Many companies aren't properly trained to handle product recalls and other mishaps, here's how you can mitigate the risks.
One of the biggest challenges that your business might face is the possibility of a product recall.
Although safety procedures are always considered to be a priority, there are still chances that a product may not pass the necessary requirements, possibly resulting in this dreaded situation.
In fact, according to University of Mexico’s associate professor, Dirk Gibson, more than 2,500 product recalls take place in the US annually.
How can you protect your business from dealing with this kind of issue? We’ve created a list that can help you prepare for future product recalls and save yourself from all the trouble.
Related Article: 6 Lessons in Corporate Ethics from the GM Recall
What is Product Recall?
Rob Bohn of Bohn Law defined product recall as “an action a manufacturer takes, either voluntarily or under the advice or direction of a governmental agency, to remove a product from the market.”
Regulation and determination of product recalls are conducted by several government agencies:
- Food and Drug Administration (FDA)
- National Highway and Traffic Safety Association (NHTSA)
- Environmental Protection Agency (EPA)
- Consumer Protection Safety Commission (CPSC)
Sometimes, a product recall can also be initiated by the manufacturer once they find their products defective or not passing their internal tests. That way, companies save themselves from any further manufacturing costs as well as complaints from consumers.
How Can You Best Communicate the Recall to Your Customers
After determining that a product needs to be recalled, there will be various communications that will need to take place.
Most companies hire a public relations team or company to handle media concerns, ranging from damage control to an all out press conference.
On the other hand, there are many cases in which a company opts to inform their customers directly before proceeding to mass media.
More often, especially when it involves the general public types of products, the government also help release public notification to help spread the news and warnings.
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Repercussions of Product Recalls
A recall definitely causes additional costs for a business. There are refunds to be made while other items have to be pulled out from distributors, resulting to a decline in profit.
Customer loyalty can also be greatly affected, as your company’s reputation could be tainted. However, the way the company handles the product recall will make a huge difference between brands that consumers would trust in the long run.
What You Can Do About It
Once a product has been recalled, the damage has been done. However, a strategic approach to managing recalls can help to keep your company afloat, and gain the trust of the customers yet again.
Knowing and preparing what details are necessary to discuss and saying the right words at the right time would help on keeping the damage more controlled.
Appointing an official spokesperson would also be of great assistance as this would mean that all statements released by your company are consistent, especially when it comes to the media. However, the company should not solely depend on the spokesperson alone, but rather empower each employee with the accurate details so they are equipped with the proper knowledge about the product and can better handle customer inquiries and complaints.
Word-of-mouth is also one of the greatest factors that can affect if you can make it or not in the succeeding months. Since your employees are upholding your company’s name, each of them would be seen as their family and friends as a reliable source.
Maintaining a firm stand during this challenging time is also vital, as every detail and actions of your team would be taken into consideration by your consumers and your possible and unexplored market. Make sure that your company has a concrete stand on what happened and instead of putting blame on others, accept the responsibility and secure your customers that such problems would not happen again.
While this may be easier said than done, evaluating your existing production and manufacturing process will not only unveil certain processes that needed to be replaced or get rid of, but will also help you better assess areas to improve on.
Aside from these, you must also make use of all possible channels, as it would help your company not only in clarifying the issue, but also in spreading out the possible dangers that your consumers may encounter.
At the end of the day, being transparent and having consistent communication to your consumers will help your company look responsible in the eyes of the customers. Broadcasting and making actions as quickly as possible would definitely lessen the likelihood of facing more issues that may arise from the usage of the defective or any harmful product.
After all, it’s not only your company’s bottom line that’s on the line but also your customers’ lives. By making sure your company is prepared for any product recall and equipped with the right knowledge and training will help mitigate the risks it may cause in the future.
(Image Credit: Flickr, Creative Commons: Bart)