Five Reasons You Need a Crisis Communications Plan

It’s impossible to prepare for and manage a crisis concurrently.

By Paula Hahn of Blink

Ice cream and listeria. Baby food and glass. Sprouts and E. coli. These days food and beverage processors are ground zero for brand reputation and media relations. When things go wrong, people want to hear first-hand from the folks responsible for both the problem and the solution.

Most food and beverage processors have locked down their operations crisis response, but the communications aspect of crisis management may or may not be covered. Yet, how a company communicates its recovery plan makes all the difference between a brand that survives a crisis, and one that never quite recovers.

Key players in the reputation management game include customers, retailers and the media along with important stakeholders like employees and investors. The newest wrinkle in crisis communications is the increasingly important role of social media. Everyone has a voice these days regardless of whether they’re vested or invested in the company.

Here are five good reasons every food processor should have a crisis plan tested and in place, ready to go when (no longer a question of “if”) a crisis happens:

1. A Crisis Negatively Impacts Company Valuation

Consider a crisis communications plan an investment in brand reputation, not an expense. The faster a company can tame a crisis, the faster stock price and sales revenues can rebound.

Some cases in point: the Odwalla apple juice crisis caused the company's stock to drop from $19 to $9 a share immediately after the news broke. When salmonella contaminated peanut butter, the National Peanut Board tracked a19 percent drop in sales versus the year before.

The cost of crisis recovery efforts can extend beyond lower stock prices and sales volume. Consider Target's recent data breach which required an estimated $20 billion to supply free credit reports to its shopper base.

2. Social Media Keeps the Crisis Alive

Social media represents the biggest obstacle companies face when trying to contain a crisis. According to a global survey of senior crisis communications advisers by international law firm Freshfields Bruckhaus Deringer [FBD]:

  • 28 percent of crises reported spread globally within an hour
  • 69 percent of crises reported spread globally within 24 hours
  • It takes 21 hours on average before companies are able to issue meaningful (legally approved) external communications to try to manage the issue

3. Crises Do a Number on Brand Equity, Too

The statement that perception is reality was never more true than during a crisis. Unfortunately, many stakeholders give more credence to what they see as impartial social media posts than official company statements. More than nine of 10 global crisis experts polled by FBD said that failing to prepare to effectively handle the issue online leaves an organization open to "trial by Twitter."

And that gives the famous Warren Buffet quote credence: "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."

4. It’s Impossible to Prepare for and Manage a Crisis Concurrently

Seems like common sense to have a plan in place, but many companies find themselves trying to prepare for a crisis in the middle of one. There are so many moving parts to a crisis plan (message development, spokesperson coaching, regulatory notifications, product recalls, internal investigations, press conferences, stakeholder communication, media monitoring, social media management and more) that it can’t all be done in real time.

For example, it's much easier to line up your suppliers as partners in this now, than create a hotline with them later. Developing a comprehensive tool kit and testing the plan prior to an incident is the best predictor of success.

A great example of being prepared is the National Beef Board. They were ready with a crisis plan when the BSE or "mad cow" scare came about in 2003. As a result, per capita beef spending increased each of the two years following the crisis.

5. How a Company Handles a Crisis Counts More Than the Crisis Itself

If you ever wonder about the importance of how a crisis is handled, just mention the BP oil spill and gauge the reaction. The oil spill evolved from an environmental crisis into a leadership and management crisis, complete with the wrong spokesperson and botched messages. The company is still trying to recover from the estimated $43 billion hit in fines, legal settlements and clean-up costs, while the damage to brand equity is incalculable.

Which leaves a single question on the table: if a crisis hits, are you ready?

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