Halloween is just around the corner. For many, that means haunted houses, creepy costumes, and scary movies. But for business leaders, none of those is anywhere near as terrifying as a product recall. And it’s no wonder. If a recall is mismanaged, it can lead to brand damage, lost market share, and legal liability. Rather than turn away, it is best to take a look at some of the top recall horror stories – and how to escape them.
Notification and response management pitfalls
Ever notice how communication is among the top problems in virtually every aspect of business? That’s true of product recalls as well. Some common recall communication issues companies run into include:
One consumer product company ran into several of these issues when it issued a recall for a popular kitchen appliance. Customers who called the designated hotline often received busy signals, forcing them to call back and wait for hours to reach an agent, in some cases only to be disconnected and forced to start the process all over again. Most company leaders have been in similar situations themselves, perhaps after a cancelled flight or delayed delivery, so they know firsthand how frustrating it is – and how difficult it is to recover a reputation after the experience.
In most cases, overloaded websites and call centers will occur only when the issue presents a major hazard that receives a lot of media attention. But there are cases where poor communication has had a devastating impact on brand loyalty, even when the defect was relatively minor. A beverage company experienced a major decrease in market share because information being given to the media and public was confusing and even conflicting, giving the appearance that the company was indifferent to the situation.
Failure to remove product from the market
It can be challenging to retrieve products from consumers once they’ve been sold, but companies should have processes in place for removing them from the supply chain and keeping them from being sold in the first place. A leading beauty company faced backlash for failing this step. It received multiple reports that one of its products was causing hair loss, but even after issuing a recall, the product was widely available for purchase on several websites. The company was widely criticized on social media and even faced a class action lawsuit.
Providing an inadequate remedy
Consumer loyalty is a double-edged sword when a recall is issued. Yet another small kitchen appliance company faced this issue when it issued a recall right before the holidays, when the product is most often used. Rather than offer consumers a choice, the company only provided replacements – even though it didn’t have enough in stock. Consumers had to wait months to receive a new product. Once again, the backlash on both traditional and social media was swift, and a class action lawsuit was filed.
Going out of business
On occasion, a product recall is so serious that the company in question simply can’t recover. This most often happens when companies lack the traceability required to isolate affected product and narrow the scope of the recall. A good example is Topps Meat Company. In other cases, companies fail to cooperate with regulators, causing negative press that can be nearly impossible to overcome.
Escaping the nightmare
Any one of these is certainly a frightening scenario for businesses. And unlike the common plotlines of cheesy horror movies, they actually happen. However, they can also be prevented. Leaders shouldn’t be afraid to take a close look at their recall plans and ask themselves if they are really comprehensive enough to guide them through a recall. And they should follow up with mock recalls to identify and correct any gaps. Considering the possibility of a recall may sound spooky, but in this case, it is better to face those fears.
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