Disasters
Educating Marketing: Worst-Case Scenario Planning

The Marketing Department. Love them or loathe them, it’d be pretty hard for them to cause a real business continuity issue, right? A reputational one perhaps (which is a big problem in itself), but one that causes business money to be lost or critical processes to be compromised..?

Here are some horror stories stemming from some seemingly excellent marketing ideas:

The ‘classic’ study for this is the Hoover “free flight” initiative. In 1998 two marketing executives came up with a brilliant idea: offer two free return flights from London to New York to anyone purchasing one of their vacuum cleaners in London. They were proposing to capitalize on the universal truth that a vast number of gift vouchers and coupons are never redeemed by those who hold them. A pilot of the scheme was wildly successful, so the marketing team rolled the promotion out nationally. It was a great deal. In fact, it was so much cheaper to buy the vaccuum cleaner  that 200,000 people bought a hoover they didn’t need just to get the flights. And, what do you know, they cashed in their vouchers too. Hoover lost a cool £20 million on the promotion and its European arm was taken over by washing machine manufacturer Candy.

In 2006, American coffee company Starbucks decided to give free iced coffee coupons to some of its staff. They emailed them coupons to receive free coffees with no terms, conditions or limits on the number of times the coupon could be used or printed, nor on who could use it. The coupon went viral. It was printed millions of times and was posted on popular coupon websites. Starbucks had to publicly announce the coupons were no longer valid in any store.

McDonald’s ran a promotion offering free meals every time a US Olympic team won a medal in the 1984 Games. Unfortunately, they used the 1976 Games to estimate how many meals that would cost them, failing to consider the Russian teams were boycotting the games and the American teams had gotten much better. Team USA won lots of medals; McDonalds lost lots of money. (Are you ‘loving it’?)

And if you think these case studies show this is a problem for big companies only, think again…

Smaller companies also have the ability to unwittingly walk into a marketing crisis, and their lesser size means the results can be devastating. Consider, for example, some small business experiences with Groupon that have also been making the news…

If you’re not familiar with Groupon, it’s a phenomenally successful ‘group buying’ scheme. Subscribers get offered ‘daily deals’ that offer treats and luxuries at bargain prices, but deals only happen if a minimum number of people buy them. Vendors are reportedly advised to keep prices low and offer true bargains and use the opportunity as a PR/marketing tool to get repeat customers. Indeed it works well for many; the plumber who moved to Scotland established a whole new customer based using a Groupon initiative. But big opportunities can big serious opportunities for failure and it’s also reported that some have lost out massively with loss making deals crippling small businesses who simply didn’t calculate the volume of costs and potential losses.

So how can business continuity planners can help the marketing department?

  • Encourage your marketing colleagues to consider worst-case scenarios, particularly when embarking on new initiatives. The idea isn’t to discourage innovation but to place sensible controls around it so potential downsides are explored as part of the decision-making process.
  • Don’t view risk management as ‘just another box to tick’. We all secretly know it sometimes feels like this.  The key can be knowing when something is ‘different’ to the routine issues that we’re more used to dealing with.
  • Encourage your experts to brainstorm the impact of worst-case scenarios.  Remember one of your skills is offering exercises and learning sessions, so offer them just that and based it on a marketing problem. Do it before there’s a problem and make it fun if you want the best ongoing relationship with them
  • Work with your press office regularly.  They’re not just the front line for reputational issues: it’s likely they’ll be the first to know about a number of events if they affect your public before the company realises there’s a problem.  Knowing them well means you’re much more likely to get the heads up on any issues that might be brewing before they become significant. If you don’t have a press office then one investigate equipping a current member of staff or, possibly more usefully, finding a freelance professional you can call in an emergency.

 

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