What To Do After A Product Recall

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What To Do After A Product Recall

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Law360

Jonathan Judge, Derin Kiykioglu

If a company facing a recall has managed it effectively, the hardest part is probably over. After writing about how companies can prepare for and manage an effective recall, we offer four strategies companies can use to restore order and maintain brand loyalty following a product recall.

Maintain an Open Dialogue

Open and honest post-recall communications help to foster a sense of goodwill in consumers. Although recalls are financially and emotionally taxing, maintaining an open dialogue with consumers and media can influence brand loyalty and help stock prices recover, often to pre-recall levels.

For example, Johnson and Johnson’s famous recovery from the cyanide-laced Tylenol took only 43 days because of its visibility and transparency. Its CEO kept news networks informed and publicly met with the Federal Bureau of Investigation and the U.S. Food and Drug Administration. According to a 2010 report from the Relational Capital Group, companies that handle product recalls quickly, transparently and honorably can keep brand loyalty from 87 percent of their consumers.

Companies should also reinforce their commitment to safety after the dust has settled. For example, after recalling its toys that contained lead paint, Mattel Inc. launched a heavily publicized three-point check system to monitor toys throughout the production process. Mattel’s CEO wrote a personal appeal in the form of an apology letter to parents. Mattel bought ads in prominent newspapers to publish the letter.

The company’s CEO also spoke directly with vendors to discuss safety procedures — ensuring that the public was aware he took these concrete steps. Finally, Mattel’s CEO spoke directly to the public through videos the company posted online, in which he apologized for the issue causing the recall, took responsibility for it and clearly laid out his plan for remedying the problem and ensuring that it would not happen again. Mattel’s strategy communicated that it was committed to consumer safety.

Mattel’s recall didn’t just affect Mattel. Other major toy companies took Mattel’s example to heart and intensified their own safety testing, especially during the holiday season when toy sales are at their peak. Some toy companies announced that they were reconsidering their relationships with manufacturers who were not operating under the strictest of safety standards.

Mattel’s renewed commitment to safety also inspired consumer advocates and politicians, who called for stricter safety standards and harsher penalties for companies that failed to comply. Most companies have a website and can use it, along with social media, to explain to consumers how they plan to do better.

Assess Internal Impact

Companies should take the time to assess how the recall impacted internal processes, including employee morale. Rewarding their recall team and acknowledging the difficulty of a recall may re-energize a team while recognizing the importance of its work. Many members of the recall team probably were pulled off other projects companies considered to be important, and likely had to ruffle some feathers in the process. Recognize that the timelines for those projects may need to be adjusted accordingly, and that staffing may have to be reallocated.

Although not “internal” per se, relationships with retailers are also critically important. Like consumers, retailers tend to understand that recalls happen, and they respond well to transparency and consistency in messaging and result. On the other hand, a recall characterized by “radio silence,” lack of transparency and a refusal to recognize the retailer’s burden can permanently damage a supplier’s relationship.

Evaluate Processes

After a recall, it is useful for companies to revisit processes that may have contributed to the issue. One way would be to evaluate the most recent recall and put plans in place to ensure they are prepared for potential new recalls. Based on the evaluation, companies may choose to implement additional preventive measures at the manufacturing or retail stages, such as slowing down production or implementing additional quality checks or hazard analyses.

Companies can also identify which recall processes worked for them and which did not. Hasbro Inc. recalled its Easy-Bake Oven twice in 2007 after the first recall failed to remedy a problem. While the first recall offered free repair kits, the second recall pulled the item from the shelves and ended up being far more successful.

In its over 50 years on the shelves, the Easy-Bake Oven has taken 11 different forms. Some of these changes have been made for aesthetic reasons, whereas others, such as the redesign after the 2007 recall, were mandated by federal law. Hasbro used the most recent redesign as an opportunity to modernize the toy; not only is it more energy-efficient, but it looks much more like a regular kitchen appliance than a toy. The newest version of the oven heats much like a traditional oven on the inside, while remaining only slightly warm on the outside. Because of its redesign, the Easy-Bake Oven has continued its long tradition of giving children some of their first experiences in the kitchen.

Monitor for Lingering Effects

Finally, companies should continue to keep an eye on the news, social media and customer comment forums to understand any lingering effects of the recall. Effective recalls operate across multiple channels and give consumers various opportunities to participate, adjusting as needed throughout the process.

For example, after Ikea’s Malm chests and dressers were recalled due to reports of collapsing on toddlers, the company offered consumers both wall-mounting kits and opportunities to return the furniture to the store. It offered to send Ikea employees to help mount the furniture or to pick up the furniture at no extra cost to the consumer.

Ikea advertised its recall in print, digital and social media. It also aired its message on television and emailed its consumers directly, and repeatedly announced the recall when additional incidents came to light. Ikea’s messaging acknowledged consumers’ concerns surrounding the recall — specifically stating that it understood the real risk of death from a collapsing chest or dresser — and sparked customer participation by highlighting the simplicity of the solution and offering help to achieve that solution.

In the end, an effective recall requires a combination of preparation, speed and responsiveness to consumers. If consumers see that the company is committed to their safety and satisfaction, the company can leave the recall in the rearview mirror.