South Africa’s Great Consumer Backlash has only just begun and can be expected to get bigger and angrier if nothing is done. Should service standards get worse, undeclared ‘war’ could erupt, with consumers becoming increasingly antagonistic.

You have a personal brand, whether you think about it or not. Your personal brand is what people say about you when you’re not in the room. It’s how your colleagues, associates, friends and acquaintances perceive you.

It seems that economic uncertainty will persist for some time and governments will struggle to fund the growing demands for public services. With pressure on tax revenues, tax collection and policy is a priority for any government, and is far more relevant to an informed tax conscious public who inevitably recognises it may become more dependent on the government in the uncertain environment.  

Will the 4 million credit profiles you can no longer see, work for you?

The new regulations to the National Credit Act will keep companies in the dark about certain information pertaining to employee applicants and potential vendors.

 

This is according to Jenny Reid, CEO of iFacts, a company that takes care of corporate security and seeks to remove people risk in business through pre-employment screening, background checks, and individual risk assessments.

 

Background to the changes

In late February, Dr Rob Davies, Minister of Trade and Industry, gave notice of new regulations to the National Credit Act, 2005. The change came into effect 1 April 2014 and the Department of Trade and Industry (DTI) has given Credit Bureaus in South Africa approximately two months to remove adverse consumer credit information from, and information relating to paid-up judgements. In other words, 6.5 million status updates relating to 4.2 million credit profiles will soon be deleted.

 

Disappearing histories

This means that negative descriptions—such as slow payer, delinquent, default or non-contactable—will no longer be allowed. The bureau will also not be allowed to give out enforcement action indicators, such as legal action, written off, repossessed or overdue.

Corporate crime is the scourge of business in South Africa and it’s getting worse. PricewaterhouseCoopers released its annual Global Economic Crime Survey to the media this week.

 

It exposed the shocking prevalence of economic crime, stating the companies here at home are hit by more fraud, bribery and corruption than their global counterparts. Since 2011, the report states, the percentages have climbed.

 

It’s a bitter blow for ethics and integrity in local business and intensifies the challenge facing business leaders in South Africa today.

 

Profiling the enemy within

The survey also reveals a profile of the typical fraudster lurking in senior and middle management. He is usually male, between the ages of 30 and 40, university educated and has been with an organisation for a long time. This fraudster, it says, commits more than 70 percent of all internal fraud.

 

This a frightening barometer of the climate of corruption in business. The survey reveals that SA organisations took no legal action in almost 10 percent of cases, opted for transfers in two percent and issued warnings in just less than 20 percent of the cases. This, to me, shows either a lack of vigilance or a fatal complacency or acceptance of the current status quo.

Ask people about the state of customer service, and there is a good chance that they will be able to tell you about at least five stories of terrible experiences – and not many positive ones. In a recent survey of more than 400 South African customers, 72% said that they had experienced rage with a business at least once in the last 4 months. Anyone who has tried to solve a problem with a bank, airline booking, or mobile phone service provider recently will know what this sense of powerlessness feels like.

 

The horrendous state of customer care is not particularly new to most readers. What is new is the fact that companies are going to pay a higher price for not taking care of customers, because rebellious customers become more able and willing to take action. The most important issue for our generation is not humility or frugality, but trust. We feel betrayed by governments and businesses, (as well as many other organisations,) and the trust is gone. What’s made it worse for companies is that customers find ever-easier ways to deal with competitors, to identify and expose the “lies” and “fraud” committed against them by companies trying to separate them from their hard-earned money. There will doubtless be more WikiLeaks and HelloPeter.com, (18 million hits every month, making it SA’s most popular website,) that expose companies’ worst practices, and we also have no doubt that customers will take action against any business that is vaguely unethical, greedy or abusive.

 

But the damage that customers do goes way beyond bad-mouthing a company and affecting its reputation, (in the social media and everywhere else.) Withdrawal of business, taking legal action, contacting consumer bodies and media, abuse of staff and property, and not paying accounts are some of the other negative consequences. And all this in an environment where comparisons are happening in real time, and customers demand better prices through decreased cost and waste.

 

What customer care trends do we think will happen in 2014? Even more importantly, how can a business avoid the pitfalls of poor customer management? Here are our thoughts:

 

For many years companies have employed “brand police” in senior executive positions to ensure that the company image is clearly defined and communicated. More and more companies will hire senior “customer police” who are obsessed with ensuring that customers are treated right. As author Chris Anderson put it, “A company’s brand is not what the company says it is, but what the customer says it is on Google… The ants have megaphones now.” Early on, amazon.com’s Jeff Bezos brought an empty chair into meetings so that company executives and managers would be forced to think about the crucial participant who wasn’t in the room: the customer. Now that role is played by specially trained employees, and when they frown, executives tremble. As the power of traditional marketing and promotion activity fails even more, companies will need to focus on giving customer better experiences.

Over the past few months, hundreds of South Africa’s approximately 6.19 million registered Facebook users have become the victims of cloning. This practice, which is also known as deep mining, is when cybercriminals lift a user’s name and profile picture from their existing account to create a duplicate Facebook profile from which they then send messages to the victim’s friends asking them for money.

A company’s brand and reputation is its most valuable asset and consumers will more readily buy products from a company they trust and even pay more for it. Managing and protecting the brand and reputation of a company is an onerous task and a responsibility that falls within the gambit of its directors. A company’s reputation can be ruined overnight as countless ready meal and processed meat brands have recently shown.

The recent fire that broke out at the Polokwane Magistrates Court destroying not only the building but computers and court documents, highlights the importance for any organisation to implement effective records management and information protection procedures to avoid the financial, operational and reputational repercussions of loss or damage to critical information in the event of a fire.

 

This is according to Leon Thompson, General Manager of Metrofile Records Management: Pretoria, a group company of JSE-listed Metrofile Holdings Limited, who says failure to securely store and back-up critical records means the organisation has to rebuild its database from scratch in the event of it being destroyed by a fire. “Reconstituting this information and records could take months, or even years, which can have a potentially devastating impact on by delaying, hindering or even permanently ceasing operations.”

 

Statistics from the UK Home Office reveal that 30% of all business that suffer from a major fire shut down within a year and 70% fail within five years. In addition to this, since 2000 there has been a 24% increase in the total cost of fire in the UK totalling £7.7bn worth of financial losses.

 

“Fire poses one of the biggest threats to any organisation that deals with documents on a daily basis. The legal system in particular faces a particularly high risk of losing vital documents and evidence needed for legal cases. Therefore, it is imperative that institutions such as court houses incorporate effective risk management programmes to protect these assets accordingly,” says Thompson.

 

He says that should an organisation have no data storage and recovery plan in place the potential business repercussions include, among others, financial losses, damage to brand reputation, costly litigation, job losses and total business inoperability. “Data is unquantifiable and therefore extremely difficult to insure, making it impossible to recover any financial losses.

 

“Organisations have two options; onsite or offsite records management. Companies that need immediate access to documents and records have no choice but to store them onsite, the key lies in implementing an effective back-up solution and storing the documents in a secure environment that can protect the records from damp, fire and water damage as well as insect infestation. Essential to this solution is effective fire detection systems.”

 

Thompson says offsite records management is becoming increasingly popular due to space constraints of storing records onsite as well as the costs involved with implementing the effective security measures needed to securely store records, including fire detection and prevention.

 

“Offsite records management entails the storage of company data and information in purpose-built facilities incorporating data protection which involves the securing of a backup data tape in an off-site vault. The location of storage facilities are specifically situated in low-risk areas where exposure to flooding, fires, earthquakes, flight paths or other natural disasters are least probable.”

 

Thompson says that a combination of both physical and online data backup provides the most comprehensive backup storage system. “The online disaster recovery site continuously mirrors the information stored to the records management storage system to avoid loss of data due to data corruption.

 

“Closure as a result of loss or damage to company data and information is becoming increasingly prevalent, yet this risk is so easily mitigated,” concludes Thompson.

A PR crisis can erupt at any time – be it the result of a disgruntled employee or an enraged customer – and can cause a company a significant amount of reputational damage if handled incorrectly.

 

Even the smallest companies can fall victim to negative public sentiment, and PR agencies, irrespective of their size, need to be prepared to deal with the fall-out as swiftly and efficiently as possible.

 

This is particularly important when it comes to managing public sentiment in the online environment, which has given rise to a new breed of critic – one armed with anonymity and the ability to express their opinions across a wide range of platforms.

 

Whilst there is no cookie-cutter solution that can be applied to all online crisis situations, there are certain measures that agencies can take to better equip them to diffuse a range of potentially explosive outcomes

 

Be Prepared

The key to dealing with any kind of crisis is preparation.  The immediacy of the web means that a situation can escalate very rapidly, and, as such, needs to be dealt with as quickly as possible.

 

Whilst professional media monitoring tools are not a realistic option for many smaller agencies, Google Alerts can be used as an effective alternative. Daily keyword searches can also aid in tracking coverage, and should be undertaken as regularly as possible so as to keep a vigilant eye on public sentiment.

 

Assess the Situation

Every single crisis situation is different, and needs to be carefully assessed before action is taken. A considered approach is necessary, as what works in one instance could potentially have disastrous consequences in another.

 

Before entering into full-blown crisis mode, consider the situation from a holistic perspective. What is the actual impact of these comments? Is anybody actually reading them apart from the critic in question?

 

Google can once again be helpful in painting a bigger picture, as a page’s position within a search can offer insight into its popularity and readership. An understanding of the article’s audience can be invaluable in informing your crisis management strategy, so make sure to arm yourself with as much information as possible before diving in head-first.

 

Is Silence Really Golden?

The vast majority of crisis communication experts recommend responding to negative comments. Whilst this approach is effective in the majority of instances, there are times when a response can actually serve to further fuel the fire.

 

So how do you decide whether to keep tight-lipped or launch a counter-offensive? The validity of a comment will often dictate which approach would work best. Should a criticism, for instance, arise as a result of a legitimate error on the part of the company in question, a transparent and honest response is most likely best to serve the situation.

 

However, should the complainant be using a web-based news platform to lash out at your client based on a personal vendetta, this approach can actually end up exacerbating the situation. Bearing in mind that you are operating in a public forum, it doesn’t do your client’s reputation any service to be engaging in a petty squabble of a personal nature. In situations like this, it is often best to take the conversation offline where possible, and to try to find an amicable resolution outside of the public sphere.

 

Hit Back Strategically

Often the best approach to handling a crisis is to counter negativity with a positive stance. The reality is that, whilst many situations can be dealt with easily, there will be times when you are forced to deal with unreasonable individuals who will remain unconvinced by your attempts to come to a sensible détente.

 

In cases such as these, it is sometimes better to take a more indirect approach to crisis management, and employ tactics other than company engagement in order to appropriately counter any negativity.

 

For instance, should you be dealing with an unhappy employee, who is using a story’s comments section to vent about their issues with their employer, you can involve other members of staff, and encourage them to respond to these comments with their own, more positive views of the company. This can be a very effective approach to countering a negative situation, as comments originating from peers, rather than directly from the company itself, are often better received.

 

Situations like this can also represent an opportunity to engage in publicity of a more positive nature. Rather than taking a defensive stance on behalf of your client, why not organise a publicity tour or a charitable initiative likely to be received positively by the media? By proactively fostering positive sentiment, you can quickly change public perceptions and dull the impact of a reputational crisis.

 

Expect the Unexpected

The fluctuating nature of the web means that crisis situations can arise unexpectedly and in various forms, and can often include an element of surprise that you couldn’t possibly have envisioned.

 

However, by employing a considered and informed approach to a possibly detrimental situation, you can better position yourself to effectively counteract negativity in as quick and concise a manner as possible.