Product Recalls: How to Enhance Brand Loyalty During a Recall

Product recalls are at the top of consumers’ minds ahead of a busy retail season and following a series of high-profile food industry recalls.

Brands often fear the risks and setbacks that come with managing a recall. But recalls don’t necessarily lead to a decrease in brand loyalty.

In fact, 67.7% of consumers say that they would continue to buy from a brand following a recall event, according to a Sedgwick Consumer Product Safety Pulse Report.

This datapoint suggests that well-managed recalls do not damage long-term customer relationships.

With advance planning, a little investment early in the recall, and strong consumer awareness, a well-executed recall response can enhance your brand.

Be Prepared for a Recall

As with any potential risk, the first step in successfully managing a recall is being prepared for the event before it even happens.

Companies should not only have a customized recall plan in place, but they should test the recall plan routinely and conduct regular training sessions with staff to familiarize every employee with the plan in a low-pressure setting. Under the stress of a recall event, there are less surprises when every person knows their part in the response.

Taking this step also pushes leaders to regularly audit the organization’s infrastructure, shore up any gaps, and actively consider what areas may or may not need additional help during a recall.

Enlist Expert Help Proactively

Brands may have recall insurance as part of their policy, particularly food and beverage brands, but might not be utilizing every benefit that comes with being insured.

As part of pre-recall preparation, brands should review their insurance policy. Most policies allow a percentage of the premium to be used on pre-incident activities. Brands can utilize pre-incident funding to get outside expertise on reviewing recall plans, testing, training, and more. Not enough policyholders take advantage of the proactive benefits of recall insurance, and this makes a big difference in minimizing the loss, from an insurance perspective, as well as mitigating loss in brand loyalty from consumers after a recall happens.

Partners with recall expertise can also help brands navigate the unexpected areas of a recall and bolster the response to an event with support steps like setting up and staffing call centers, assisting with crisis communications, and retrieving recalled products to remove them from the market.

Act Quickly

It’s imperative for companies to act quickly to address the recall and inform consumers, especially during food recalls. Leaders’ first major steps in a recall plan include stopping the distribution of the recalled product, controlling the narrative quickly, and showing empathy upfront to the public.

Attempts to hide or bury the news of a recall, in practice, just instill fear into a brand’s customer base. Instead, CEOs should be out in front of the news to give customers both a clear account of what happened and what steps will be taken to fix the issue with the product.

Make it Easy for Consumers to Act

Many customers stay informed about their products; during a recall, brands are responsible for providing a fair remedy to fix the issue and making it easy for their customers to take action. They also must then deliver on their solution to customers in the timeline communicated. No matter the reason or the season, this step is make-or-break for the success of a recall.

Understanding their consumer is also crucial to a brand’s success during a recall. For example, if a brand’s main customer base is elderly people, offering only a QR code or website link to access recall resources is not the best way to engage. A call line option may be better targeted to this audience.

Once consumers connect, their path to receiving reimbursement must be easy. Brands are often unprepared for the surge in consumer response during a recall. As a result, consumers are left waiting on call lines or overwhelm website servers, which only leads to frustration and a drop in brand loyalty. Working with recall experts or leaning on surge services provided in recall insurance policies can counteract the issues brands experience in this area of recall response.

Overdeliver on Expectations

Depending on the type of recall, brands may choose to recall and replace a faulty part, replace the entire product, or issue a refund. It’s a delicate balance in determining what recall steps the brand can manage and what consumers expect to be fair. Underestimating either of these factors can spell disaster for the brand’s consumer loyalty.

For example, a brand offering a replacement part during a faulty appliance recall may give a three-to-four week timeline for consumers to receive their replacement. Underestimating the volume of customers responding to the recall or taking more than four weeks to issue the replacement part becomes perceived by consumers as a failure to fulfill the brand’s commitment. This shatters brand loyalty.

Instead, brands have an opportunity to build on brand loyalty if they exceed a consumer’s expectations during the recall response. Aim to under-promise and over-deliver on the timeline and level of service to consumers.

Be Open to an Upfront Spend

The urge to control spending is a natural response to a crisis event like a recall. However, sometimes if brands spend a little money at the start of a recall, the payoff in brand loyalty can be massive by the end.

It may be more cost-efficient to replace a faulty part in a recalled appliance, but it may be much faster and easier for consumers if the brand instead issues a full refund upfront. Brands may even add an incentive – an additional percentage off a new, non-faulty product – in addition to a refund on the recalled product to encourage consumers to remain loyal to the brand after a recall experience.

These steps and incentives can be expensive for brands to execute, but if the offer is perceived as fair and even goes above and beyond for consumers, they’ll be more inclined to re-engage.

To conclude, many brands cross their fingers and hope they don’t ever have a recall. In practice, recalls are an expected risk for which businesses need to prepare. Brands are advised to not hide behind a recall – face consumers transparently and offer fair solutions. When done right, brands can showcase their dedication to upholding product safety and restore customer confidence very quickly. Though unexpected at the start, a recall can have silver linings in the end.

Harvey is senior vice president of brand protection at Sedgwick.