Maintaining a good reputation based on brand recognition is an important aspect of any business strategy. As a business grows, it stakes its reputation on its brand on the assumption that customers will be attracted to the company because of its respectability and good business practice. Unfortunately, public scandals can undermine this strategy, often prompting a name change or slogan adjustment to mitigate any damage. Sometimes these changes produce positive results, but sometimes they do not. Here is a rundown of some of the biggest branding scandals.
Blackwater is an American private security company that employs mostly ex-service members in protection details and other paramilitary activities in Iraq, Afghanistan, and elsewhere. It received enormous federal contracts for these activities, most famously during the Iraq War. Blackwater contractors were frequently accused of misconduct, most notably for the Nisour Square massacre. Its members were implicated in mercenary activities and crimes, and some were criminally prosecuted. Following these events, the company changed its name several times, but continued reporting by news organizations did little to mend its damaged reputation.
Poor service will always negatively impact your brand. Nationwide has developed a reputation for delaying or denying customer claims, which has landed them permanently on our nation’s collective $#!% list. The company racks up poor reviews on online customer service rating sites, always a problem in an age when word of mouth and online reputation can be critical to success.
For decades, Volkswagen was widely regarded as a top manufacturer of high-quality automobiles, largely due to the German reputation for excellence in engineering. Many of its car lines relied on building a reputation for environmental responsibility, especially in terms of carbon emissions. However, when it was discovered the company had been cheating on emissions tests, a public outcry fueled by large-scale reporting significantly damaged the company’s value in the public eye. The chief executive was forced to resign, and the company was forced to pay tens of billions of dollars in fines. A massive increase in negative comments online, mostly through social media, damaged the brand further.
The most egregious branding errors usually involve a direct contradiction between a company’s actions and the values it actively promotes through its advertising campaigns. Responsible business leaders should always take into account the view of their company they are attempting to build in its consumers’ psyche.