Volkswagen: Das auto disaster

Almost every major car manufacturer has experienced it: Toyota’s recall of 9 million cars in 2009, Ford’s recall of 19 million vehicles in 1996 and GM’s 30 million cars over the past 5 years. So how come Volkswagen’s recent announcement of 500,000 vehicles to be recalled as a result of its blatant cheating is likely to damage the brand more than any of the automobile recalls in the past?

Because the brand has directly violated their own core values.

Think “Cowboy” and you’re likely to say Marlboro; “Search” and you’ll say Google. Think “safety” and you’ll say Volvo. But what if Volvo had tampered with their renowned safety standards in order to secure better reviews – and thus better sales? 

Volkswagen – in fact all of Germany - stands for two time-honored words: “trust” and “engineering”.  They are synonymous with the country and in particular, its legacy of world class motor vehicles. Tampering with these two fundamental values is like removing the load bearing pillars from a skyscraper.

So, how does Volkswagen steer itself out of this nightmare? What vital steps will it need to take to minimize damage from the hit the brand is about to take? How do brands recover from such unanticipated calamities?

1. Acknowledge the issue: Initiate an independent investigation and then, in parallel, establish a task force armed with an unconditional mandate to act on behalf (and in the good interest) of the brand. Silence or even being slow to communicate with the outside world can cause more damage than good. Thus the objective should be to identify a small task force of 4 people (maximum) who are able to act free of internal bureaucracy, and, most importantly, react immediately in the face of the social media and press onslaught. Start to scan search key words, articles – in fact the entire social media space – and get real time feedback on what the public really thinks of you. You will then be able to adjust your response strategies accordingly.
2. Identify your friends: Through my research work on social media and how word-of-mouth goes viral, I’ve learned that the 1:9:90 rule indeed exists – and works: i.e. 1 person (the seeder) influences another 9 individuals (the incubators) who in turn influence the subsequent 90 individuals (the public). Your goal is to find and then initiate a dialogue with the 9. Remember there are always two sides to the same story – and, despite how deliberately calculated the Volkswagen story may seem at the moment, I’m sure their engineering department has insight on the topic which would almost certainly add a more nuanced perspective to this story. Get hold of your friends, your fans and your business contacts (including the car dealerships), analyze who’s running with the news and then contact them all, one-by-one, and share your In short create an army of ambassadors. Arm them with tools, talking points and outreach programs so that they can start a dialogue with the local community.
3. Create empathy: Forget about advertising – it’s a complete waste of money because no-one will trust you anyway. If you’re going to over-react do so directly with the consumer. It may come with a hefty price tag, but Volkswagen, with its deep pockets, is not in a position to think of a short term revenue loss. Ask yourself what the brand should offer each and every consumer as compensation for hiding the truth from them. Reparations so generous that even the enemies of Volkswagen (and the thousands of individuals writing heated posts online) could only respond along the lines of: “Admittedly Volkswagen blundered badly – but their reaction is almost too generous”. Go cheap, like Germanwings’ (Flight 9525’s) initial compensation of EURO 50,000 per victim, and you’ll burn an indelible negative impression into everyone’s memory. This ‘over compensation’ approach has its roots in neuroscience. It’s called a Somatic Marker – the anchoring of an emotional bookmark so dramatic that it will never be forgotten.
4. Turn the tables 180 degrees: What would you do if you were the competition? It’s an essential question to ask – as the competition in any case had a hand in outing the truth (6 out of 10 brand crises are shown to be linked with actions from the competition). You can bet that they’re getting ready to welcome your customers, both emotionally and physically – a hemorrhaging that will completely undermine your future revenue. Action point:  launch task force number 2, whose only objective is to stop the bleeding.  What would you do if you were the competition? Think then act as they would. Turn the tables.
5. Regain trust: While the short term machine is in action to manage the public outrage, your immediate requirement is to head back to the drawing board and find the answers to recover your long term reputation. Remember, you’ve just lost your most essential brand value “trust” – thus anything and everything you say in the future will be scrutinized.

Who can you team up with in order to recover trust when releasing new models? What feature can you include or introduce that screams “trust”? What will the competition do to further weaken and fuel distrust amongst your customers? It’s no longer business as usual.  Every single product, advert and strategy in your pipeline will need to be re-evaluated in the light of “zero trust”.

As gloomy as the days are for Volkswagen right now here’s some good news. Volkswagen will survive – just as 98% of companies over the last decade did with their brand crises. We all make mistakes and, yes, a study even shows that we all lie every day. 36 times a day, in fact. Which is not to say that Volkswagen taking us all for a ride can in any way be justified – it cannot. It is, however, fair to say that a 78-year company like VW, still holds enormous credibility, brand equity which will, just as when any one of us commits an error in judgment, generate enough empathy to win back consumer trust.

My guess?  18 months from now most people will have forgotten about the Volkswagen issue. Nevertheless, and most importantly perhaps, let this story serve as a wake-up call for you and your brand in order to better prepare yourself. You see, no matter how good you are, how trusted your brand may be, at some point in the future you will endure a brand crisis. It’s not a matter of if, but rather when.

Good versus bad management will become patently obvious when the new dawn breaks and the typhoon’s damage is out there, for all to see.

About the author:

Martin Lindstrom, a global expert and pioneer in the fields of consumer psychology, marketing, and neuroscientific research, has worked with such brands as McDonald’s, PepsiCo, Nestlé, American Express, Microsoft Corporation, The Walt Disney Company, and GlaxoSmithKline.

Named one of TIME Magazine’s “World's 100 Most Influential People”, he authored the NY Times and international bestseller "Buyology—Truth and Lies About Why We Buy” and "Brandwashed: Tricks Companies Use to Manipulate Our Minds and Persuade Us to Buy".

Get to know Martin better on Twitter, Facebook or at MartinLindstrom.com