Can Essential Brands Withstand Bad PR?

 

It seems like almost every week, a major brand is in the news for a public blowup. Whether it’s the off-color comments of their CEO, a viral video of customer injustice or reports of the company’s food causing serious illness, a cycle has been formed.

There’s an incident, news about the incident, public finger-wagging and threats of protests, projections about the doom of the company, thinkpieces after thinkpieces (Medium must salivate after a company does something dumb)… and then, nothing. A month later, another incident happens and we’re right back to where we started.

Companies such as Uber, United Airlines and Chipotle have made waves in recent months for various well-publicized scandals.

The battle between Uber and Lyft has been the most public example of bad PR at work. As more rideshare riders realize how Uber treats employees and drivers, they start to second-guess their decisions.

Lyft has capitalized on this, as the dominant Uber market share is starting to shrink. USA Today reported recently that Uber once held 90 percent of the ride-hailing market share, but over the past two years, that has slipped to 75 percent. Meanwhile, Lyft has gone from 21.2 percent up to 24.7 percent.

This goes to show that bad PR goes simply beyond harming the bottom line. It opens the door to competitors. It forces consumers to make a choice. Sure, Uber might be the cheapest way to get from point A to B, but is it something you’d want to contribute to? While Lyft has been the biggest benefactor of this, a host of other on-demand apps have risen to give Uber-hesitant consumers a more conscientious choice.

However, in the cases of United and Chipotle, they often have a dominating share of consumer choice. Unless you live in a major metropolitan area, your choices of airline might be slim. Likewise, for more rural and suburban areas, Chipotle is your best or only option at Mexican food that doesn’t come from a drive-thru.

You might think that in the case of these major companies, they’re able to weather the storm because they’re often the only game in town. That can change, though. Smart brands can disrupt these areas. Lyft can offer incentives to new drivers, undercutting Uber strongholds. Mid-range and mom-and-pop restaurants can establish footholds where Chipotle is the only place for a fresh burrito. Budget-friendly airlines such as Southwest could open a few more routes in underserved cities.

There is a definite long-term effect to bad PR on even the most infallible of brands. Hearing about unspeakable acts committed by high-profile executives or extreme injustices captured on video would make even the most fiscally conservative consumer pause. That hesitation, if scaled, can be a nightmare for brands.

Millennials, a growing force in spending power, want to make sure their dollar goes somewhere worthwhile. This is where the Uber vs. Lyft and United vs. Southwest decisions really matter. Consumers want to feel good about their spending.

Toxic PR may not always be enough to shutter a company in a day, but it definitely weighs on the decisions that consumers make day in and day out.

By Justin L.

Uber’s PR Problem

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Just a few short months after being publicly lauded for its kitten-delivering masterpiece, startup Uber is facing its most difficult PR battle to date.

A leak (though this is the kind of leak that companies want) revealed on Valleywag showed Uber’s impressive revenue growth. According to Valleywag, the company is raking in more than $200m in revenue and scaling its technology worldwide at a rapid pace. Tech bloggers speculated that Uber was aspiring to be more than just an app for people who need rides, aiming to be a lifestyle brand on par with behemoth Amazon.

David Becomes Goliath                                                                                                     

Once Uber revealed itself at the top of the podium, the target on its back grew larger. Uber was already in the crosshairs of taxi and regulatory commissions. And Uber did all of the right things to make itself an easy target.

Uber began taking big hits for its controversial surge pricing strategy. Users on Twitter complained en masse, posting photographic evidence of their outlandish fares with each new post topping the other. Instead of properly explaining or even attempting to assuage the outraged masses, Uber’s CEO Travis Kalanick responded with derision for his customers. Kalanick vigorously defended surge pricing (the jury is still out on whether it has affected Uber’s user base) and pointed to the basic tenants of capitalism to support his business strategy. Just compare Kalanick’s response to criticism to Evernote’s Phil Libin’s. As the VentureBeat article states, Libin does PR right.

Then, the real tragedy happened. On New Year’s Eve, Uber driver Syed Muzzafar struck and killed 6-year old Sophia Liu and put her brother and her mother in the hospital. Muzzafar told police that he was working for Uber and searching for fares. The horrible death that could have easily been prevented became an unfortunate battle cry for the anti-Uber crowd (mostly made up of taxi companies). Uber responded in an equally unfortunate way.

Crisis Communications Fail                                                                                            

Uber did exactly what companies shouldn’t do when tragedy strikes: they put out incorrect information (which they later rectified), didn’t apologize or offer any resolution for users of the service. Instead, they began washing their hands of any association with Muzzafar. When the news reached Uber, they initially immediately denied that Muzzafar was even an Uber driver, news that turned out to be incorrect. Though they likely were not deliberately lying to the public, their statement was irresponsible as they later admitted that Muzzafar was a driver on the system. When the tragic news occurred, Uber should have expressed empathy and stated that they were investigating whether Muzzafar worked for them, instead of categorically denying it without the proper facts.

Uber then stuck to their company messaging by proclaiming themselves to be a technology provider only (which conflicts with their reported aspirations as a lifestyle brand) and distancing themselves as far as possible from any responsibility for the tragedy. Missing in all of this was an apology or any emotion for young Liu and her family.

Uber’s statement was teeming with veiled language and blatant obfuscation that few could gain any measure of satisfaction with their actions. Nor was an apology proffered for initially denying Muzzafar’s status with Uber. Uber displayed zero emotion for the preventable loss of a young girl’s life and the irreparable damage to her family. But should Uber have shown emotion?

Brands Are People                                                                                                                  

In the new age of social media, brands can’t hide behind cold, corporate facades. When Uber is doing things like delivering kittens for adoption to make your day better, or delivering ice cream and Christmas trees, then it is presenting itself as an emotional brand. Acting like a human would have made Uber’s repeated rejections of their own liability in Sophie Liu’s death go down better among its user base who could easily imagine themselves being struck down by an Uber driver and having Uber wash its hands so callously. Uber’s responses were so universally criticized that Nissan backed away from its association in a recent commercial. Even startup-friendly outlet PandoDaily began posting critical articles (Carmel Deamicis’s recent post on Uber’s lack of criminal background checks on drivers is great).

The broader implications for Uber, and the numerous startups that share its business model (Lyft, SideCar, Airbnb, et al), is liability. And liability equals money. Uber immediately relinquished any liability for the actions of the driver precisely to avoid paying the large sums of money many (including the Liu family) would argue Liu’s family deserves, money that the driver Muzzafar likely would not have. Whether his insurance would cover any claims due to his using his vehicle for commercial purposes remains to be seen. Shouldn’t a company like Uber that claims to be “everyone’s private driver” show some responsibility for the people who use it?

One could argue that Uber isn’t liable for her tragic death, and apologizing would implicate them. But a more humane response than their calculated denials would not have been misconstrued as liability, and would have shown that Uber cares about the many people who use their service, and those like Liu who are affected by it.

In the end, Uber blatantly put its profits before people, a move that will never endear a company to its public.

The Future’s Still Bright                                                                                                    

Can Uber bounce back? Absolutely (remember when everyone thought Netflix was dunzo?). But Uber will need to put its money where its heart is, and learn to say a simple word that goes a long way: Sorry. It’s a word that’s even more powerful than cuddly kittens.

San Francisco Supervisor Jane Kim has posted information on donating to Liu’s family

Uber’s PR Win: Just Add Kittens

Brand marketers love to ponder what exactly makes something go viral on the webz. Our client John Montgomery has joked that it’s to add “magic fairy dust” and we’re pretty sure that he meant kittens. Because seriously, if you just add kittens, you’ll win the Internet.

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Look no further than today’s big (and smart) PR stunt from Uber that has everyone tweeting. They capitalized on National Cat Day and partnered with the absolute best brand to partner with on such a day (meme site Cheezburger), added adoptable kittens and tada, instant PR win. Uber is also donating proceeds to local shelters to make this extra feel-good.

The brilliant stunt is a good way for Uber to steer media attention away from some of its criticisms (largely stemming from angry taxi cab companies and regulation) and to bring kittens into people’s lives. Because there’s pretty much nothing better than kittens, except of course kittens with puppies (you’re welcome).