Listen to the podcast:
We know we messed up. Please, let’s not dwell on it. It’s a new day, and we’re going to win back your trust.
The corporate apology has been called upon many times in recent decades, from the New Coke fiasco in 1985 to the 2010 BP oilrig explosion that killed 11 workers and caused the worst oil spill in U.S. history. But the routine lately seems like it’s been playing on a perpetual loop. In pricey ad campaigns on social media, TV, in print and on billboards and transit posters, the company you’ve long trusted is sorry. Really sorry.
Among the mea culpas currently coming your way: “From now on, Facebook will do more to keep you safe and protect your privacy.” At Wells Fargo, “Earning back your trust is our greatest priority.” One of the core values at Uber “is to always do the right thing,” the company’s CEO, Dara Khosrowshahi, tells us himself.
There’s nothing particularly innovative in the substance of most of the apology tours being undertaken by these and other companies. What is unusual, several say, is the number of apologies streaming into the messaging atmosphere.
“We are absolutely living in the era of the apology,” according to Wharton marketing professor Robert Meyer, co-director of the school’s Risk Management and Decision Processes Center, who discussed the topic during a recent segment on Knowledge@Wharton’s SiriusXM show. (Listen to the complete podcast at the top of this page.)
“In some sense, it’s an area which has grown and in which there are a lot of management consultants who are in the business of trying to figure out how to best craft the apology,” Meyer says. “One could always raise the question: Why do we need the apologies to begin with? I mean, why not have better management that precludes the need for having them?”
In this day and age, “everyone is walking around with a sorry button and companies are throwing themselves at the mercy of the public begging for forgiveness,” says Wharton marketing professor Americus Reed. But Reed believes many companies are over-reacting. In some cases, it may be better not to take a company’s troubles back into the news cycle with an aggressive apology campaign.
“You may just be reminding people of the problem,” says Reed. “A lot of companies may not understand the lack of memory people have. They are just trying to go through their own lives, and here you are telling them about something you did that was bad. Sometimes you just want to tell people you’re fixing this and leave it alone.”
He notes that companies are very nervous because they know consumers hold a lot of power. But research shows it takes a lot for someone to actually take their business elsewhere. “People are busy, their memories are short, and there is too much stuff happening out there for them to worry about Wells Fargo.”
Apologize Quickly – Then Fix the Problem
Apologies serve a useful purpose, and they do often work — up to a point. Customers encountering a specific problem with a company want to hear an apology, but after that, they judge their relationship with the company by how much creativity an employee exhibits when solving the problem, research shows.
In fact, continuing to apologize beyond seven seconds and doubling down on relational work can backfire, write the authors of “Frontline Problem-solving Effectiveness: A Dynamic Analysis of Verbal and Nonverbal Cues,” published in April in the Journal of Marketing Research. Through analysis of video of interactions with airline customers as well as a controlled experimental study, they conclude that work focused on solving the issue at hand has a positive effect on customer satisfaction that increases as the interaction unfolds.
“One could always raise the question: Why do we need the apologies to begin with? I mean, why not have better management that precludes the need for having them?”–Robert Meyer
“However, this positive effect becomes weaker for relatively higher levels of frontline relational work or displayed affect and, conversely, stronger for relatively lower levels over time,” the study states. “Overdoing relational work and over-displaying positive affect diminish the efficacy of problem-solving interactions.”
It’s also important to know to whom you are apologizing and why. Wells Fargo — which came under fire for setting up accounts without customers’ knowledge as part of a system for meeting top-down sales quotas, as well as other transgressions — crafted a commercial that seems aimed broadly at customers. It hits notes of nostalgia for the company’s beginnings bringing gold back East during the Gold Rush, and, while extremely light on acknowledging what the problem actually was, declares that it is starting a new day. “Wells Fargo: established 1852. Re-established 2018,” the tagline says.
“It’s like, OK, whatever. It’s lucky for them that banking is the epitome of a commodity. You literally would have to steal from me directly before I am going to go through the hassle of changing accounts,” says Reed.
A better strategy, he says, would have been for the bank to put “laser focus into personal attention to those customers who were directly affected by these policies and put all of their money into making them feel good about the company again.”
An apology tour has to be geared toward a specific stakeholder, adds Meyer, and one of those clearly is investors, and what they are looking for is strength. Sometimes that means when a company is called on the carpet, the best apology is the one that does not apologize at all.
A classic example of a non-apology was Goldman Sachs chairman and CEO Lloyd Blankfein in 2010, says Meyer. “He was brought in front of Congress, and in kind of an analysis of the financial meltdown, they asked: How could Goldman do this? On the one hand, you’re basically selling to a lot of your customers mortgage-backed securities, while at the same time, you’re also betting against them. You’re shorting them to other customers. And so how can you possibly do this?”
According to Meyer, Blankfein “simply said, ‘Look, this is the business that we’re in, and people want to be exposed to these instruments, and we’re exposing them to them.’ And so, in some sense, actually, they came out fine with that, basically because a lot of their stakeholders — that’s in some sense what they wanted to hear, that there was this venerable institution that basically promises to do x, and it does x. It signaled strength.”
“People are busy, their memories and short, and there is too much stuff happening out there for them to worry about Wells Fargo.”–Americus Reed
The same strategy would not have worked for BP. “If they had come back and said, ‘Look, we’re in the drilling business, and this is the stuff that happens,’ it would have been a disaster,” Meyer notes. “So, they had to be in a position, just to preserve the brand name, of having a profound apology.”
The News May Be Fake, But the Apology Must Be Real
Of course, in order for an apology to work, it has to acknowledge what the problem was, and offer some specific, believable evidence that things have changed. This is where both the Facebook and Wells Fargo spots fall down.
“Wells Fargo must obviously try to correct the public narrative that they cannot be trusted to serve their customers’ interests. Otherwise, the damage caused by this scandal — so far, surprisingly small along most parameters — could escalate,” says Peter Conti-Brown, Wharton professor of legal studies and business ethics. “The problem is that correcting the narrative isn’t simply a matter of a marketing campaign.” He notes that Wells Fargo’s management and employees must show to many constituencies — including customers, regulators and its board of directors — that they are going to truly honor the idea that this moment will be one of starting over.
“In other words, is the promise advertised in the new marketing campaign authentic and deep or superficial and shallow? It’s impossible to tell at this early stage,” Conti-Brown says. “The approach so far in this slow-burning scandal has suggested that promises of change have been superficial, but we’ve seen other changes that are far more dramatic, especially at the level of governance changes. Stay tuned.”
The Wells Fargo spot does mention that it is “ending product sales goals for branch bankers.” Facebook’s commercial acknowledges that “something happened. We had to deal with spam, clickbait, fake news, data misuse. That’s going to change.” But is it? What specifically, will be Facebook be doing to create change? The ad doesn’t say.
“The problem is that correcting the narrative isn’t simply a matter of a marketing campaign.”–Peter Conti-Brown
“I feel like for Facebook, it’s just not credible,” says Wharton professor of operations, information and decisions Maurice Schweitzer. The credibility of an apology is critical, or “the belief that things have really changed,” he says. “And that is where Wells Fargo falls short. It just doesn’t tell us that they are committed to change.”
Schweitzer says the process of an organization evaluating the need to apologize starts with deciding whether there was a transgression, real or perceived; whether the violation was core to the organization’s mission, product or activities, or more peripheral; gauging the potential public reaction to the violation and determining whether the organization really is committed to making the kinds of changes necessary to ensure that the violation will not happen again.
Then the organization can develop the right kind of apology. If the violation was at the serious end of the spectrum, it may make sense for the CEO to voice the apology him or herself. And the message? The best apologies involve candor, remorse and a demonstrative commitment to change. Quick apologies are important, Schweitzer says, even if it means issuing a bare-bones “placeholder” apology until a more detailed one can be fleshed out.
Many of these principles have become widely accepted, and so it’s curious to see companies as experienced and presumably well advised as Facebook and Wells Fargo struggling with vague messaging, he says. (They have issued more specific apologies to specific constituents, such as employees and regulators.)
“If you’re Wells Fargo or Facebook, you can’t keep inventing new news, and you have to at some level deal with what’s happened.”–Maurice Schweitzer
People often don’t like to apologize because “when we are unapologetic, we appear to be more powerful and we appear to be more deliberate,” says Schweitzer.
This often works for politicians — hence the Trump administration’s nearly unbroken record of not apologizing — but not for companies. “If you’re Wells Fargo or Facebook, you can’t keep inventing new news, and you have to at some level deal with what’s happened.”
On occasion, companies have an opportunity to fold humor into an apology. Schweitzer points to one such instance in February when KFC in the U.K. experienced supplier problems, ran out of chicken and had to close hundreds of its restaurants. The company ran a large print ad showing an empty bucket with the familiar Colonel Sanders image on it. But instead of the usual KFC, the letters stamped on the bucket were transposed into an edgy anagram: FCK. “We’re Sorry,” the ad said.
“They’re messing with their brand,” said Schweitzer. “I thought it was a very good move, the opposite of what Wells Fargo did. They are making light of themselves.”
But, while many observers thought KFC hit exactly the right note, that kind of event in the life of a corporation doesn’t come along often. Running out of chicken has a kind of comic potential not granted a bank that has opened fake accounts for unwitting customers, or a car company that developed a software system designed to cheat emissions tests, as Volkswagen infamously did.
That situation amounted to the worse kind of corporate nightmare, said Schweitzer. “Corporate villains in movies do what VW did,” he said. “They deceived thousands and thousands of customers in ways that harmed the environment by design. They strategically did something bad for the environment and at the same time they had ads talking about engineers getting their angel wings. Projecting the idea of a smart, clean company while deceiving regulators is the worst possible thing that can be done.”
Says Meyer: “I think we would love to be in a world where we didn’t have to apologize, where companies were one step ahead of the game, were able to … look at their policies and say, ‘Given these policies, given the set of incentives this sets up, what are the possible things that could go wrong?’ And then given those possibilities, do proper risk management and make sure that you have policies or safeguards in place that basically prevent things from going wrong.
“Unfortunately,” he adds, “I think that’s a little bit optimistic. And fortunately, I think that we’ll probably be seeing a lot of these apologies.”