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My Business is in Crisis! Now What??

Posted by Nick Matarazzo on February 11th, 2013 at 6:35 pm

Toyota’s mass recalls demonstrate how using digital to address issues head-on helps lessen negative brand perceptions.

jumpstart automotive group, toyota 2012 recalls, digital marketing crisis communications2012 could be dubbed the ‘Year of the Recall’ for the auto industry with various automakers calling back more than 14 million cars in 12 months for inspections and repairs involving safety issues.  For perspective, nearly 14.5 million cars and light trucks were sold last year.  The number of cars sold versus those recalled was a near wash by year’s end.

And it was recently announced that Toyota plans to settle an estimated $1.3 billion in class action claims involving sudden, unintended acceleration first reported in 2009 in certain Toyota, Scion and Lexus vehicles.  The anticipated settlement would be the largest payout by any auto company, ever.

What’s interesting about 2012 is that in spite of widespread safety issues, auto shopper interest saw negligible impact.  In fact, year-end sales were 13 percent better than 2011 and the best we’ve seen in the past five years.

So, what’s going on here?

Maybe it’s a recovering economy or a testament to the loyalty of certain car shoppers who, despite all odds, remain steadfastly devoted to a particular brand. Or, perhaps it’s consumer indifference, which has adapted over time to safety issues that, in recent years, have become the norm rather than the exception.

More than any other factors, I believe the reasons automakers have fared well in the midst of seemingly insurmountable obstacles are twofold.  First, there have been drastic improvements in the way auto recalls are handled. In tandem, auto marketers have optimized digital to successfully speak to—and listen to—their customers in times of crisis.

Toyota in Crisisjumpstart automotive group, toyota camry recall, digital crisis communications

In 2009, on the heels of a crash reportedly caused by sudden, unintended acceleration that claimed the lives of four people, additional reports began emerging of sudden acceleration problems in a number of Toyota and Lexus vehicles.

The automaker’s top-down management style was cited as the culprit for the fundamental curtness in which an ever-growing wave of consumer complaints was addressed.  Amid accusations of ignoring hundreds of complaints for almost 10 years prior and being rebuked by the National Highway Traffic Safety Administration for “misleading” comments in a press release, Toyota was criticized for sitting on its hands by failing to effectively communicate with its customers along the way that there was indeed a problem it was making every effort to fix.

In a February 2010 Jumpstart Automotive Group Survey, 80 percent of respondents indicated they’d buy American on the heels of the Toyota crisis and 51 percent indicated the automaker’s safety issues had changed their perception of the brand, leading them to eliminate it as a consideration for their next vehicle purchase.

Turning to Social to Calm Concerns

jumpstart automotive group, digital automotive marketing, jim lentz toyota crisisThat same month, Toyota realized the need for open lines of communication with its customers in the wake of public backlash and turned to Digg (with roughly 40 million monthly unique visitors at the time)  to offer up Jim Lentz, Toyota Motor Sales USA president, to answer questions voted on by fans in a video Digg Dialogg.

Around the time of the first Digg campaign, the automaker also launched “Toyota Conversations” on TweetMeme to aggregate top stories being tweeted about Toyota.  It took to YouTube to post an apology by Lentz explaining the sticking accelerator pedal situation in recalled Toyota vehicles while assuring customers its dealers had already begun repairs on floor mat issues from an earlier recall.

Toyota’s better late than never PR and social media campaign proved effective, bottoming out negative consumer opinions about the brand.  Industry analysts praised Toyota’s proactive social media approach, crediting it in part to helping lessen the recall blow.jumpstart automotive group, toyota conversations, digital automotive marketing

Toyota in Fast Forward: A New Approach

This past October, the automaker announced a recall of 7.4 million vehicles worldwide—the largest number of units in Toyota’s 75-year history as well as the auto industry’s single largest recall since 1996—due to a faulty power window switch that could melt and potentially catch fire.  One month later, it announced another recall involving 2.8 million vehicles due to a steering glitch.

Not only were the latest Toyota call backs mass and swift, digital communications efforts were candid and clear.  Malfunctioning components and potential hazards were outlined, and the repair process was described in detail.

Recently, Jumpstart gauged the behaviors of approximately 19 million monthly car shoppers across our network of 14 automotive websites in the weeks following the October and November recalls.  Our analysis revealed that interest in Toyota cars and trucks was virtually unaffected.

During the four-week period following news of the 7.4 million vehicle recall (from October 10 to November 10), shopper interest in Toyota cars and trucks across Jumpstart's suite of websites remained relatively strong with a meager 0.4 percent decline in share at an average of 9.0 percent compared to the first 10 months of 2012.

Following November 14, when it was announced that 2.8 million vehicles were being recalled, Toyota's shopper interest held relatively steady at a tiny 0.1 percent decline over the prior two weeks.

Jumpstart Analysis Toyota Average Monthly Share of Brand Shopping
Jan 1 – Oct 10, 2012 9.4%
Oct 10 – Nov 10, 2012 9.0%
Nov 14 – Nov 28, 2012 8.9%
Total Variance in Average Monthly  Shoppers
CY 2009-2010 -1%
CY 2010-2011 +15%
CY 2011-2012 (Jan-Oct) +13%

jumpstart automotive group, digital automotive marketing, toyota crisis communications

Sales data indicates consumers are embracing the brand in record numbers, with 9.7 million Toyota vehicles sold in 2012—its biggest sales year ever. Granted, Toyota customers are fiercely loyal in general, but the manner in which Toyota handled its latest mass recalls proved much more effective in mitigating negative opinions.

Digital marketers have access to the most powerful communications channels available today.  Never before have we had the capability of real-time, two-way dialogue—an immediate and reciprocal communications stream enabling us to allay concerns, answer questions, address problems and tap into the opinions of the people who matter most—our customers.

Using these channels to 1) acknowledge problems clearly and quickly 2) explain solutions to problems and distribute messages broadly and 3) address consumer concerns in real time is always the best approach when mitigating a crisis.

Nick Matarazzo is CEO of Jumpstart Automotive Group, an innovative marketing solutions provider for automotive advertisers.

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