How to avoid a social media disaster after a big blunder: The Volkswagen case

It will probably cost a lot of effort and money to Volkswagen to regain its position as leading and reliable top class automaker in the world markets. The diesel emissions manipulation scandal will probably forever be a dark page in the company’s history. But amid the doom and gloom, the resignations of top executives, the lawsuits, the recalls of millions of cars and the congress hearings Volkswagen has brilliantly managed to avoid a social media disaster: A “shitstorm” as they call in Germany a social media customer or public attack. Such public attacks have been quite common the last years and companies like P&G, Nike, Primarkt, McDonnalds, Uniter Ailines, Gap, IKEA, Nestle’, Cryptonite and many others have experienced firsthand how powerful the new consumer is, armed with the social media. All these companies were attacked by blog swarms or negative posts in social media for all kinds of reasons.

While bad publicity is nothing new in the world, businesses in the past could contain reputation problems using PR in combination with mass publicity in various media channels under their control. But with social media customer attacks things are different, not only because of the fast dispersion of such attacks, sometimes in global scale and the ferocity of such attacks but because of the fact that containment is notoriously difficult.

While in the past companies have suffered serious reputation damage trying to deal with social media attacks the old fashion way, things seem to rapidly  change. Social media customer attacks have forced many businesses to develop contingency plans for online reputation damage and professionalize their community management methods. Reputation or Community Manager, a management function that did not even exist five years ago is today a common place in most large and medium size businesses. Volkswagen must have very good social media damage control plans or reputation managers if we look to the facts: The business disaster of emission level manipulation di not become a social media disaster, something very obvious if we look to the picture above illustrating the volume and the sentiment of the social media posts around the case (data based on COOSTO data monitoring). A sharp increase in posts and high negative sentiment in social media posts from the date the scandal was revealed (around 21 of September) followed by a sharp decrease after the US Volkwagen boss Michael Hom offered his public apologies without any efforts to hide or undermine the case and even admitting that Volkswagen “totally screwed up” while the VW chief executive Martin Winterkorn issued an apology saying he was "endlessly sorry" for the "manipulation". (http://www.bbc.com/news/business-34322668 ). With such statements VW removed all ammunition from customers who would take their frustrations to online comments that would probably have a snowball effect in the social space, causing a difficult to reverse reputation damage. Transparency and honest apologies help therefore more than old fashion professional publicity and denial of wrongdoing, something many of the earlier mentioned victims of customer attacks did. 

How to deal with the empowered customers when they misuse their power

I usually start my talks on Social Media marketing with showing to the audience a list of questions marketing practitioners have on the impact of technology on their business, markets and marketing practice.
One question of my list is "How to deal with the empowered consumer". I am especially interested for this question because customer empowerment is one of the most important (side-) effects of the internet and social media boom, a phenomenon that will shape the marketing thought and practice in the coming years: as academics and practitioners already realize the market power migration will change not only the rules of the marketing (from pushing to collaborating, from broadcasting to engaging, from talking to listening to name some important ones) but also the focus of it. One of the new focus areas will be reputation management and preventing customer  attacks. If you want to know more about this I suggest the book of Gillin and Gianforte "Attack of the Customers".
During my talk last week in the E-Travel Summit I had again the opportunity to talk about such issues. After the speech I was approached by the management group of a hotel who wanted to have my opinion on how to deal with customers who make a (discounted) non-refundable booking in the hotel and do not show up or cancel the booking and ask their money back because there was a "serious" reason that they cancelled their booking.
While some of these customers are persuaded by talking that what they ask is not possible some insist to have their money back otherwise they will wreck  the reputation of the hotel in the social media.
Of course no business that has invest to good service and reputation is happy about such a possibility; the people I spoke were really concerned about the  issue and eager to have some advice.
What is the right strategy in such cases? Should the business give up to threats to protect its reputation or keep a firm position and face the possibility of a reputation damage?

I told them that there are different levels where one should deal with such practices in this particular case.
The first level is during the booking process: In this stage it is important to be absolutely open and transparent with the customer.
How can you do that? Be sure for example that the customers before pressing the button for closing the deal see a last screen or pop-up reminding  them that they buy a non-refundable ticket and mentioning their options: To accept that there is no possibility to have the booking refunded for any reason, to buy a travel insurance covering refund in case of unexpected events or buy a refundable booking. If the customer clicks that he is aware of these facts and still prefers the non-refundable option, be sure to inform them with a confirmation email about their option again and possibly offer the possibility to change the booking within 24 hours to a refundable one.
Such an open yet water-proof attitude and deprives customers from much ammunition when they change their mind.
But what should you do with customers who despite such clear and binding agreements still threaten with reputation damage? The next step is to engage in a direct discussion with the customer outside the social media space: by phone, email or personally if necessary. Most customers will give up in this stage if you show that you are interested and take the customers seriously but also remind them their own commitments.
For the few that despite all this will insist and threaten I have another piece of advice: Ignore them if they are irrelevant or invisible in the social media: you do not need to worry about someone without any presence at all in the social media or someone with 20 Facebook followers. If the person has a serious social media presence then you have two options: either try to make him/her forget the issue by offering something as compensations (like a discount in the following booking) or follow closely their posts on the social media and respond professionally, being prepared at the same time to spend some time on the case. I do not think that giving up to threats is an option, maybe another option is to scrap the discounted non-refundable options altogether.
Is there, despite all these measures, any guarantee of avoiding such problems completely? I am afraid  the answer is no. Consumers are now aware of their power and some of them will be eager to misuse it. We must not be surprised by this, this is in human nature and businesses have done this often in the past (and still do it in some cases). The issue is that reputation management will be a topic in the next years, not only for large multinationals but also for any business big or small.