Update: A recent Ragan article provides perspective on the next steps and “hard remedies” required for Volkswagen to rebuilt consumer trust.
We make purchasing decisions based on any number of factors. We may purchase a television because it has great sound quality, a piece of art we find aesthetically pleasing, a bottle of wine for the taste or a plane ticket for the price. It’s still a relatively new phenomenon, though, for our values and beliefs to play a role in our purchasing decisions.
In the last half-century or so, our consumer culture has added a dimension. Call it corporate social responsibility, corporate citizenship or responsible business practices, but the idea is the same. As consumers, we have a certain expectation that businesses are accountable for more than just profit, and that expectation influences our buying behavior.
So while we may be angry when the speaker on the TV breaks, the colors in the artwork fade, the wine goes bad or the flight experience turns out NOT to be worth the price, we feel betrayed on a deeper level when we’ve made a purchasing decision based on a company’s stated values or beliefs.
When the news broke recently that Volkswagen installed software in some diesel-powered cars in order to cheat EPA emissions tests, the brand faced backlash from more than just regulators. Consumers who purchased a Volkswagen in part to support environmentally friendly engineering are now faced with a dilemma: their car is safe and functional, but it can no longer stake the same claim to environmental responsibility.
What’s worse, the company installed software for the express purpose of fabricating emissions results, which means consumers were intentionally misled into believing not only that their vehicle could be environmentally responsible but that their vehicle’s brand valued environmental responsibility as a corporate goal.
It’s a subtle distinction but an important one, especially when it comes to reputation repair. In the majority of reputation management situations, a brand must restore faith in what their product or service can do – deliver quality, meet standards, perform safely. But the age of corporate social responsibility has brought on a new type of reputation challenge – one that requires brands to restore consumer faith in their corporate values – a much less tangible or measurable goal.
So how has Volkswagen done so far? Corporate values begin at the top, so whether or not former CEO Martin Winterkorn had first-hand knowledge of the deceptive practices, his resignation was an important and necessary step for brand repair. He had failed to institute a culture where brand values and integrity were paramount in business decision-making.
But over the next few months (even years), the brand must do more than market its corporate values – it must live them. Authentic reform is the first and most reliable step toward reputation repair. Then the company will have to show a consistent pattern of putting their money (or profits) where their mouths (or corporate responsibility claims) are. Even then, it will take time to restore trust with those consumers who made a purchasing decision based on perceived corporate values, but for a large swath of consumers who just want a cool-looking, high-performing car, Volkswagen has less of a hill to climb. Like most reputation issues, the industry and invested members of the public will remember long after others have forgotten.
So, what can we take away from the Volkswagen situation? That a breach in brand trust related to values can have a more destructive effect than one related to capability or function. If your business is going to market its values, the most important reputation management tool is true adoption. Leadership must believe in the value(s) and insist on integration throughout the organization, and institute checks and balances to ensure adoption. Make internal examples of value implementation external. It’s the responsible thing to do for the company and the public.