Toyota: Example of a Crisis Communications Fail

March 30th, 2010 No Comments

Toyota’s recent failures and poor press is a example of how crisis communication in 2010 must embrace the cultural changes taking place.

When speaking to clients, the most important thing that I try to explain is that social media and the Internet is not about technology – it’s not about Twitter or Facebook or blogging or Flickr. Rather, it’s about transparency.

The recent worldwide Toyota recall was a major communications disaster for Toyota precisely because they forgot that one essential point — transparency.

Since 2002, Toyota warned auto dealerships of problems in the Toyota Camry. While the company later claimed that their problems were due to stuck floor mats, the earlier documents referred to the problem as electrical.

FAILURE #1: Changing their story and covering up. While cover ups (while unethical) may have worked in an age where information was hard to come by, in today’s age of legal and digital transparency, any cover up will be discovered in short time.”They can fix these problems easily,” said Tim Howard, a Northeastern University law professor who heads the legal group suing Toyota. “But it would cost them about $500 a car nationwide. If you have six [million] to seven million cars, you add the numbers — it’s between $4 [billion] and $5 billion. It’s hard to actually tell the truth when those numbers are at the bottom of that truth.” (CNN)

But the problem continued. Five years later, in 2007, over 55,000 Camry’s were recalled. And two years after that, Toyota’s image was significantly tarnished with millions of their vehicles recalled. Backtracking on their 2002 story, the auto company recalled thousands of floor mats in 2007 and 2009.  Yet, while Toyota blamed the floor mats in their November 2009 recall letter, the National Highway Transportation Safety Administration (NHTSA)  said that Toyota’s letter was “inaccurate and misleading” and that, “removal of the floor mats is simply an interim measure, not a remedy of the underlying defect in the vehicles.

When Toyota’s CEO was called in from Japan to testify in front of a Congressional testimony, he was also criticized for evading the congressmen’s answers.

Had Toyota been transparent, the problem could have been resolved with far less negative press, without Congressional sanction, and without the decline in sales.t was estimated that each Toyota dealership in the US could lose between $1.75 million to $2 million a month in revenue, a total loss of $2.47 billion across the country from the entire incident. Additionally, Toyota Motors as a whole announced that it could face losses totaling as much as $2 billion from lost output and sales worldwide. Between 25 January and 29 January 2010 Toyota shares fell in value by 15%. Competitors began offering incentives for Toyota owners to trade in their cars and purchase competitors.

Toyota has not done an adequate job of engaging with their customers online. Toyota’s European Twitter account has less than 2,100 followers and only tweets sporadically. The same is true with their Canadian account.

Toyota is slowly reversing these concerns by starting to address their safety concerns via their other social network profiles. For example, the background of Toyota USA’s Twitter account (@toyota) now includes a link to the recall site and they are tweeting out the official statements. The company should, however, empower their community ambassadors (those tweeting under the brand’s name) to speak about the problems Toyota is facing.

Beyond a link, their Facebook account does not reference the crisis in a professional manner. After Akio Toyoda’s forced Congressional testimony, the company began to address the crisis by hoping that readers would demand less information. In fact, readers are demanding more recall information.

If your product is due for a recall, here are some steps that you can take:

  • Plan Ahead – Businesses should have a recall emergency plan. They should also consider purchasing recall insurace.
  • Be Transparent – Transparency will win you a lot of goodwill. One company noticed potential problems and voluntarily contacted the Consumer Product Safety Commission and then, when faced with a product recall, was told by the CPSC that it didn’t need to make its recall public, but the CEO did it anyway. The result? The company was able to rebound.
  • Respond on Your Marketing Channels. This means not merely sending out a press release over the wires but also a response (and preferably a personal response, not simply copying your release) over your company’s blog, Facebook page, Twitter account, microblogging account, and other social networks that you may be on.

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