Death of the ‘social media crisis’

First published on Social Media Today

There is much talk in social media and marketing circles about ‘digital’ or ‘social media’ crises.

There are no such things.

A crisis is a crisis, a one-off incident or series of events that seriously impacts the reputation and/or performance of an organisation – think BP’s Mexico oil spill, the BBC’s Newsnight meltdown or Yum Brands’ recent KFC woes in China.

While the internet and social media can escalate and amplify both ‘digital’ and ‘traditional’ issues, the great majority of significant reputation problems directly attributable to social media are small.

According to study by law firm Freshfields Bruckhaus Deringer, operational crises such as significant product recalls or environmental lapses have the greatest long-term impact on a firm’s share price (and reputation), while behavioural crises such as rogue employees or corruption have the severest short-term impact.

This feels accurate, and it is useful to see it quantified.

Freshfields_crisistypes

Here’s how Freshfields categorise crises:

  • Behavioural: allegations of illegal or questionable conduct by the company or specific employees, including claims of bribery and corruption; senior employee misconduct or human rights violations.
  • Operational: where the company’s ability to function is seriously impaired, such as significant product recalls or environmental incidents.
  • Corporate: a crisis affecting corporate or financial well-being, including liquidity issues or material litigation.
  • Informational: where a company’s IT infrastructure or electronic data systems are seriously impacted, including system failures; hacking and loss of customer data.

Most incidents emanating from or being played out in social media fit into one or more of the categories above. Research (see below) indicates that the majority of social media risks are informational in nature.

McKinsey-Risks-Use-of-Social-Tech-Mar2013

Worryingly for reputation and risk managers, the most damaging in terms of reputation are behavioural and involve their own employees. Experience and observation suggest the main drivers of so-called ‘digital’ reputation issues are:

  1. Customer service – complaints about poor product quality and/or customer service eg. Vodafone’s Vodafail in Australia
  2. Customer feedback – failure to listen to customer needs, requirements and concerns eg. Netflix’s sudden price hike
  3. Marketing – inappropriate, misleading or offensive marketing and advertising eg.
    Nivea’s Re-Civilise campaign
  4. Social media campaigns – often caused by a lack of alignment between marketing and PR eg. #QantasLuxury or #McDStories
  5. Employees – disgruntled or poorly trained employees eg. Domino’s Pizza mucus video.

Of these, only inappropriate use of social media by employees, failed standalone social media campaigns and poor online customer service can be construed as ‘digital’ and result largely from inadequate professionalism and a lack of co-ordination between marketing, sales, PR and customer service.

Smart organisations have learnt to educate their people about their online behaviour and to integrate their social media campaigns and online customer service.

Regrettably, bona fide crises will continue. But the death of the ‘social media’ crisis is nigh.

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