Product Recalls done Properly reduces Reputation Risk

Many companies fear that widespread disclosure and publicity of product recalls may be harmful to their reputations.

It could be but it depends on how product defects and recalls are handled. These days stakeholders ask for no less, namely that they be informed, especially if the product carries a health & safety danger.

Since a good reputation for product safety and reliability is an essential ingredient of a company’s sales efforts. Handling product recalls professionally can go a long way to safeguard that valuable asset.

The new South African Consumer Protection Act will impact on recall procedures.

However there are other factors to consider:

1. Recall communications is an expensive exercise. It will necessitate the use of mass media techniques depending on the circumstances, and the role of advertising agencies and other role players in this exercise will have to be factored in.

2. Negative publicity about a product before a company can officially respond can be damaging and may lower trust in the product name.

3. A Recall can have a ripple effect, as it may tarnish the reputation of the organisation and its other products. Act speedily and with resolve is key.

4. There may be product liability expenses. In many cases in the USA, litigation resulting in class action law suits have been extremely expensive. (Study Merck and its Viox withdrawal, which has run into billions of dollars).

As with any crisis, there are two things to remember, namely the reality of dealing with the crisis and the perceptions created during the crisis.

The reality of the situation involves dealing with the actual withdrawal and the perception side deals with informing various stakeholders about the withdrawal.

Here then is a short checklist that I have prepared that you may find handy. My advice is to do your homework before a recall occurs. Remember bad things happen to good companies (Murphy’s Law).

The checklist is by no means comparable to a a proper guide compiled by an external consultant working with your crisis team, but should at least prompt your thinking before a recall actually happens..

Product Recall Checklist

1. Because product recall communications and actions are complicated, close coordination of all the activities of various managers will be needed. Many managers will be affected; Sales, Distribution, packaging, quality control, customer service, PR and legal counsel. Outside stakeholders  such as the Media, Advertising Agencies and the authorities such as the SABS may be involved. Who will act as Coordinator?

2. Where outside specialists might be involved, do you have them readily identified as well as SLA’s drawn up, before a recall happens? Consultants and experts identified at the last minute can be very expensive and often there is no professional working relationships between the parties.

2. Who will issue a general statement issued to the widest possible publicity distribution, spelling out the reasons and steps for the implementation of the recall as well as the steps taken to prevent recurrence?

3. Who will prepare the Recall procedure? How will customers return the product? (This protocol should be created prior to a recall)

4. What about Dealer logistics?

5. How will you keep your stakeholders informed about the success of the recall? Remember that some stakeholders will want to know how many products have been returned and at what cost?

6. Who will monitor Media reaction?

Product Recalls executed professionally can go a long way in allaying the fears of the consumer stakeholder and will bring and instil much needed trust.