Can SMEs avoid trial by social media?
Social media presents a fantastic opportunity for small businesses to get closer to their customers, and Irish businesses have signed up in droves. But what happens when the chatter turns ugly? Sarah McCabe examines how Irish companies can protect themselves from lasting reputational damage online.
Published 03/04/2016 | 02:30
The conversation about whether a company should or should not participate on social media is already over.
Channels like Facebook and Twitter have in a few short years proved themselves to be easy and cheap ways for businesses to build their brand and reach new and existing customers.
Companies who ignore social media are increasingly being left behind by their tech-savvier competitors. Irish businesses are all too aware of this. They are the second biggest users of social media in the EU, according to figures from Eurostat. About 64pc of the companies surveyed said they used platforms like Facebook, Twitter and Instagram, compared to an EU average of 39pc.
The downsides of social media, however, receive much less attention.
Michael Dawson has experienced them first hand. As chief executive of One4All, he runs Ireland's biggest seller of gift vouchers. In early 2013 the company was hit with a malicious rumour asserting that it intended to close down the following day.
"It was a serious attack on our reputation," says Dawson. "I remember it well, at 11am on a Tuesday morning my marketing manager came into a meeting and told me the phones were hopping.
"Corporate clients and members of the public were telling us they had heard we were going out of business in 24 hours."
The rumour originated with a bulk text but spread online. "It started with a text message sent out to thousands of numbers and then spread quickly via social media."
One4All is owned by An Post and ultimately the State, making a sudden closure highly unlikely. But most people didn't know that.
"It was completely untrue of course, nothing of the sort was happening. But it still caused panic spending of our vouchers."
Dawson's team responded quickly and assertively, which he thinks had a significant effect in reducing damage.
"We immediately went into battle mode and got the message out that this was totally false, by any means we could.
"We had huge support from the media who refused to spread the rumour. Everybody checked with us first so we had the chance to correct them.
"Boards.ie pulled it down immediately and members of the public even started correcting each other online.
"Thankfully we responded strongly and it mitigated the damage. But it still cost us around €500,000 in corrective publicity and lost sales. It could have put a weaker company out of business."
One4All never found out who started the rumour, or why.
"Gardai traced it to one source, overseas, but then lost the trail. I have a suspicion that if we hadn't acted so strongly to kill the rumour we would have been contacted by the person or group with a view to extorting us."
Dawson is not alone. One in ten Irish businesses said they experienced a social media crisis in the last year, in a survey published in early March by Edelman and the Marketing Institute. A fifth said they were unprepared to deal with a social media crisis.
Experts say businesses of all sizes need to wake up and start preparing.
"In today's fast-paced media environment - where social media has given everyone license to be a thought leader and contributor to the conversation - companies need to be prepared to defend their reputation quickly," says Joe Carmody, managing director of public relations firm Edelman Ireland.
"The speed of risk has become 140 characters or less and the traditional concepts of containment are no longer possible. The risk of not controlling the narrative or leaving a void for others to fill is greater than ever and there are no safe havens from digitally empowered agendas and social exposure. Issues that might have gone under the radar in the past can now quickly become national and even international news."
Patricia Callan, chief executive of the Small Firms Association, says the risk of damage from negative sentiment on social media is "absolutely a concern for our members".
"The problem is that for many small business there is no comeback, even when they are completely in the right. Small businesses cannot afford to take legal action over this kind of thing.
"It can happen so easily - I heard of one taxi company where all that happened was that a customer, who felt their journey was too expensive, posted their receipt online with an angry message - and for whatever reason it snowballed, doing serious damage."
Some companies, like One4All, are blameless for the social media disasters they encounter. But others have only themselves to blame for inciting social media ire.
Think of Bloomingdales. In 2015 the American department store's Christmas catalogue featured a picture of a male model leering at a young woman, who is looking the other way. The image caption read: "Spike your best friend's eggnog when they're not looking."
Though the photo originated in print, social media users quickly took it online, and the image - which many felt encouraged date rape - went viral.
Or controversial Florida theme park company Sea World. Last year the group ran an 'Ask Seaworld' Twitter campaign to encourage customers to ask questions about killer whales.
Bad move. Everybody from animal rights activists to internet trolls used it as an opportunity to voice their anger at the organisation. The response from PETA (the vocal People for the Ethical Treatment of Animals group) - "Why do you lie and tell guests collapsed dorsal fins are normal when only 1pc suffer this in the wild? #AskSeaworld" was widely shared.
Platforms like Facebook and Twitter say they have comprehensive policies in place for people who feel they are being harassed or defamed online. For the most part these policies are the same whether you are an individual social media user or have a business account.
Those policies can't, however, protect against own goals by employees. Many corporate social media missteps have originated with staff. In a survey last year by law firm William Fry, 15pc of the 500 Irish employees polled said they knew of a colleague who had been disciplined for misuse of social media. This included inappropriate references to the company, inappropriate references to clients and colleagues and the sharing of confidential business information.
"Whereas the position surrounding ownership of work-related content, such as confidential information, is usually clearly addressed in typical employment contracts, this will not be sufficient to address the issues regarding work-related contacts on social media accounts or to keep up with the rapid developments in this area" says William Fry partner Catherine O'Flynn. She urges businesses of all sizes to set up social media guidelines for their employees, setting out clearly what is acceptable and what is not.
The flowering of negative information about a company on social media can have serious implications for its bottom line. Chief executives regularly cite their company's reputation as one of its most valuable assets. Its value cannot be overstated - the Aon Oxford Metrica Reputation Review estimated that the reputational cost alone of the 2010 Gulf Coast oil spill for British Petroleum was around $59bn.
The reputational effect of the emissions scandal that engulfed Volkswagen late last year is similarly thought to have reached into the billions. Volkswagen's misleading of regulators and the public on emissions pumped out by its vehicles did so much reputational harm that some experts predict it will set the entire German car industry back for years to come.
Insurers are now paying attention. A growing suite of products is emerging to protect businesses against reputation-damaging events.
The world's largest insurer, AIG, has just teamed up with new Irish business RiskEye to sell Ireland's first standalone online reputational risk insurance product. It is available to all businesses but particularly SMEs.
Alongside an online media monitoring service, policy holders will have access to a top legal team and assistance from one of the world's largest public relations firms, up to a value of €50,000.
"It's a fast-growing area," says Michelle Ryan, assistant manager in AIG's Irish financial lines business who helped to bring the product to Ireland.
"We have been selling a product like this in the US for 20 years but this is the first time it has come to Ireland and has a unique distribution model.
"A company's reputation can be destroyed in an instant online. Rumours grow legs so easily on social media. A tweet not responded to, or badly responded to, can escalate out of proportion so quickly.
"We are not insuring against the impact of reputational damage to a company's bottom line because that is very difficult to quantify, there are so many variables and we don't have hard numbers on it.
"But we can ensure that businesses have access to a suite of services that will help to mitigate the crisis when it happens."
Experts stress that prevention is better than cure.
"We'd always recommend that the best prevention is preparation," says Carmody. "Develop a crisis communications plan for your company. It might seem daunting to develop a plan, but it actually doesn't take too much effort if you follow some simple steps.
"Create a purpose-built crisis preparedness plan that identifies team roles and responsibilities, explores key response scenarios and includes sample messaging along with forms and checklists to ensure rapid response capability.
"Assess any potential risks and identify gaps and areas that need to be worked on. Conduct formal risk assessment to identify leading vulnerabilities and prioritise which areas you must be prepared in.
"Pressure test the plan and team through simulated crises to see how they react and respond. Incorporate the learnings into your plan.
"Finally, don't be put off by bringing in professional support. It doesn't cost the world to invest in a crisis communications plan and even in some media training for your spokesperson."
Sunday Indo Business