You spent hundreds of hours researching and designing your product. You made dozens of prototypes, tested each one, and finally decided on the perfect design for mass production. You performed all the necessary quality checks, attained industry approvals, and took your finished product to market.
But in spite of it all possible preparation, mistakes can still happen.
When a product requires a recall – it malfunctions, has serious flaws or, worse, poses a danger to consumers – it can be a major setback to a company’s reputation, not to mention its profits. In many cases, damage to the brand can be even harder to repair than financial losses.
So what about when it happens to you? In the event that you ever have to recall a product, we’ve compiled a few best practices to help you come out on the other side.
Be Prepared
The first step to performing an effective product recall is taken before the recall ever happens: prepare an emergency plan.
Make sure you’re aware of the specific regulatory and legal standards governing your product or industry and establish a chain of command among senior management to clearly define the responsibilities of everyone involved. Setting up a crisis "task force” to handle all recall-related measures within your organization can help with this process.
Cooperate with Stakeholders
Customers, suppliers, and government agencies will all likely be involved in the recall process, so make sure to work with them rather than taking an adversarial stance.
Depending on your industry or product, a third party regulator or arbitrator may need to get involved. Remember that, although accidental, a product recall puts your company at fault, so you’ll need to cooperate with them every step of the way to ensure a smooth recovery.
Act Quickly
When dealing with a faulty product – especially one that puts people in harm’s way – it’s crucial to react swiftly and confidently. In fact, the CPSC mandates that manufacturers report recalls to the agency within 24 hours of obtaining information about the defective product. Pulling the item from the shelves as soon as you’ve identified the risks not only keeps the public safe but also reassures them that you have the problem under control.
Don’t Point Fingers
Between manufacturers, distributors, retailers, regulators, media, and end-users, there are numerous parties to choose from to scapegoat during a recall — and none of them will help you.
Diluting responsibility and shifting blame onto someone else will only hurt your company’s image, so focus on fixing the problem first and leave the reprimands for later.
Don’t Wait to Have Your Hand Forced
Most product recalls are voluntary, with companies coordinating their investigation and safety measures with federal agencies on their own. Typically the company itself will take the product off the market as soon as it identifies the potential risks.
Hesitating for too long or trying to argue your way out of it may lead to the government forcing your product off the shelves — which will only bring about more negative press.
Don’t Focus on the Money
Recalls are usually expensive, but the cost of mishandling them and losing customers can be much higher. In many cases, your company’s long-term financial future depends on how well you deal with the crisis rather than the initial expense of the recall itself. Take the short-term revenue hit and offer full refunds whenever possible to keep customers loyal.
Reach Out to Customers
First and foremost, educate customers about the hazards of the product if the defect is something that could cause them harm. If the recall is more of an inconvenience, understand that they’re still likely to be upset and you’ll need to maintain their loyalty. Hire more customer service professionals to answer any questions they may have or provide additional channels for them to reach out such as a text or live chat function on your website. Try to offer them something in return, whether it’s a full refund, free services, or something else they’ll genuinely value.
Communicate Openly
Transparency is the key to maintaining consumer trust throughout and after the recall process. Hold a press conference to try to answer questions from the media, customers, and your own employees. Issue a press release and provide regular updates to keep everyone informed of the status of the situation. The worst thing you can say during a crisis is “no comment.” Not providing information creates a vacuum for rumors and horror stories.
Investigate the Problem
Be sure to trace not only the source of the faulty product but also its full extent through your distribution network. For example, was it a design flaw or manufacturing defect? How many products were affected? Where were they shipped?
Try to quantify the damage throughout your supply chain. In your communications with the public, be ready to assume every product will be recalled so that you’re assuming maximum responsibility and controlling the message while you triage the problem.
Apologize if it’s Called For
An admission of guilt is different from an apology. It’s okay to say you’re sorry, even if it’s only for inconveniencing your customers.
Manpreet Hora, an assistant professor in Georgia Tech’s College of Management, said in a study analyzing 500 recalls, "Consumers are forgiving, so if a firm apologizes, acknowledges the problem, and doesn’t make the mistake again and again, consumers will continue to be loyal to that brand.”
A Real-world Case Study: Samsung Galaxy Note 7
Even the most dominant companies have had to navigate this type of recall setback. You may have already forgotten, for example, the flood of stories throughout 2016 about Samsung’s pricey Galaxy Note 7 going up in (literal) flames.
Within the first two months of the phone’s August launch, the U.S. Consumer Products Safety Commission (CPSC) received 96 reports of overheating batteries and fires, forcing the company to recall 2.5 million devices.
Despite the flurry of bad press surrounding the Note 7, Samsung continues to be a leader in smartphone innovation and even created a new category when it unveiled its forthcoming foldable phone in February 2019. Samsung’s continued success isn’t an accident; it’s because the company was transparent about the recall and took immediate action to remedy it.