In October, Auckland District Court fined HelloFresh $845,000 over a cold call campaign that misled customers. One Plus One Communications’ Emily Hill writes that cases like this show the importance of brand reputation and transparency, especially in the digital age.
HelloFresh’s recent fine for misleading customers struck a chord with me. It reminded me just how high the stakes of corporate accountability are in the digital age.
In the court of public opinion, anyone can be fair game and the effects often outlast any financial penalty.
Reputation makes up a significant portion of a company’s value. When 70-80% of market value comes from hard-to-assess intangible assets such as brand equity, intellectual capital and goodwill, brand marketing is more than a service. It’s a consequential investment.
The regulatory sphere in New Zealand is increasingly intertwined with public sentiment, with the actions of the Commerce Commission or Financial Markets Authority now instantly amplified by the media. A regulatory investigation, once purely a legal matter, can become a public relations crisis if you are a major player. In the past 12 months or so, investigations surrounding Kiwibank, Noel Leeming and HelloFresh made headlines.
Breaking the public’s trust has become the cardinal corporate sin. Business communications can’t be an afterthought, it must be part of a company’s strategy from the start to build brand loyalty over time. When a moment of crisis hits, approaching it with a sense of calm and forethought can change the direction entirely, especially when loyalty can disappear in an instant.
An opportunity for transparency
More than ever, our society is holding large corporations to high ethical and moral standards, perhaps viewing them as though they are people, rather than vehicles for commerce. New Zealand banks have seen public scepticism rise dramatically. The FMA’s recent focus on banks’ conduct and culture is a clear signal that the regulator is now following, and validating, public concern.
When a corporate misstep occurs, this heightened scrutiny makes managing public relations critical. Immediate public judgement, while uncomfortable, offers the opportunity for transparency. Legal compliance sets a baseline, but public perception shapes brand identity.
In New Zealand law, the concept of public interest acts as a crucial factor, balancing media freedom against privacy. For a publisher to defend communication, two things must be proven: the subject matter was of public interest, and the communication was responsible. Major corporate scandals and regulatory breaches involving consumer rights or ethical conduct are almost always deemed to be of public interest. The failure to manage this criticism is what precipitates the real damage.
The ongoing case involving Talley’s and TVNZ highlights consequences of reputational damage. Talley’s is reporting more than a pecuniary loss. They’re reporting loss of customer loyalty, fracturing of trust and tarnishing future recruitment abilities. A “PR nightmare” can evidently lead to operational disruption, falling stock prices and a fundamental shift in consumer behaviour – even if a legal case is ultimately won.
Prepare, prepare, prepare
Preparation is everything, and there should be no secrets. Nothing can be done effectively if the team managing the communications aren’t aware of the full facts. This includes the dark and ugly. Much like lawyers, a good communications practitioner is there to find a solution, even if they do not morally agree with the actions taken.
The impulse to cut costs by handling such events internally often proves to be a false economy. Not engaging experienced external crisis communicators may be a short-term saving, but in the long term, can cost the business far more in reputational harm. Having an outsider’s perspective effectively allows holes to be poked into how a business presents itself, things that might not be seen through tunnel vision.
Everyone makes mistakes, but it’s how you deal with them that matters. Strategic PR is not about spinning a good story, it’s about risk mitigation and the demonstration of corporate accountability.
A reputation is arguably a company’s ultimate asset. And in New Zealand’s commercial environment, it must be nurtured and protected as such.
Want to know more about reputation and trust as brand metrics? We discuss these two key topics in the latest issue of NZ Marketing magazine. Grab a copy now.
