“To come back from such a high-profile crisis takes patience, persistence and acceptance that there are going to be consequences no matter what.”
For Target, Slow and Steady Will Win the Race Back to Customers’ Hearts
By Andrea Hurst
A little more than two months after Target was hit with a massive credit card breach, the company has reported that fourth quarter 2013 earnings plummeted by 46 percent year over year. The latest opinion surveys show that shopper confidence is at an all-time low, as the retailer works to rebuild its reputation and draw customers back to its stores. The truth is that Target was not the only retail giant to recently fall victim to a data security breach; the company just happened to be faced with the near-lethal combination of a large-scale crime mixed with widespread brand visibility and a vast, worldwide consumer audience.
Like it or not, and whether or not it happens again to Target specifically, the incident will be recalled for years to come, and that raises a lot of questions. How effectively has the company handled its response? Have they done enough? Is there more they can do? And what if their best just isn’t enough?
Despite the dramatic drop in earning and obvious repercussions among its customer base, Target has in fact taken solid first steps toward building back its positive image. The fact is, though, that a crisis of this magnitude will take months, or maybe even years, to overcome. There may be some truth to the saying that time heals all wounds, but that doesn’t mean a company should adopt a “wait and see” attitude in the meantime, or worse, put reputation management on the backburner when positive results aren’t immediately apparent. To come back from such a high-profile crisis takes patience, persistence and acceptance that there are going to be consequences no matter what. Given that, any company in this position must focus on rebuilding reputation the right way, rather than try to cut corners and work so fast that mistakes are made.
Target is on the right path, but they still have more to do. The retailer’s response to what has been one of the biggest crises in the company’s history is a lesson for any company faced with the challenge of restoring consumer trust and confidence in a brand. In the first phase of crisis management, here’s how they got it right:
They took responsibility and were transparent about the situation, sharing as much information as possible with their customers and other key audiences.
This establishes a level of credibility with customers, and shows them you want them to have access to knowledge about what is going on. Target came right out of the gate acknowledging the severity of the situation, with this statement from Target CEO Gregg Steinhafel: “We take this crime seriously. It was a crime against Target, our team members and most importantly you – our valued guest.” The company issued a release three days after the breach was confirmed, alerting its customers that 40 million payment card numbers had been stolen. Target continued to keep consumers in the loop weeks later when it was discovered that criminals had accessed as many as 70 million more pieces of information in addition to the card numbers. Though Steinhafel has been criticized by Target’s executives for releasing some of the details that were not legally required to be shared, customers will rarely fault you for sharing too much. It’s a much bigger problem when the opposite occurs. Target also sent credit card holders several emails and letters, apologizing for the breach, sharing information about how customers can protect themselves and updating them on the situation as new information becomes available. In addition to the emails and letters, Target took out full-page newspaper ads to apologize publicly.
They shared what resources the company is devoting to solving the problem.
Steinhafel has said, “Target won’t be defined by the breach, but how we handle the breach.” He’s right. Of course, there will unfortunately be some customers who never come back, but the rest are watching and waiting to see how the retailer reacts and will judge their integrity based on what is being done to fix the problem. To ease obvious concerns about how the breach would affect consumers and restore feelings of personal safety, Target offered all of its customers free credit monitoring and identity-theft insurance for one year. When millions of calls backlogged call centers, pushing wait times to as long as three hours, Target tripled its manpower and within a week response time was down to 8 seconds. The company has also announced it is speeding up plans to replace magnetic strips on its credit cards with new smart card technology that is less vulnerable to fraud.
They used all available channels to communicate, including social media.
One day after the news broke, Steinhafel appeared on a video posted to Target’s website, dressed in the company’s trademark red shirt and khakis store uniform. He showed humanity in his message, expressing gratitude for customer loyalty, offering tips for monitoring accounts and promising that customers would not be held responsible for fraudulent charges. That same video was cross-posted on Target’s social media channels. Company representatives also took to the Target Facebook page and Twitter feed to relay important information and respond in real time to incoming messages and complaints.
They stayed in front of the story and steered the message.
By sharing the details of the situation in a forthcoming manner, and by monitoring feedback through its various communications channels, Target has been able to lead the conversation and address any rumors or misinformation.
But after taking all of the right initial steps to winning back customer trust and loyalty, why are corporate earnings still down by so much? Why are customer approval ratings still suffering so seriously? Because the work is not yet over, and it might never be. As previously stated, a problem of this magnitude cannot be fixed overnight and Target must continue to be proactive and vigilant after the initial crisis has passed. That means staying in a positive light in the eyes of your customers while using lessons learned to prepare for the worst all over again. Three things Steinhafel and the rest of Target’s leadership should keep in mind are:
Now is the time to start cashing in on those brownie points. Shortly after the data breach occurred, Target canceled an ad campaign it had ready for the Olympics that highlighted efforts by employees to give back to their communities. Steinhafel was worried customers would think Target was “tone deaf.” At the time, that was probably the right decision, but now that things have started to blow over, this is the time to start generating positive news not related to the crisis. The company partners with a lot of good causes, including the United Way, the Red Cross, Feeding America and the Salvation Army. Tapping into the feel-good side of your company allows customers to connect and build positive associations with your brand once again.
This incident should disappear from the customers’ minds, but never yours. The question is not if, but when another crisis of some kind will occur at Target. Once that happens, this incident will be resurrected. This time though, the company has the benefit and the curse of having already gone through this. After a crisis situation occurs, evaluate why your best wasn’t good enough and plan for how to do it even better.
Time is on your side. Remember the Tylenol scare in 1982? Seven people died after taking cyanide-laced Tylenol capsules, but the company handled it effectively by taking responsibility, issuing a nationwide recall and introducing new tamper-resistant packaging. Public confidence was eventually restored, sales bounced back to near pre-crisis levels and now the crisis is a distant memory for most. This too shall pass. Perform at the highest level during a crisis situation, and you will eventually make it through to the other side and be stronger for it.
Above all, we all must remember the next big crisis is always just around the corner. Assuming it’s not another data breach, attention will be diverted away from Target when that happens. Navigating negative news is never easy, but good preparation, execution and follow-through are critical when a company’s reputation is on the line. So far, so good, Target.