Friday, February 05, 2010

Dealing with customers - now Toyota is bungling it! Inconvenience?

The Platinum standard for dealing with the public for product problems is the "Tylenol recall of 1982." This morning's press conference from Toyota president Akio Toyoda shows that Toyota is really bungling the PR issue.

The Wall Street Journal's Dispatch blog writes:
"A wooden-looking Akio Toyoda is reading from a script and apologizing. ...The first bow by Mr. Toyoda was a perfunctory one by Japanese standards. ... While he has apologized for 'causing an inconvenience' to customers, there has been no deep, long bow that is standard in these type of press conferences."

I had written a couple of days back that the issue seems to have been primarily sense and respond. I think the PR issue is making it a lot worse than it should be.

In 1989, Lexus initiated a voluntary recall of all Lexus LS sold till then, based on a couple of customer complaints in wiring and brake light. In 20 days they replaced the parts on all affected vehicles. Toyota sent technicians to pick up, repair, and return cars to customers free of charge. They also flew in personnel and rented garage space for owners in remote locations. This response helped establish a well deserved reputation for customer service. It is hard to believe that it is the same company that is bungling the public relations this time.

I guess the contrast between the Lexus episode and the current Toyota recall episode again proves that “There’s no such thing as a permanently great company or a permanently great industry. All industries rise and fall as do companies. However, there are permanently smart strategic moves” quoting W. Chan Kim & Renee Mauborgne from the Blue Ocean Strategy.


Going back to Tylenol episode and comparing that with the current Toyota issue - what are the differences?


Perception versus Reality:
Johnson and Johnson in 1992 might have thought that people were overreacting to the problem. They could have said that it was caused by a murderer and it is not their fault. But they understood that perception was reality. Toyota seems to be missing that. People might be overreacting to the acceleration problem - it might be something that happens very infrequently and might be easily controlled if the driver knows what to do. But people are worked up about it. Calling it an *inconvenience* is a slap in the face.


Visibility:

In 1982, James Burke, the CEO of Johnson and Johnson, appeared in television ads and at news conferences informing consumers of the company's actions. In a news conference only 45 days after the tragedy, he gave detailed chronology of what J&J had done. He was a very visible presence and that helped customers feel comfortable. Toyota seems to have not gotten this. The press conference was perfunctory. Hope they follow up this conference call with more substantial engagement with the public - either the CEO or some other public face of Toyota.
Speed:

1982 and 1986, when cyanide was discovered in the Tylenol bottles on the store shelves, J&J immediately and indefinitely canceled all television ads for Tylenol, established a hot-line to answer consumer questions and in 1986 issued a nationwide warning minutes after news came out that people should not use Tylenol capsules. They offered refunds or exchanges to customers who had purchased Tylenol capsules. The speed of reaction earned a lot of positive brand vibes. Toyota, fairly or unfairly, is being accused of hiding the complaints and not reacting to them. Fighting that perception by saying "No, we did not do that" is not going to help. Show rapid positive actions and communicate them widely and that is the only way to get people to forget the perceptions of mis-steps.


Thoughts on what else Toyota could do differently to reduce the damage to their brand?


Karthik

1 comment:

  1. Good first step taking responsibility addressing the perception versus reality issue talked about above.
    http://www.youtube.com/watch?v=XZoBfpm1zHg&feature=player_embedded

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