Penn State, Target, Bank of America, Lowe’s, and Netflix did not learn The Lesson of 2011
by Katie Delahaye Paine
There are no shortages of “Worst PR of 2011” lists. Just Google it, and you’ll find something like 101 million. What is amazing is the consistency. The following companies are showing up on virtually everyone’s list of top 10 PR debacles:
- Lowe's – For its abandoning “American Muslim.”
- Target - For its handling of Black Friday working hours.
- Bank of America - For its handling of the $5 debit card fee.
- Netflix – For its handling of its pricing increase and Qwikster.
- Penn State – For its handling of the child abuse scandal.
As I pondered what these organizations had in common to land them in the same proverbial vat of manure, I had a major WTF? moment. With the exception of Bank of America, (which is the company that everyone loves to hate, including investors these days), the rest of these brands were beloved. And now they’re showing up next to Anthony Weiner, Charlie Sheen, and Herman Cain.
I remember when Target was seen as way nicer than Walmart; when Lowe's was way cooler than Home Depot; when Netflix was generally assumed to be taking the entire video market away from Blockbuster; and when Penn State was admired by anyone who loved football. All these brands are now fallen favorites, foundering in the treacherous waters of a recent scandal.
Blame PR for Board Room Bungling?
While it’s easy to blame the PR department, I’m not going too far out on a limb to suggest that most of the decisions that lead to these scandals were probably made in a board room, and that PR was told later. Can’t you just see the scenario?:
The Setting: A mahogany-paneled board room at corporate headquarters.
The Attendees: Board of Directors, COO, CEO, CFO, and possibly the CMO.
The Presentation: The COO presents a detailed PowerPoint on why the economy has dictated the necessity to... (fill in the blanks here: add fees, increase working hours, cancel sponsorship, increase prices, or avoid legal costs).
The Discussion: Consists of: “Is there any discussion? Questions?” One board member meekly raises a question about timing and potential PR issues, but her fears are quickly dealt with.
The Vote: “All those in favor?” Everyone raises his or her hands.
The Announcement: Then the CMO walks to PR office and says, “Write up a release and put it on Facebook.”
And then all hell breaks loose.
The Lesson of 2011
What these crises all have in common is someone in charge who clearly has not learned The Lesson of 2011, so well articulated by News Group’s COO Fadl Al Tarzi:
“If you make people angry enough, you will be replaced.”
And, lest you think it only applies to dictators, I now shop at Home Depot, not Lowe’s; I now use Comcast, not Netflix; and I now bank locally. And, I have even been known to darken the doors of a Walmart. Since I wasn’t ever a Penn State fan, I can’t say that my allegiance has shifted.
But it’s not just me. Look at the stats:
- $4.5 to 5 billion in assets was transferred out of big banks and into local credit unions this year.
- Walmart’s stock is up 10%, while Target’s is down 15%.
- After years of losing out to Lowe’s, Home Depot is outpacing its rival in growth, store sales, and stock price.
- This year, Netflix’s share price is down 60% and it lost 800,000 customers.
- Penn State has been rejected by three of its high school picks, and Moody’s is reviewing its credit rating.
And they say there is no way to put a financial value on PR.
So, how about their reputations? Can they be saved?
I think all their images are damaged permanently. Their relationships with just about all of their stakeholders have been seriously harmed by these events. They may be able to earn the trust back, eventually. But, business-wise, they’re only going to come back if their competition fumbles.
Katie Delahaye Paine is CEO of KDPaine & Partners, a company that delivers custom research to measure brand image, public relationships, and engagement. Katie Paine is a dynamic and experienced speaker on public relations and social media measurement. Click here for the schedule of Katie’s upcoming speaking engagements. Katie and Beth Kanter are authors of the book “Measuring the Networked Nonprofit,” to be published this year by Wiley.