It’s not uncommon for a company or organization to face bad news that temporarily hurts its reputation. But not all reputation-harming news is the same degree of bad. For Volkswagen, what about the revelation that a group of its employees manipulated on-board software to falsify emissions results for 11 million diesel cars? Yeah, that’s about as bad as it gets.
Can the brand withstand this crisis?
Yes it can, but only with a thoughtful brand strategy focused on honesty, communication, action and long-term health.
So, first, for any company rocked by scandal, there must be visibility and accountability – and that’s going to hurt. So has the pain been for Volkswagen. The otherwise well-regarded CEO resigned. The recently named President of VW North America quit. More details about the extent of the wrongdoing arise nearly each week. VW sent letters to all customers admitting wrong-doing. Dealerships are stuck with inventory they’re not allowed to sell. And the company was hit with a downgraded credit rating.
All such actions are necessary before rebuilding the business and its brand. There can be no hiding or downplaying the crisis. The company must communicate frequently with the public, especially to customers.
In cases like this, it’s imperative the company show it is and will hold people accountable. That typically comes in two waves. First, oust representative leadership to show how seriously the company is dealing with this. Second, find and deal with the employees who actually committed the crime. As of the publishing of this article, VW is still grappling with that second phase of accountability.
It’s critical that VW owners know the company, as a whole, is on their side and will provide some form of compensation and assurance to keep them loyal to the brand. A full resolution for something of this scale can take months, if not years. But showing progress, early on, is important for recovery of its reputation.
VW is not the type of company or brand people want to see fail. Brand studies show consumers have had great admiration for the Volkswagen brand for decades. Also, consumers – not just VW’s – have short-term memories. So the quicker VW gets through the admissions, the punishments, and the compensations, the sooner investors and consumers will move on. Anything short of completing those three phases means the brand suffers.
Companies in VW’s shoes must concentrate on continual action over words. Or at least follow statements quickly, with action to support the promises. VW has a long way to go, but this is not a brand that’s going away in the foreseeable future.