The high-wire reputation act: Why high-profile struggling businesses need PR
Many familiar UK brands are journeying close to administration. In an economic climate defined by the “cost of doing business crisis,” struggling businesses and brands face a particularly difficult challenge: how to project confidence to their customers when their financial foundations are crumbling. This is a high-stakes, high-wire act where the slightest misstep can accelerate a brand’s reputation and even accelerate its collapse.
Poundland, Claire’s, Hobbycraft, and River Island have all hit the headlines in recent weeks amid store closure and job loss fears. It is a familiar story for many businesses and brands in an economic climate that has been struggling for air since ‘that’ Liz Truss mini-budget of late 2022.
While the spotlight continues to be shone brightly on the financial difficulties of these businesses until a resolution is found, such as a new buyer is found or closure is forced, there is another major and often overlooked challenge that businesses in such situations find themselves: how to protect their reputation and project confidence to their customers when their financial foundations are crumbling. This is a high-stakes, high-wire act where the slightest misstep can accelerate a brand’s collapse.
It is a delicate paradox. A struggling business’s lifeline is its customers. They need sales and cash flow to stay afloat, but this cash flow depends entirely on consumer trust. Trustworthiness is perhaps the most critical of the four major purchasing considerations for customers and clients. It is built over time through consistent delivery, strong referrals, and a visible, authentic presence in the market. And customers must be made to feel confident that is they continue to part with their cash that business is stable enough to honour the terms and conditions of the transaction – such as honouring gift cards, warranties, and loyalty points. They are present today, but will they be the past by tomorrow?
This creates a perilous Catch-22 situation, and an unenviable one at that. To maintain customer confidence (and trust be default), a business must appear healthy. But the degree of communication needs to be considered carefully.
For instance, if the message emanating from the business focuses on spiralling debt, falling sales, and potential job cuts and is not balanced then confidence and trust in that business will falter – customers will pull back. The consequences of this happening are obvious – the business will simply be further starved of vital cash coming in and that will likely hasten its demise.
As with any form of crisis communications and reputation management strategy, businesses need to be transparent about their situation but do so in a way that provides assurances and expectations that the steps being taken to tackle the current challenges will deliver the desired outcomes a little bit further down the line.
What businesses and brands really want to be talking about is “growth,” “expansion,” and “investment”. That is not possible at this point, but they can provide a sense of optimism in their communications using terms such as “restructuring”, “streamlining operations,” and “strategic review.”
Yes, they still infer that the business has entered administration, but they also suggest that the business is both recognising the challenges and is taking positive steps to overcoming them without necessarily revealing the full extent of the distress. It won’t placate everyone, but it will almost certainly stem the flow of losses and help the business retain many of its current customers and protect its reputation.
The hope of course is that the actions taken to steady the ship will lead to a new buyer coming in or a natural change in fortunes for the business, such as an upturn in the economy. Key to ensuring the business can come through such crisis is the way in which it talks about it at the time. Effective crisis management and reputation management focuses on managing the perception of the problem whilst retaining its ‘good name.’
PR practitioners play an extraordinary important role in the pre- and post-administration process. Through clearly communicated messaging, agencies like Clearly PR are doing much more than simply responding to the hype and conjecture, we are keeping the brand’s reputation afloat AND maximising its value – whether to attract potential buyers or to ensure its relevance once the storm has passed.
Get in touch for support with your reputation management needs. Email me at paul@clearlypr.co.uk
