By Darren Ponsford, strategy and planning director, Blueview Group.
Product recalls are a critical and growing issue for consumer brands. Blueview Group’s latest research report on UK recalls, which compiled government and EU figures, revealed an upward trend in recalls, exposing an area of risk where many brands simply do not have contingency facilities in place
No worse impression is created, nor brand damage done, than in the situation where a company is uncontactable or unhelpful just when consumer concerns have been escalated by a product recall.
Manufacturers, suppliers and retailers need to urgently investigate how, in the event of a product crisis or recall, they can set up enquiry and advice channels that allow them to deal with consumer concerns, dispense additional information and, in the end, contain damage to their brands – without the whole contact infrastructure being unaffordable.
So what should they take into consideration?
1. Set up contingency service facilities
Companies must ensure that they have the measures in place to cope with extra demands on their contact centres.
Best practice, when a product recall crisis occurs, involves setting up proactive contingency service facilities, so that customers can easily contact the company with their concerns and the brand can effectively handle what can potentially be a difficult and damaging situation for a business.
2. Do not rely on existing care lines
Simply relying on existing care line facilities is quite inadequate. A recall will result in a vast increase in phone calls as worried customers look for more information.
Contact centre facilities set up to fulfil day-to-day needs are often quickly swamped, especially if the recall affects a large number of products or has a high profile.
In such instances, not only do customers find that they are unable to speak to someone regarding the issue if the company has no contingency plan in place, but contact centre agents become increasingly stressed.
3. Brief agents
Call centre agents need to be fully briefed on the recall and trained in the intricacies of the situation in order to be able to handle enquiries from concerned and potentially aggressive customers. Agents who are unable to answer enquiries can be as damaging to a customer’s perception of the brand as an inability to contact the company.
4. Act quickly
While reluctance to recall products is understandable due to the huge cost of recall, it is better to err on the side of caution as the price of brand damage, legal costs and fines associated with undue delays can be equally massive.
The commercial impact on Cadbury in 2006 when it recalled batches of chocolate due to a contamination with salmonella was significant when it waited as long as five months after the suspected contamination to initiate its recall. It also suffered considerable damage to its reputation.
5. Be aware of legal obligations
Companies must be aware of the legal risks associated with a recall. Under EU Directive 2001/95/EC on General Product Safety companies are obliged to notify the market surveillance authority or authorities within every relevant jurisdiction where dangerous products have been placed on the market.
Importantly, the obligation is to notify all relevant authorities: immediately in cases of emergency; within 3 days in cases of serious risk; and within 10 days in other cases.
Conclusion
With product recall levels expected to increase consistently each year, it is clear that the risk cannot be ignored. That product recalls have a damaging effect not just on brand sales, but also mid-term perceptions and choice of the brand, is beyond question.
However, if a product recall is properly handled, brands will be able to sharply reduce the negative effects.
The period during which customer loyalty to the brand takes a dip (measured by sales volumes) will be greatly compressed compared to the industry norm, with brand confidence recovering much more quickly than would otherwise be the case
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