In Crisis Management, From the Firm, In the Media, In the News, Reputation

tornado-2016-3-webWrap up the year with our final two “What were you thinking?” moments and the lessons they have for all of us in business.

Delta System Outages- Making The Best of a Bad Situation

An August power outage forced Delta to cancel 2,300 flights over a three-day period, stranding passengers worldwide.  While social media buzzed with shots of passengers sleeping in terminals, hand-written boarding passes and pizza being delivered to passengers stranded on planes, the airline got busy doing textbook crisis communications.

Initially they issued a statement that alerted passengers to the problem in a low-key way: “Delta has experienced a computer outage that has affected flights scheduled for this morning. Flights awaiting departure are currently delayed. Flights in route are operating normally. Delta is advising travelers to check the status of their flights this morning while the issue is being addressed.”

As the day progressed Delta updated blog posts and taped statement from Delta chief, Ed Bastian from their Operations Center.  He explained that they were working hard to fix it, apologized for inconvenience and applauded the hard work of their people to fix it (good move).  The next day he posted a three-minute video statement with another apology from his office, which was more formal and probably went on too long.  But their communications efforts made the best of a bad situation, in my opinion.  And layering on $200 travel vouchers made sense as well as their relaxation of their re-booking restrictions for those who were affected.

Airlines and the challenges of air travel are favorite punching bags for bloggers, social media denizens and any of us who fly.  When things go wrong, they fit with the stories we tell ourselves, so we enjoy them.

This crisis communications manager thinks Delta did the best they could with an untenable situation.  And the damage was controlled as well as possible.  In September, the company reported that the fallout from the outage reduced pretax income by 1.5 percentage points.  That was a lot less than analysts expected (at least two analysists had expected revenue to decline by seven percent).  In fact, shares of Delta stock actually rose more than two percent in early trading on the day the financial impact was announced only a month after the outage.

The lesson for business here is that stuff happens.  And the best you can do may be the best you can do.  I believe the impact of this outage will be minimal long-term and I’m crediting open, honest and compassionate communication is partly responsible.  I also credit the store of goodwill that Delta has with their frequent fliers due to its good on-time record with few cancelled flights.  Crises like this not only test a business’ operational readiness to fix problems, but their ability to use communications to inform, sooth and express regret for those affected.

Chipotle – Still Ill But In Recovery?

The food safety crises that plagued Chipotle in 2015 continued to make the company sick in 2016.  On the one-year anniversary of the outbreak of their first food-borne illness, Chipotle had yet to return to its pre-crisis status as a Wall Street darling.  Investors are still wondering when, or if, the company’s stock and sales will bounce back. The company has been slow to recover and one year afterward, the stock remained 42 percent lower than its levels before the crisis.

Part of the reason for the slow recovery is that the food safety crises struck at the core of Chipotle’s brand positioning as “food with integrity.”  The crisis caused consumers to question that core value.

To bring traffic back management added menu items and targeted it at its one-time fans.  In February, the brand implemented a strategy to win back its customers with a free giveaway campaign. Users responded, downloading 5.3 million freebie coupons from Chipotle’s app for a complimentary burrito. Half of those coupons were redeemed. In March, they went to the give-away well again, sending another 21 million free coupons in the mail.

The giveaways continued into the summer with various buy-one, get-one and freebie offers and a summer rewards campaign called Chiptopia. The company also hired former Starbucks executive Curt Garner as chief information officer in November.  He’s one of the architects of Starbucks’ highly successful rewards program.

The company also focused on its tried-and-true social-media efforts, videos and local marketing activities, such as the Cultivate festivals with live music, local chefs, craft beers and exhibits about the dangers of genetically modified organisms. And it stuck with its “Food With Integrity” mantra, highlighting its commitment to locally sourced produce and pasture-raised animals through apps that present their own movies and games.

Sticking with the “Food With Integrity” theme is gutsy and given the nature of this crisis as a violation of that, it’s something of a gamble.  Let’s see how this plays out in 2017.  Chipotle has made up a lot of ground since sales hit a low in January, but it’s going to take time.  And that’s the big lesson for businesses hit by crisis: Recovery takes time, persistence and patience.

So there you have it, a wild ride through our Chronicle of Crises 2016.  From goofs to gaffes and gluttony to grief, it’s certainly been a year.  There’s no telling what 2017 may bring.  But there’s one thing you can count on: it will be interesting.

Recommended Posts