How Crisis Management Can Change Your Business and Customer Relationships

The restaurant was teeming with the dinner rush when the first patrons began getting sick. Some clutched their stomachs in pain. Others sprinted for the bathrooms. Within hours, reports were flooding in of hundreds of customers becoming ill with food poisoning after eating at the popular chain. Health inspectors descended, TV news trucks camped outside, and #BoycottGardenGrille started trending on Twitter. For the leadership team at the previously beloved eatery, it was a waking nightmare.

No organization ever wants to find itself in the throes of a crisis like this. But in today‘s complex and fast-paced business world, it‘s increasingly not a matter of if a major problem will hit, but when. Crises can take many forms – from product safety issues and data breaches to employee misconduct and natural disasters. And they are becoming more frequent and severe. In fact, PwC‘s Global Crisis Survey found:

• 69% of business leaders have experienced at least one corporate crisis in the last 5 years
• The average number of crises experienced in the last 5 years is 3
• 95% of leaders expect to be hit by a crisis in the future
• 56% of crises resulted in severe financial impact like damage to revenue and profits

Yet the same survey reveals that over half of companies don‘t have a dedicated crisis response plan in place. This lack of preparedness is a recipe for disaster. Because in the age of social media, a crisis can quickly spiral out of control, causing lasting damage to a company‘s reputation, customer relationships, and bottom line.

The good news is that with proper planning and execution, organizations can not only weather a crisis, but actually emerge stronger. A well-handled crisis response demonstrates competence, accountability and trustworthiness – all of which can deepen customer loyalty. In one example, Tylenol‘s market share actually increased after Johnson & Johnson‘s lauded response to the cyanide tampering scare in 1982.

So how can your organization get crisis-ready? It starts with understanding exactly what crises could impact your business and having a thorough response plan in place before you need it. Here‘s a roadmap to get you there.

Preparing for the Worst

Benjamin Franklin once said, "By failing to prepare, you are preparing to fail." That adage is especially apt when it comes to crisis management. The worst time to wing it is when you are in the eye of the storm. Effective crisis response requires significant legwork in advance.

The first step is assessing your risks. What keeps your leadership team up at night? A vulnerability audit can uncover potential exposures, considering:

• Operational risks like supply chain disruptions, power outages, labor disputes
• Financial risks like cash flow shortages, accounting irregularities, client bankruptcies
• Compliance risks like regulatory violations, lawsuits, investigations
• Technology risks like data breaches, system outages, IP theft
• Personnel risks like executive misconduct, harassment allegations, mass layoffs
• Reputational risks like social media backlash, negative press, product quality issues

Prioritize the crisis scenarios that are most likely and would be most damaging for your organization. Then, develop concrete response plans for the top risks. The Department of Homeland Security recommends that a crisis plan include:

1. Activation protocol – What events will trigger the plan and alert the team?
2. Roles and responsibilities – Who will be on the core crisis response team and what are their duties?
3. Communications strategy – What are the key messages for each stakeholder group and who is authorized to communicate them?
4. Information and resources – Where will the team work, how will they share updates, what resources will they need access to?
5. Response procedures – What specific actions will be taken in the first minutes, hours and days?

It‘s also a good idea to create a crisis severity matrix to quickly determine the level and scope of response needed for a given situation. Deloitte suggests categorizing crises based on:

Level	Example	Severity	Scope
1	Website outage	Low	Functions within normal resources and policies
2	Negative social media post	Minor	Some coordination between functions
3	Product contamination	Major	Serious impact and coordination across functions
4	Workplace violence	Extreme	Company-wide, significant external resources and oversight needed

Regularly practice the plan with tabletop simulations of various scenarios to surface any gaps or flaws. When the real thing hits, your team will act more nimbly under pressure if you‘ve rehearsed.

Responding Rapidly and Transparently

In a crisis, the goal is to quickly gain control of the narrative and protect your reputation. That means communicating early, often and thoroughly. As PR expert Jonathan Bernstein advises, "Tell it all, tell it fast, tell the truth." Silence or "no comment" will be interpreted as guilt or indifference.

Some key crisis communications principles:

• Centralize messaging – Appoint one spokesperson and ensure the entire organization is in lock-step. Mixed signals erode credibility.
• Monitor mentions – Continuously track what‘s being said about the situation on social media, news outlets, and blogs. Identify and engage key influencers.
• Empathize sincerely – Those affected don‘t want to hear corporate speak. Use a human tone, acknowledge accountability and convey genuine concern.
• Control your channels – Don‘t just play defense by responding to inquiries. Proactively push out your side of the story on your website, emails and social handles.
• Provide resources – Make it easy for people to get regular updates and have their questions answered via hotlines, microsites, and trained spokespeople.

Perhaps the most important stakeholder group to engage is your own employees. They are the face of the company and can be powerful brand ambassadors. Make sure they feel informed and equipped to answer questions from concerned family, friends and customers. When pet food maker Blue Buffalo faced a class action lawsuit over alleged false advertising, they created an employee portal with key messages, Q&As and background to align the entire workforce.

Learning and Evolving

As the immediate fire dies down, don‘t lose momentum. A crisis provides a burning platform to institute changes that will help prevent recurrences and make the organization more resilient overall. Conduct a thorough post-mortem to identify what you did well, where you fell short, and what you will modify going forward.

Capture details like:

• How quickly was the crisis detected and response mobilized?
• Were the right personnel engaged and empowered to act?
• Did the crisis plan account for everything that was needed?
• How effective was internal and external communication?
• What were the ultimate impacts on reputation, people and finances?

Use those learnings to update your crisis management program, close any gaps in business continuity planning, and provide additional training. Don‘t just put your plan back on the shelf until the next incident. Schedule recurring drills and incorporate emerging risks and scenarios over time.

Some crises can actually present opportunities. When Airbnb homes were damaged by Hurricane Sandy in 2012, they quickly instituted a Disaster Relief Program to provide free short-term housing for displaced residents. It not only aided their community, but generated significant goodwill for the company. Similarly, when Starbucks closed 8,000 stores in 2018 for racial bias training after an incident in Philadelphia, they designed an immersive experience and publicly shared original content from it. This demonstrated real commitment vs. just checking the box.

The New Normal

If crisis management wasn‘t already complex enough, a confluence of factors is making it even trickier. Thanks to the hyperconnected, hypersensitive environment we now operate in, the stakes have never been higher.

Consider that:

• Two-thirds of customers would stop using a brand if it failed to address a crisis properly (Crisp)
• Over one-third of stakeholders believe crises have become more disruptive and harder to manage in the last decade (Morrison & Foerster)
• 29% of companies worldwide were the target of a corporate activism campaign in 2020, up from 25% in 2019 (Alliance Advisors)

Social media is a huge amplifier, giving any individual a megaphone to broadcast complaints or outrage to the world. "Cancel culture" means organizations are under more scrutiny than ever for their actions and affiliations. Employee activism is also rising, with workers speaking out on everything from sustainability to political donations. And the prolonged pandemic and social justice movement have only heightened expectations for companies to take strong stances and lead with purpose.

All of this means that what previously may have been considered a minor issue can metastasize into a full-blown crisis at warp speed. Companies must have their ears to the ground and their teams on high alert to detect the early warning signs and respond in a way that aligns with societal expectations.

Ultimately, while you can‘t always avoid a crisis, you can choose how to show up in those moments. When you put people first, act with integrity, and communicate with transparency, you build trust. And trust is the foundation of all stakeholder relationships – with customers, employees, partners and the public at large.

In an environment where trust is increasingly divided across different institutions, businesses have an opportunity and an imperative to deepen and leverage that trust. Those that do will have an incredible competitive advantage. According to the Edelman Trust Barometer:

• Customers who trust a brand buy from it first, stay loyal to it, and advocate for it
• Employees who trust their employer are more motivated, loyal and willing to advocate
• 68% of investors would not invest in a company with poor trust scores

By making crisis preparedness a strategic priority, you aren‘t just buying an insurance policy. You are making a down payment on long-term brand equity and stakeholder relationships. Because trust takes years to build, seconds to break, and forever to repair. Don‘t wait for a crisis to start building yours.

As you bolster your crisis management muscles, consider:

• Expanding your crisis planning team beyond just PR to include HR, legal, IT, and other critical functions
• Developing a crisis communication playbook with templated messaging, FAQs, and stakeholder contact info you can grab and go
• Investing in social listening and AI analytics tools to help you detect potential issues before they escalate
• Running crisis simulations regularly to ensure your plans are up to date and your team is ready to mobilize
• Identifying and training a broader set of spokespeople to add capacity and diverse representation
• Baking purpose and values into everything you do so your conduct in a crisis aligns with your stakeholders‘ expectations

No one ever wants to go through a crisis. But how you show up in those inevitable moments of truth is what separates the organizations that survive from the ones that thrive on the other side. By preparing now, you will build the resilience and the reservoir of trust to withstand any storm that comes your way. Your customers, your employees and your bottom line will thank you.