Sears Hits Lending Crises Bullseye; Radio Shack Misses Mark
Last month's peace on the PR front lasted about as long as the average truce in the Middle East. For some reason this month we were blessed (?) with so many crises, it was hard to pick one.
For our score card this month, we're going to focus on recent developments in lending because some leading and highly respected corporate brands have recently come under fire for their lending practices. As one person put it: "if you're in the business of lending money, you touch people's lives at some very sensitive times and there's bound to be fall-out." (I wonder if in some boardroom somewhere, there aren't a few corporate officers wondering whether the profits from such lending can offset the devaluation of their corporate brand that can happen as a result. )
Both Radio Shack and Sears have been exposed for aggressive debt collecting. They allegedly threatened to repossess goods unless consumers agreed to repayment plans, then failed to file the agreements in court as required by law. Sears' reaction provides an excellent example of making the best of a touchy situation by admitting that it used "flawed legal judgment" in handling debt collections and promising refunds to consumers and reforms. Radio Shack, on the other hand, has refused to comment.
Sears
|
Grade | Comments | Advice |
| Extent of coverage | C | By coming forward and admitting that they "used flawed judgment," Sears essentially broke the story and thus became the lead. | The trade-off was quality vs. quantity. Yes, they got more exposure for the problem, but they also got their positioning out there first. They made the right choice. |
| Effectiveness of spokespeople | B | The overall perception was one of candor and honesty. Clearly, spokespeople were well trained and well briefed. | While it's nice to have high-ranking officials, it's better to have well- trained, candid spokespeople. |
| Communication of key messages | A + | Analysts as well as company spokespeople conveyed the message that Sears was sorry, they were fixing the problem, and that they cared about the consumer. A remarkable feat given the nature of the news. | Don't just think "media relations" in a crisis. Worry about all the "publics" you serve. Think about who the reporters are going to interview next; financial analysts? technical gurus? consumers? Sears clearly had taken all of them into their planning. |
| Management of negative messages | B + | Yes, they admitted their mistakes but the good deeds got more exposure. | Key to containment of negative messages was the immediate action Sears took to rebate money to those it wronged. They clearly meant what they said. |
| Impact on customers | B + | The message was clear that Sears cared about its customers and their perception of them. On the other hand, they may be a bit more leery of buying on credit. | Make customers part of your key messages in a crisis. If you put the customer first, the negative impact on sales will be lessened. |
| Impact on investors | B | Wall Street did not take kindly to the news but it could have been much worse. Key analysts clearly understood the problem saying that Sears wasn't the only one and that it is a common issue. Wall Street simply panicked and drove down the stock. | Not sure they could have done any better, and they probably avoided a bigger drop in share prices. |
| Impact on employees and prospective employees | B | If I were a Sears employee, I'd appreciate the candor and integrity with which Sears faced the problem. | If you want to continue to attract honest people of high integrity, you have to be that way first. |
| Overall score | A | I'm not sure if anyone could have done any better given the facts at hand. | Candor and honesty win the day. |
Radio Shack
|
Grade | Comments | Advice | |
| Extent of coverage | F | They got just as much coverage by saying "no comment" as they would have if they'd made a comment. | "No comment" just lets the media and your critics shape the story. | |
| Effectiveness of spokespeople | F | There were no spokespeople. | The critics were the spokespeople. | |
| Communication of key messages | F | Radio Shack goes after customers struggling to rebuild themselves after bankruptcy. | No comment, no balance. | |
| Management of negative messages | F | That's about all there was: negative messages! | No comment, no balance. | |
| Impact on customers | F | I wonder if their big-ticket item sales are down, since a $1,000 Radio Shack computer served as one example item threatened to be repossessed. | When your message is "we don't care about or customer public opinion" they won't care about you. | |
| Impact on investors | F | The message is: We don't care what you think. | We only talk to ourselves. | |
| Impact on employees and prospective employees | F | There is a clear message here: we don't have any answers. | Find answers fast. | |
| Overall score | F | There is nothing worse that you can do than say "no comment." It only allows the media and your critics more control over your coverage. | Get a crisis communications plan in place, train spokespeople and use them. | |
Katherine Paine is founder and CEO of the Delahaye Group, an international image consulting firm based in Portsmouth, N.H.
Over the past decade she and her firm have analyzed more than 1 million articles, studied thousands of Internet posting and interviewed thousands of event attendees to provide quantitative and qualitative measures of success for her clients. Her column on measurement appears monthly in PR NEWS.
Paine can be reached at 603/431-0111. Visit the company's Web site at http://www.delahaye.com