Learning From Volkswagen: 6 Tips for Surviving a Scandal
Handled correctly, a scandal represents an opportunity to win trust, show goodwill and reassure consumers.
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More than a year before Volkswagen admitted to deliberately cheating emissions tests, the Environmental Protection Agency questioned the German automaker about discrepancies between formal air-quality tests and the vehicles' higher levels of pollution on the roads.
It was the first whiff of scandal, and the company's eventually admitted to employing emissions-cheating software after the EPA threatened to withhold approval of the company's 2016 diesel models, pending further investigation.
Volkswagen's big blunder was attempting to skirt federal Clean Air Act regulations in the first place. But after this deception was revealed, did the company's actions hurt or help its eventual recovery? Furthermore, how can any brand embroiled in scandal keep its head above the proverbial water?
Saving a sinking company.
While a brand's best bet for surviving scandal is to avoid doing wrong in the first place, scandal-ridden brands are often afforded public podiums from which they can seek redemption. Handled correctly, a scandal represents an opportunity to win trust, show goodwill and reassure consumers.
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Here are six tips for how Volkswagen -- and any brand that finds itself in the midst of scandal -- can survive the ensuing firestorm of negative press.
1. Be honest.
Volkswagen's most glaring error was trying to conceal that it had employed emission cheating software once the EPA got involved. The deceit compounded the brand's problems: the scandal was bound to come out, and the cover up brought into question the authenticity of Volkswagen's apology and post-scandal messaging.
2. Apologize like you mean it.
Hoping to earn back the public's trust, the embattled German automaker placed a full-page apology ad in dozens of American newspapers.
Volkswagen got this one right: even in the digital age, newspaper and television are the best places to come clean. The medium's' broad audiences will combat perceptions that the company is only apologizing to narrow special interest groups.
3. Pay for your sins.
After a scandal, particularly one as sweeping as Volkswagen's emissions fiasco, the wronged parties want more than an apology -- they want to see the brand pay.
While Volkswagen has submitted a recall plan for the 482,000 affected vehicles sold in the U.S. and the 8.5 million sold in Europe, it has done little to ease international outrage besides offering $500 Visa cards to owners of affected models and $500 toward the purchase of a new Volkswagen.
This olive branch seems stingy and insincere. The brand's best bet is to overpay for the damage, perhaps by replacing affected models free of charge.
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4. Communicate company values.
Volkswagen has always employed clever, well-designed advertisements. But its recent diesel deception has demolished decades of cultivated goodwill.
After the crisis, brand messaging should promote new, positive ideas. While the initial apology is important, its next ad campaign must convey honesty, environmentalism and integrity.
5. Get wrongdoers out.
In the days after the scandal broke, the company ousted CEO Martin Winterkorn, handing the keys instead to Matthias Mueller.
Replacing the company's chief is an expected, but important, step in rebuilding Volkswagen's image. Rightly or not, the CEO is the company's figurehead, and Winterkorn was damaged goods. Volkswagen would do well to oust any executives who supported the deviant plan.
6. Consider killing the brand altogether.
Many brands don't survive terrible scandals, and one brand's scandal can have dangerous ripples. If a scandal-ridden brand is part of a wider corporation, it might be worthwhile to amputate that brand rather than risking the entire company's reputation.
Unfortunately for Volkswagen, this isn't an option because the scandal involves most of its portfolio companies, including Audi and Porsche.
Once a rebrand is complete, it's time to measure results. The scandal-plagued brand must keep its eye on consumer rhetoric and the press, but sales figures are the true barometer of brand rehabilitation.
As for Volkswagen, its sales figures signal a long road ahead. Volkswagen's U.S. sales fell nearly 25 percent in November, and U.K. sales fell about 20 percent that same month.
Until Volkswagen can demonstrate a renewed commitment to the environment, consumers, and its own integrity, the brand can't recover. And if the brand can't follow through on its commitment to clean, honest business, then it might be auf Wiedersehen forever.