I highly recommend reading my blog posts on how a poorly defined Net Promoter Score customer satisfaction monitoring system can derail the customer relationship management process and why Twitter should be used as a customer service medium.

Marketing Manager, Pricing Strategy

<strong>Brandon Hickie</strong> is Marketing Manager, Pricing Strategy at <a href="https://www.linkedin.com/">LinkedIn</a>. He previously worked at OpenView as Marketing Insights Manager. Prior to OpenView Brandon was an Associate in the competition practice at Charles River Associates where he focused on merger strategy, merger regulatory review, and antitrust litigation.