Service and product failures are inevitable in business, irrespective of size and the nature of the business. The most important aspect of service and product failure is the way a brand recovers which ultimately determines how the market perceives it. The strategy that Ford employed to deal with the Ford Kuga saga presents the company as one that is oblivious to effective brand management. David Hagenbuch stated that, “brands can use service failures as an opportunity to build customer relationships”. When a brand experiences a service or a product catastrophe, it has two options:
- Face the problem head-on and find solutions as quick as possible to restore customer confidence or
- Simply ignore the problem and put the blame on others while losing customer confidence.
In the case of the Ford Kuga, Ford seem to have chosen option 2 and they will forever go down in history as the company that does not care about the wellbeing of their customers and that does not take responsibility for their actions. The world of risk management and public relations will never forget the Ford Kuga saga and it will be used as a classic example of bad crisis management, after sales service and decision making.
It all started in 2015, Reshall Jimmy (may his soul rest in peace) lost his life after his Ford Kuga burst into flames. Two reports pointed out that the fire was caused by an electrical fault in the car. However, Ford denied the allegations and conducted its own investigation which has not yielded any results a year later since the incident. Ford only met with Jimmy’s family in December 2016, which some reports stating that, they (Ford) showed no empathy for the passing of Jimmy. In an interview with SABC news, Ford CEO, Jeff Nemeth said Jimmy’s death should be treated as a separate issue because his death was not as a result of engine failure. Nemeth further admitted that the matter has gotten out hand.
Media reports state that Ford was alerted of the problem by an insurance company but did not act on the reports. It took about 47 more Kugas and summons from the National Consumer Commission before Ford could decide on a recall of the Ford Kuga EcoBoost 1.6 litre produced between 2012 and 2014. The recall affects a total of 4 556 Kugas in South Africa. In North America, Ford recalled over 400 000 units of the Ford Escape – the United States version of the Kuga – due to glitches in the engine.
After the recall announcement, some customers said they do not want their Ford Kugas anymore and are petrified to drive the car. This is a sign that consumers have lost confidence in the Ford brand. According to a Sunday Times report, the Kuga is presently worthless, as most car dealerships refuse to take it as a trade-in. The value of the car has also dropped tremendously, with some dealership valuing the top of the range Ford Kuga at R100 000.
Warren Buffett was famously quoted saying, “it takes 20 years to build a reputation and 5 minutes to lose it. If you think about it, you will do things differently.” Indeed Ford has undoubtedly lost its reputation through the manner in which they handled the Kuga fiasco. What will be interesting though, would be how Ford continues to perform in the market with their other products, from a market share point of view and how they recover and restore confidence to consumers.
According to Bruce Condit of the Allegiance Capital there are 7 critical steps to crisis management that Ford could have applied:
- Have a crisis management plan with clear objectives to protect any individual who may be affected by the crisis. The plan should also contain action to be taken in the event of a crisis.
- Identify a spokesperson to ensure that the company speaks with one voice and delivers a clear consistent message to the public, because crisis attracts a media attention.
- Be honest and open to help stop rumours and diffuse potential media frenzy.
- Keep employees informed to minimize the internal rumour mill that may lead to employees posting false reports on social media and giving customers false information.
- Communicate with customers and suppliers regularly. Customers should not learn about the crisis surrounding your brand through the media. The crisis communications plan should contain ways in which customers and suppliers will be updated regularly.
- Update early and often. It is better to over-communicate than to allow rumours to fill the void. Establish a social media team that will monitor, post and react to social media posts regarding the crisis.
Ford failed dismally to apply the aforementioned steps or any other crisis management strategy until it was too late. And for this reason, Ford gets a Slap! A slap for poor quality assurance! A slap for poor customer service! A slap for poor crisis management! A slap for ignoring market concerns! A slap for trivialising the death of Reshall Jimmy! A slap for taking their time at the expense of the customer! A slap for ignorance!
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Read full article on critical steps to crisis management: http://www.inc.com/bruce-condit/7-critical-steps-to-crisis-management.html