Abercrombie & Fitch. Balenciaga. Starbucks. In recent years, these brands and many others have faced extreme public backlashes to insensitive comments from executives, changes to loyalty programs, controversial advertising decisions, and more.
In today's hyperconnected world, negative information about brands can quickly snowball online, resulting in widespread calls for boycotts and in lost sales. In the most extreme cases, companies may lose hundreds of millions of dollars.
The customers most upset by bad news are often a brand's most loyal, says Wayne Hoyer, marketing professor and James L. Bayless/William S. Farrish Fund Chair for Free Enterprise at Texas McCombs. In a new paper, he tests a novel but simple strategy to help brands retain their most valuable devotees in the wake of moderate controversies.
"Everything in marketing is about promoting the brand, creating positive attitudes," he says. "But now, another whole area is brand defense. How do we protect ourselves against the obvious attacks that we might get?"
Hoyer's research, with co-authors Omar Merlo and Andreas Eisingerich of Imperial College London, builds on prior studies whose findings might seem paradoxical at first blush. By intentionally exposing customers to weakly negative news, a brand makes them less likely to abandon it in the future, even when worse news emerges.
In initial conversations with marketers, the researchers found them resistant to trying the strategy. One CEO described it as "terrifying" and even "grotesque."
But what would happen, the researchers wondered, if they tweaked the concept? Expose customers to the general idea of bad news rather than anything specific. Would it have a similar effect, strengthening their brand loyalty, while also being more palatable to businesses?
To test this hypothesis, they surveyed more than 1,100 postgraduate students and online volunteers about three of the biggest brands — Amazon, Facebook, and Nike — with separate studies for each.
In each study, respondents were asked about their future intent to purchase or use the brand, generally on a scale from 1 to 7. From there, however, they split into three groups:
- A "bad news" group was asked to rank agreement with statements such as "My relationship with Amazon is not affected by negative information about it."
- Members of a second group ranked their overall attitudes toward the brand, from dislikable to likable.
- A third, which served as a control group, was asked no additional questions.
