Dead in 48 hours — how quickly a crisis can kill your business

We’ve just supported a company in a case that shows how quickly you may need to tackle a reputational crisis – and the devastation that can follow if you don’t.

I won’t name the company to avoid piling on more misery, but this was a relatively new leisure firm running a UK-wide series of family events.

Trouble arose when it had to cancel one of its events at short notice. The firm notified people who’d bought tickets, but one family claims not to have been told and turned up anyway.

Anger

The customer turned to her local press to vent her anger – generating a story in print, online, on the radio and social media.

The media coverage, at first local-only, was way out of proportion with the facts. Despite having been given a full refund, an apology and free tickets to another event, the customer branded the enterprise ‘a scam’ and ‘a fraud’ — and all this was emblazoned in print.

The problem is the company called us for help a day after the media pieces had been published, not when the problems first arose and the media started calling.

We managed to persuade the editor to revise the online press story, toning it down and retracting parts that were misleading. And we persuaded some other titles not to run stories by putting facts straight and setting the situation in better context.

But, by this time, the main damage was done. The initial story had already taken on a life of its own – sparking interest from The Sun, ITV news and many others.

Vicious cycle

It’s ironic that the angry customer’s purported motivation in going to the media was to prevent other families being disappointed by cancelled events — and this is precisely what she made sure happened.

Negative press coverage and social media comments snowballed – all appearing for anyone who Googled the firm — causing a domino effect as customers across the country demanded refunds and venues cancelled bookings.

Over the next 24 hours, the company had to scrap more events — because of a lack of customers or venues, or both. A vicious cycle kicked in, with yet more negative media coverage from further cancellations spurring yet more customers to demand their money back.

Within 48 hours, the company collapsed.

It’s a sad story, as the firm had nothing but good intentions. Its staff have now lost their jobs, its investors have lost their money and its customers have all been disappointed.

Sobering lesson

The firm was brought to its knees by a lethal cocktail of a hostile customer, scandal-hungry journalists and a management team that was far too slow with its crisis communications.

It’s a sobering lesson in how quickly you often need to act to manage a reputational disaster.

You can sit on your hands and hope it will all blow over. And it might.

But it might not. And what starts out as a relatively minor issue could quickly engulf you.

It’s not worth taking the risk.

See more on our crisis communications services.

Image by Edu Lauton