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Businesses unprepared for high-stakes PR crisis

We all know that a PR crisis can seriously damage your company’s reputation. But often it’s the cause, and how it’s handled, that either help or hinder any recovery.

If a UK business is involved in a data security breach, sexual harassment scandal or other ‘high-stakes’ business reputation crisis, it’s risking serious reputation damage and stands to lose 8 out of 10 customers, according to Hotwire’s ‘High-Stakes Leadership In A Post-B2B World’*. This report shows the huge influence business values and behaviour have on brand reputation and on consumers’ buying decisions…

…..and it really brings home how high the stakes are.

  • 77% of business decision-makers and 78% of customers will stop working with a company that doesn’t handle a PR crisis well.
  • 40% of consumers have walked away from brands they believe to have violated their personal values.
  • 68% of consumers say personal values influence their buying behaviour.
  • 33% who stop using a brand say loss of trust is the main reason. Followed by a poor response to a PR crisis, lack of apology, or that the company doesn’t publicly accept the reality of the event.
  • 55% of UK marketing leaders say they’re vulnerable to the damaging impacts of a high-stakes PR crisis.
  • 55% of business decision-makers say they’d be exposed to damaging consequences if a partner organisation was hit by a PR crisis.

Worryingly though, just 47% marketing leaders in the UK are ‘very’ or ‘quite’ worried about a PR crisis event. This is less than the global average.

High-stakes PR crisis – be prepared, or lose consumers and your reputation

If companies are facing a crisis, their marketers and business decision-makers say they’re most worried about damage to their brand reputation. And rightly so. But marketers are also more acutely aware of the potential loss of consumers. More so than business decision-makers. Nearly two-thirds of marketers understand that poor communications around crisis issues or events mean they’ll lose customers, just over half of business leaders do.

This means that marketers need to better inform business leaders to recognise the risks and impact of a crisis. Explaining how vital good communications are in a crisis, and that it’s essential to link reputation and crisis management to core business values.

Consumers say that honesty/integrity is the most commonly held value across all three surveyed groups. This is because people have high expectations of the brands and businesses they choose to do business with. If business behaviours aren’t aligned to personal values, or a crisis is handled badly, it can spell disaster. Values are key to being prepared for a PR crisis, but not everyone has their values in order well enough to guide them through a PR crisis.

What is a high-stakes PR crisis? 

The research finds what we’ve known for some time – that the high-stakes issues – those that influence peoples’ decision-making – include workplace bullying, protecting the environment, gender discrimination, equality, financial corruption and more.

But personal and societal issues tend to receive less proactive marketing attention. Fewer than one-third of marketers say they’ve driven campaigns on topics such as mental health, gender, ethnic discrimination or protecting the environment.  

This is interesting when you compare it with what UK consumers most want to see and hear from brands. Brexit is a priority (20%), and they want businesses to take a stand on mental health (22%) and sexual harassment (19%). 

How can my business redress the PR crisis balance? 

You should address the disparity between the topics you are building proactive campaigns around, and what consumers most want to see and hear from you. 

UK business marketers have the most experience dealing with ‘lack of transparency’ (28%). However, according to the research findings, they have less experience dealing with income and wage gaps and sexual harassment. On average, global business marketers have the most experience in dealing with these specific topics.

The biggest issue in the UK – Brexit. Nearly half (45%) of businesses say they’ve run a campaign on it, 19% with first-hand experience in handling the issue. Over a third (38%) have focused on data security and GDPR (36%).

Most business marketing leaders (77%)  have a plan in place in casethey face a PR crisis. Yet only 58% of UKbusiness decision-makers feel they have a solid plan.

Less than half (46%) of the UK businesses surveyed have direct experience reactively managing crisis communications events. This is lower than the global average (58%). Only just over a third (35%) of UK businesses work with a PR agency that offers crisis management. Only 40% monitor and collect information to help identify potential negative scenarios.   

While this is concerning, it also illustrates that it’s important for business marketers to have a seat at the top table. This clearly shows there’s a real opportunity here for them to own strategic crisis PR planning – both proactive and reactive.

The backlash businesses can expect from poor planning and handling of crisis scenarios is to lose customers, and fast. Which is why having a PR crisis plan in place is vital to survival.

Addressing the disconnect  

Matt Cross, Head of B2B EMEA at Hotwire, says: “It’s an interesting situation, as when asked which crisis issue their business should take a stand on, UK business decision-makers did not place sexual harassment in the top ten. Given recent events and growing support for those affected by the issue, it is a great surprise. Meanwhile, marketing leaders have done little proactive work on the issue to date, with 41% of marketers feeling their organisations should tackle the issue. There is certainly a disconnect between business leaders and consumer expectations which marketers need to re-evaluate.” 

*Research was conducted by Sapio Research on behalf of Hotwire from December 2018 to January 2019, surveying 658 CMOs and senior communications executives at B2B and B2C companies, 688 general business decision-makers at B2B and B2C companies and 6,218 consumers. It was conducted across eight countries.

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