Saul Klein: How companies respond to their mistakes affects whether customers will trust them

Earlier this year, Judith Kasiama, an avid hiker and snowshoer, called out several outdoor companies for the lack of diversity in their advertising. Canadian retailer Mountain Equipment Co-op, known for its outdoor recreation gear and clothing, was one of the brands Kasiama mentioned in her social media post, criticizing them for showing predominantly white models.

Within 10 minutes of the post, an MEC representative reached out to Kasiama and a discussion ensued on how the company could improve. Six months later, MEC’s CEO David Labistour posted an open letter on the company’s website, admitting the company’s role in propagating the “vastly incorrect notion that people of colour in Canada don’t ski, hike, climb or camp.”

The open letter “Do white people dominate the outdoors?” didn’t shy away from owning up to the company’s mistakes.

“The truth is that we haven’t represented the diversity of Canadians or of our five million members,” Labistour stated. “We’ve let our members down.”

The response from the company gained nationwide appreciation for being quick to address the issue and for being open, powerful and honest about it.

Understanding the importance of trust, the Gustavson School of Business surveys more than 6,000 Canadians each year on how much they trust 300 different brands. We have discovered that besides the functional performance of a brand (quality, reliability, value for money) and the way it relates to its customers, consumers also pay close attention to a brand’s values and its social responsibility. Through their purchase decisions, consumers are looking to satisfy both their immediate functional needs and their need to identify with the values and beliefs of the brand.

While MEC came in second on the overall Brand Trust Index this year, they have consistently been at the top with regard to values-based trust. This is simply because, in addition to immense trust in their products and service, consumers have unwavering faith in the company’s commitment to acting responsibly and doing the right thing.

Not only did MEC issue a sincere apology related to their past use of imagery, but it also demonstrated the actions it is taking to rectify the situation. In addition to changing its advertising, the company promised to hire a more diverse workforce and partner with more diverse athletes — as evidenced by Kasiama’s new role as an ambassador for the brand.

Much like people, brands sometimes make mistakes. Handling a slip-up the right way allows consumers to retain their trust. We don’t want to see the brands we love being defensive, hiding behind corporate jargon, or engaging in any “blame game.” We want to see them being authentic and taking ownership. If we see the human side of a business, we are far more likely to forgive the brand and connect with it even more.

MEC is a perfect case in point. Labistour’s open letter was lauded by the public because it was sincere, heartfelt and impactful. In it, he admits MEC’s past advertisements were inappropriate. “We can’t move forward until we acknowledge our past,” the letter declared. Labistour did a spectacular job of addressing the issue and owning up to it.

Contrary to MEC’s method of crisis management, Volkswagen provides a textbook example of what not to do when things go awry, illustrating why they have been rated as one of the two least-trusted brands in Canada for the past three years. Volkswagen used software to cheat on its emission tests and then tried to avoid taking responsibility for its actions. The company not only misled regulators, but it alienated its most loyal customers. While VW eventually admitted to its misdeeds, the way it did so came across as insincere and defensive. The hit to the company’s brand image wasn’t due to the quality of its vehicles or the service it provided, but because consumers felt betrayed by its deception.

The three simple acts of being quick to respond, being honest and authentic, and communicating a plan of action ensured MEC didn’t lose trust among its customers and key stakeholders. That makes all the difference.

Saul Klein is dean of the Gustavson School of Business at the University of Victoria.


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