Nectar’s Computer-generated Paracrisis Response: Is it better than no Response?

Nectar is a loyalty reward program in the UK.  People earn points by shopping at various locations such as grocery and department stores.  There is nothing inherently controversial in loyalty programs, most people belong to several.  Nectar hit a paracrisis (I think the term social media crisis is rather useless because its conceptualization is so poor) when it announced it had added The Daily Mail to the program.  The Daily Mail has a questionable reputation as a newspaper most recently running what many believe were questionable anti-refugee material.  The point is that a controversial company was added to the Nectar program and many customers and other stakeholders were upset.  Because Nectar made the announcement of the addition on Facebook, the crisis did transpire most in social media. There were already over 5,000 comments as of August 17th.

 

The concern here is not with the The Daily Mail but with how Nectar handled the crisis.  As you can see in the visual above, Nectar chose to repeat the same statement anytime there was a concern expressed about The Daily Mail.

 

“The primary factor in our decision making for any new partnership is our current customer base. From our data and research, we know that there is a large crossover between our customers and Mail readers. We appreciate your feedback.”

 

Critics of the response, including media training company mediafirst, argued that people want a human voice not a computer-generated response.  Moreover, the response did NOT provide a link for more information on the company’s web site.  Such links are helpful in supplying additional information to interested and active stakeholders.

 

Firms that seek to engage stakeholders through social media create certain expectations including responding when there are concerns.  The computer-generated response might be done due to limited staff and resources but can make the situation worse.  As mediafirst noted, Nectar could have at least created different versions of their set response.  Social media can create additional crisis risks, especially if the social media messages are deemed in appropriate or ineffective.

 

Questions to Consider

 

  1. Why would this qualify as a paracrisis?

 

  1. What factors could push this to becoming an actual reputational crisis? What factors could prevent the escalation of the paracrisis?

 

  1. How can a firm balance the demands of responsiveness with the limited resources that might be assigned to social media? Is no response better than a computer-generated response? Why or why not?

Our Product is Where? Tiki Torch’s Unhappy Publicity

Ideally, company’s want celebrities to use their products so that when the media snap pictures, the product gets publicity.  But sometimes people use your product and you wish they would not.  Such was the case for Tiki Brand Products.  During the pro-white rally in Charlottesville, VA, the company’s Tiki torches featured prominently in stories about the white supremacists carrying the Tiki torches.  Search for a story about evening march and you will see images of the Tiki torches.  No one suggests Tiki Brands Products were sponsoring such an event but the product was linked to the protests that turned violent and deadly.  Tiki Brand Products responded with the following comment on its Facebook page:

 

TIKI Brand is not associated in any way with the events that took place in Charlottesville and are deeply saddened and disappointed. We do not support their message or the use of our products in this way. Our products are designed to enhance backyard gatherings and to help family and friends connect with each other at home in their yard.”

Luckily people agreed with the company and the responses were largely supportive such as this one:

“Thanks for making a statement. It’s too bad that the oh-so-charming crowd of half-wit incompetent torch-bearers decided to use your products, but it’s not like we can blame you. Certainly, you didn’t say, ‘Oh hey, let us sell you a truckload or torches at a deep discount for your hate rally.’

Take heart. Your apology is spreading across Facebook. Your products are made for friends and families to gather in love. We all know this. Their misappropriation of your products is not a reflection on you, but a reminder of how much of a perversion they make of the symbols of life in our country.

Questions to Consider

1.  What are the pros and cons of Tiki Brand Products making a public statement?

2.  Why do you think the company used its Facebook page and not its web site for the statement?

3.  What are some the advantages Tiki Brand Products has when dealing with the situation?

4.  What other actions and/or communication would you take and why?

Note to Wells Fargo: Repetition is not Good for Crises

The data from research studies clearly indicate a history of crises is problematic for an organization.  Multiple crises increase attributions for crisis responsibility (and attendant damage to the organization) because it indicates stability for crisis inducing behavior.  This is part of what has been called the Velcro effect because past crises attract negative views just as Velcro attracts fuzz.

 

Wells Fargo cannot seem to avoid taking actions they know can hurt their customers.  I must disclose Wells Fargo owns our home mortgage but it was sold to them and we had no choice in the matter.  Last year it was found Wells Fargo employees created extra accounts for over 2 million customers without their knowledge.  Over 5,000 employees were fired after that crisis/scandal.  This July Wells Fargo admitted it had charged people with automobile loans for insurance they did not need.  The improper insurance was charged to around 800,000 people.  About 274,000 of those customers were forced into delinquency with 20,000 to 25,000 having vehicles repossessed.  In addition to the financial damage, Wells Fargo has hurt their customers in many other ways including their credit scores and access to vehicles.

 

To make matters worse, Wells Fargo was aware of the problem since July of 2016.  The company had the consulting firm of Oliver Wyman investigate the situation.  The New York Times made the story public when if published a story based upon the internal report.  Wells Fargo clearly missed the chance to use stealing thunder on this crisis by not disclosing what it knew when it knew it.

 

Once the crisis/scandal was public, Wells Fargo began posting messages online including its webs site and on Twitter.  Here is the text from the response:

 

Wells Fargo CEO Tim Sloan shared his thoughts with team members about making things right for auto insurance customers.

July 28, 2017

Editor’s note: On July 27, CEO Tim Sloan sent the following companywide message.

On July 27 Wells Fargo made an important public announcement about the steps we are making to build a better auto lending business and to address efforts we are taking to make things right for some customers in regard to our vehicle Collateral Protection Insurance (CPI) Program.

In addition, The New York Times has published an article based on a preliminary report that we commissioned several months ago to help us ensure that we make impacted customers whole.

Customers’ auto loan contracts require them to maintain comprehensive and collision physical damage insurance on behalf of the lender throughout the term of the loan. As permitted under those contracts, Wells Fargo would purchase CPI from a vendor on the customer’s behalf if there was no evidence — either from the customer or the insurance company — that the customer already had the required insurance.

However, in July 2016 we initiated a review of the CPI program in response to customer concerns and determined that certain external vendor processes and internal controls were inadequate. More important, we discovered that those deficiencies inadvertently harmed some of our customers. We discontinued the program in September 2016 and immediately started work, with the help of independent consultants, to ensure that our remediation plan addresses customer situations in a thoughtful way.

Wells Fargo reviewed policies placed between 2012 and 2017 and identified approximately 570,000 customers who may have been impacted and will receive refunds and other payments as compensation. In total, approximately $64 million in cash remediation will be sent to customers in the coming months, along with $16 million in account adjustments, for a total of approximately $80 million in remediation. In some cases we already have refunded customers, and the remainder of the remediation program — which begins in August and concludes by the end of this year — is still being finalized.

Beyond this remediation, we’ve taken multiple steps to strengthen the Dealer Services business. Just this week, Dealer Services announced a new structure and other recent changes include centralizing collections, tightening our credit standards, increasing oversight of third-party vendors, enhancing our risk management practices, and hiring new leaders and team members.

Auto lending is an important business to Wells Fargo because it’s vital for our customers to have access to affordable vehicle financing that enables their everyday lives. Today’s announcement underscores our long-term commitment to the business and to conducting it in the right way.

We are deeply sorry for any harm we caused our customers, who expect and deserve better from us. Situations like this one reinforce the importance of continuing to examine every aspect of our business. We will acknowledge mistakes and take responsibility for our actions. On those days, I appreciate that it sometimes can be challenging to keep up the tremendous effort you make each day for our customers and for our company. I believe in the work you are doing. I believe it’s making a significant difference and that a brighter future lies ahead for all of us as we build a better, stronger Wells Fargo.

Thank you.

Questions to Consider

 

  1. How effective do you feel the Wells Fargo response will be for current customers? For potential customers?

 

  1. How important is compensation for this crisis? Why?

 

  1. How important is an apology in this crisis? Why?

 

  1. How badly will knowing Wells Fargo withheld information hurt efforts to repair the damage from the crisis?

 

  1. What role does the past crisis/scandal play in shaping this crisis/scandal?