No two recalls are ever exactly the same. But all recalls share at least two similarities: They are complex and inevitable. We can only guess the details of a future recall and the true impact it will have on a company. Large or small, companies that have prepared recall plans and carried out mock recall drills are more likely to make it through these unexpected but inevitable events unscathed. For one big company, Toyota, the recall process is becoming steadily more complex and devastating as it drags on and affects more consumers worldwide.
In the coming weeks and months, Toyota will face intense public and legal scrutiny in the form of class-action lawsuits and congressional hearings. And that’s just in the United States.
By examining how Toyota has managed its massive recall, we can all learn several important lessons.
Work with regulators and lawmakers. Companies are responsible for monitoring adverse event reports and alerting regulatory agencies of any potential safety concerns. Failing to communicate promptly with regulators about these issues will undermine the agency’s trust in your company and raise doubts about your ability to make responsible decisions and execute a recall that protects consumers. Likewise, if the regulators are forced to come to you first, you can expect increased scrutiny and skepticism of your recall management across the board.
Quick and effective recalls are critical to consumer safety and brand protection. When regulators are involved from the outset, they can become allies in your effort to guarantee consumer safety. Proper communication is essential to putting your company in a position to mitigate the legal and economic risks of a recall.
Be in the consumer safety business. Now more than ever, Toyota is in the business of keeping customers safe, calming fears, and quickly coordinating repairs. Toyota must protect the goodwill and loyalty it built with consumers through years of excellent service and a history of safety awards for cars across its fleet.
During a recall, your company is no longer in the business of making products. It is in the business of protecting the public. When everything you stand for is at risk, your business model changes. Just as your company is in crisis during a recall, your customers are facing their own personal crises, particularly when they believe their own safety has been compromised. Everything you do during a recall must demonstrate genuine concern for the well-being of your existing and future consumer base.
Offer consumers an easy remedy. When a product fails to meet expectations or, in Toyota’s case, endangers consumers, it is impossible to avoid buyer’s remorse and negative attention to your brand. But offering an effective remedy and supplementing the solution with unfailing customer support will speak to the level of commitment Toyota has for its customer base and reassure the public that it is capable of correcting this and any future issue with its product line.
A critical part of the recall process is the remedy. The mistake that led to the recall is in the past. Providing a timely and effective remedy is your company’s opportunity to redeem itself. Appearing slow or incapable of responding will only increase public doubt and regulator concern. It is critical that you provide the right solution quickly and ensure that everyone involved – be they grocery stores, sales agents, or car dealerships – understands who will be delivering the remedy and providing the resources and answers the public requires.
Communicate, communicate, communicate. Without constant communication, there are only questions. Consumers ask whether they are safe in Toyota cars. Dealers wonder how they will handle repairs and soothe consumer fears. Before long, regulators will be asking questions about recall management.
During a recall there are many parties of interest – from regulatory agencies to consumers, dealers to employees, and investors to boards of directors. Regardless of the audience, it is critical that they receive the latest information as soon as it is available.
Be sure to plan for all possibilities and prepare to answer every possible question. Allow no surprises. It is how your company handles these challenges that will determine if the road ahead will be rough or smoothe. If you don’t control how the final chapter of this story is written, others surely will.
During a recall, your destiny is in your own hands. In the case of Toyota, how the company manages the massive recalls now underway will determine whether those recalls play out as a speed bump or a deep pothole that knocks the wheels off a once highly respected brand.
Mike Rozembajgier is director of recalls for ExpertRECALL and also blogs at www.ExpertRECALL.com/blog
To learn more about how to manage recalls, attend The Directorship Forum in June.