Experienced business owners know that crises can occur at a moment's notice, so they must prepare themselves and their employees to handle any type of workplace situation.
While you’d hope you’d never need it, proactive planning and having a crisis communication plan minimizes damages when an unfortunate circumstance derails your business. After all, it's easy for employees to panic and make rash decisions when they're under pressure to respond to a significant crisis.
Before we craft an effective crisis-communication plan, we need to understand the different types of crises and how they can affect your business.
Types of Crisis Examples
- Financial Crisis
- Personnel Crisis
- Organizational Crisis
- Technological Crisis
- Natural Crisis
There are five types of crises that may impact your organization. Let's briefly summarize each type, or you can read a more detailed explanation of each here.
1. Financial Crisis
A financial crisis occurs when a business loses value in its assets and can't afford to pay off expenses. This is caused by either internal or external factors that result in a severe decrease in demand for the company's products or services.
2. Personnel Crisis
A personnel crisis occurs when an internal stakeholder is involved with an illegal or unethical scandal that impacts the company's reputation.
3. Organizational Crisis
Organizational crises occur when a business exploits its customers to gain more profit or information. These situations often receive lots of media attention that's negative for the company.
4. Technological Crisis
A technological crisis occurs when an organization's technology crashes — such as when a server breaks or an error emerges in a software product. When these crises happen, customers and users have no access to the company's products and/or services.
5. Natural Crisis
A natural crisis occurs when severe weather interrupts normal business functions. This can be temporary like a snow delay or more permanent like a flooding evacuation.
Since there are a few different types of natural crises, let's review each one in more detail below.
Short-term delays are times when weather temporarily prevents your business from being fully operational. Your business may still be open, but certain features or services aren't available to customers. For example, you may provide a delivery service, but due to severe snow, you'll need to delay deliveries until the following day.
During these situations, your team should alert customers to any changes that may affect their customer experience. Use an automated email or calling tool to send out a message to your customer base, notifying them of the temporary crisis. It's important to be proactive during these cases as it reduces friction for affected customers.
I remember growing up through the New England Ice Storm of 2008. And, while the storm itself only lasted a day or two, the damage it caused left nearly every town without electricity for weeks.
This is a great example of a long-term outage crisis. While the storm wasn't considered a natural disaster, it did affect how businesses operated. Some companies needed to close completely while others offered limited services until power was restored.
If your business experiences a similar situation, it's best to communicate with customers as much as possible. If you can, use mobile devices to get messages out on social media and make it clear to customers what you can and can't provide at this time. Alternatively, you can use radio ads to contact customers who are listening to the news and waiting for updates.
Anticipated Natural Disasters
Fortunately, modern technology has made it possible to anticipate some incoming storms and disasters. For example, hurricanes can be spotted before they reach the coastline and start causing damage. This gives people enough time to prepare for the storm or evacuate to a safer location.
In these situations, your business should prioritize customer safety before profits. Delay actions like billing and sales pitches until you're sure customers are safe and that damage is limited. If there are urgent tasks that need to be completed, reach out to customer service personnel for help. But, remember, these are the times when it's more important to show customers you care about their well-being than to remind them about an overdue bill.
Unexpected Natural Disasters
Other disasters, like earthquakes and flash floods, aren't caught ahead of time. These can strike at almost any moment and cause devastating damage to towns and cities.
If your business or offices are affected by this type of disaster, the first step you should take is to assess the damage. Try to determine if you can keep your business open, and for how long. If the damage is severe, call up your insurance documents and anything else you'll need to file a claim for your business. Then, let customers know via social media if your business will be open, or if you'll need to close and when you expect to reopen.
If your business can stay open, but customers are affected by the disaster, you should focus on your customer service team. Plan for a spike in case volume as people will likely reach out with questions or concerns about their accounts. Remind your reps to be patient as customers may be juggling other important tasks while working with your team.
Permanent Climate Change
In rare cases, natural disasters create permanent changes in a region. Take forest fires or droughts, for example, as these events present long-lasting changes to an environment. If your business was dependent on a resource found in your area, this can create major problems for your organization.
For these scenarios, the best response is proactive planning. Creating a plan ahead of time to deal with these potential issues can help you avoid problems once natural disasters occur. You should be constantly updating your plan, too, giving you plenty of alternatives to choose from in case your original backup plan fails.
Let’s look at some real-world examples of companies faced with a crisis and how they handled them.
8 Crisis Communication Examples
Boeing experienced a major crisis when two of its 737 Max airplanes fatally crashed in Indonesia and Ethiopia just 5 months apart in 2018 and 2019. The crashes killed a combined 346 people and the manufacturer is still suffering the fallout from the events.
At first, Boeing blamed pilot error for the crashes until information surfaced later that it was a flight control software issue. In response, all Boeing 737 Max planes were grounded for 20 months by the FAA and other global regulators until regulators could figure out what software glitch was causing the fatal crashes.
As a result, Boeing’s stock price plummeted and they were forced to halt production of the Boeing 737 Max — costing them billions in losses. Once the pandemic hit in 2020 and air travel slowed, Boeing faced another crisis as orders for the model were canceled, which led to more financial losses.
To make matters worse, when the 737 Max was finally cleared to fly in November of 2020, they were grounded again in early 2021 after electrical issues were discovered. In 2021 Boeing was ordered to pay $2.5 billion to settle charges that the company hid issues with the plane from safety officials.
Where Boeing Went Wrong
Lack of Transparency
At first, Boeing deflected blame for the crashes to “inexperienced pilots,” but an investigation later showed that it was Boeing’s flight control software that was the main contributor to the crash. Moreover, the US Justice Department found that Boeing knew about the software issue and tried to conceal the faulty software from investigators.
"Boeing's employees chose the path of profit over candor by concealing material information from the FAA concerning the operation of its 737 Max airplane and engaging in an effort to cover up their deception,” stated a DOJ press release regarding Boeing’s fraud charges.
A Better Approach
While nothing would have made up for the loss of life, Boeing would have been better off coming clean about the existing software glitch. Their efforts to conceal the issue meant that pilot training manuals lacked information about the faulty system, which forced planes to nosedive after it overrode pilot commands.
Had Boeing been transparent about their automated flight control system, including it in their manual and informing customers of the aircraft of the software, tragedy could have been prevented. Additionally, being honest from the start could have spared Boeing from the intense public backlash they experienced and helped them retain a public image that reflected a company taking responsibility for its actions, instead of one that shifted blame elsewhere for monetary gain.
In 1982, Tylenol suffered a huge blow when seven people in Chicago were reported dead after consuming over-the-counter Extra-Strength Tylenol capsules. Shocked by the sudden crisis, the parent brand, Johnson & Johnson, discussed what to do: Does it risk its reputation by recalling the product or defend its reputation by claiming it to be tampering?
Fortunately, the brand decided to protect consumers over its reputation and conducted an immediate recall of its most profitable product: 31 million bottles at $100 million.
Additionally, the company went as far as to issue a national warning against consuming Tylenol capsules. Johnson & Johnson knew Tylenol wasn't responsible for the deaths; however, the brand's focus wasn't on proving its innocence, it was to protect consumers and ensure their long-term safety.
This could've left Tylenol in a very tight spot, but the company's initiative to immediately recall products, issue warnings, and establish hotlines for nervous customers left it in a strong light. Additionally, when Tylenol re-introduced its product, it used tamper-resistant packaging and promoted caplets, which are more difficult to tamper with. It also made over 2,250 presentations on the safety of the new product to educate dubious consumers. The dedication to promoting safety and making customers feel safe has made this notorious incident a model for crisis communication.
What Went Well
Tylenol took a proactive crisis management approach and opened the lines of communication with customers to reassure them that their products were safe. Additionally, the company introduced new safety features to their packaging to further protect customers from potential harm.
In 1993, Pepsi faced serious allegations about the safety of its products. The scandal began with an elderly couple in Washington who claimed to have found a syringe in their Diet Pepsi can. Over the course of a week, 50 reports came in about various objects being found in Diet Pepsi cans — pins, sewing needles, bullets, screws, vials, and more.
In response, Pepsi released a four-part video campaign showing the exact process each can follows in production. These videos proved there was no opportunity for a can to be tampered with before it was delivered to a store. Additionally, Pepsi got its hands on a security video showing a woman in Colorado inserting a syringe into a can of Diet Pepsi at her grocery store. This confirmed to consumers that Pepsi was innocent of the crime.
What Went Well
After confirming internally that the business was not at fault, Pepsi took an effective, defensive approach with its video campaign. Rather than claiming innocence and leaving room for controversy, Pepsi proved it using an educational video and security tape. The company even bought a print ad with the headline, "Pepsi, Proud to Introduce … Nothing" as a humorous attempt to move on from the incident.
4. American Red Cross
In 2011, the American Red Cross faced a more lighthearted crisis. One evening, the following tweet appeared on their Twitter account:
The tweet was shared by an American Red Cross social media specialist, who accidentally posted to her organization's Twitter account rather than her personal one. The organization could have received criticism from its followers if it had merely deleted the tweet an hour later and ignored it. However, the American Red Cross decided to take a humorous approach to crisis communication with this follow-up tweet:
Even Dogfish Head brewery jumped into the conversation, encouraging people to use the hashtag #gettngslizzerd and donate to the American Red Cross. All in all, the incident brought more attention to the American Red Cross and the company enjoyed a spike in donations. The organization's lighthearted response to the situation — rather than issuing a formal public apology or taking a more serious stance — showed customers that even the largest organizations make human mistakes.
What Went Well
Using humor worked in the Red Cross’ favor when handling this incident. It added levity to a situation that could have become a public relations nightmare while reassuring the public that the organization had everything under control.
Amazon faced criticism in December 2021 after a tornado ravaged one of its warehouses in Edwardsville, Illinois. Six people died in the warehouse collapse in Illinois as a series of tornadoes ripped through parts of Tennessee, Kentucky, and Arkansas.
Once reports surfaced of Amazon warehouse workers allegedly being forced to continue working through tornado warnings, the company’s health and safety guidelines quickly came under scrutiny. The Occupational Health and Safety Administration (OSHA) is now investigating the matter.
Where Amazon Went Wrong
Amazon’s first misstep was a delayed public response. CEO Jeff Bezos took nearly 24 hours to respond to the warehouse collapse.
"The news from Edwardsville is tragic. We're heartbroken over the loss of our teammates there, and our thoughts and prayers are with their families and loved ones," Bezos tweeted. "All of Edwardsville should know that the Amazon team is committed to supporting them and will be by their side through this crisis. We extend our fullest gratitude to all the incredible first responders who have worked so tirelessly at the site."
Bezos was quickly lambasted across social media, with many suggesting that his statement was insincere.
A Better Approach
When such a tragic loss of life happens, it’s best to come out with a statement that expresses empathy sooner rather than later. Bezos’ reply came across as insincere in part because it was delayed. The CEO had been steadily tweeting and posting about the landing of Blue Origin throughout the day, so by the time he made a comment about the tornado tragedy, it seemed like an afterthought.
6. Virgin Group
In 2014, the Virgin Group faced a massive crisis when a Virgin Galactic test flight crashed. The SpaceShipTwo space tourism craft crashed while flying over the Mojave Desert in California. One pilot died from the crash, while the other was injured. The crash caused a large setback to the Virgin Group's space travel plans, as well as to commercial space tourism as a whole.
The Virgin Group began with sharing details of the crash and showing genuine concern for the pilots and their families. Sir Richard Branson, the founder of the Virgin Group, tweeted numerous times with updates and personal remarks. Branson immediately flew out to Los Angeles to be at the scene of the incident and take ownership of the unfortunate situation.
What Went Well
What made this crisis communication so successful was that the Virgin Group and Branson never strayed from their mission. They didn't quit their efforts with Virgin Galactic, rather, their message stayed consistent: "Space is hard – but worth it. We will persevere and move forward together." They didn't want the pilot to die in vain, and this message resonated with the public.
A common theme we can take from all of these examples is the importance of immediacy. The longer an organization waits to respond, the larger the crisis gets. When a company ignores social media and customer reviews, users start to come to their own conclusions on a crisis — and those conclusions usually place the company as the perpetrator.
7. Burger King
In the fall of 2019, a man who follows a vegan lifestyle filed a lawsuit against popular burger chain Burger King on the basis that the company misled other vegan customers regarding the newly introduced Impossible Burger. Upon realizing the meatless patties were prepared on the same grill as the 100% beef burgers, the plaintiff alleged that the ads weren’t clear that the burger was not completely meat-free.
Other popular fast-food chains like Subway and Wendy’s experienced similar crises in the past regarding issues with food preparation. Although both were unfounded claims, they caused a significant crisis for both brands. It’s not a surprise that Burger King experienced similar, unfounded claims.
Although Burger King had a strong rebuttal against the lawsuit, the company awaited the decision of the judge who dismissed the case a year later due to lack of evidence from the plaintiffs.
What Went Well
Burger King was successful in this crisis communication because it allowed the crisis to run its course without intervening more than necessary. At the announcement of the case dismissal, Burger King responded, “This claim has no basis.” Shortly thereafter, the crisis subsided and Burger King used humor to double down on the ads for the meatless Impossible Burger in its next ad campaign.
8. Fyre Festival
If you didn’t hear about the Fyre Festival — two weekends of music and “fun” on the Island of Exuma — when it was initially promoted in 2017, you probably learned about the party-turned-nightmare when sparks flew a couple of months later. It’s no secret that the Fyre founders make a lot of mistakes in throwing this festival, and in this example, we’ll focus on what exactly went wrong and identify a better approach to manage the crisis.
The once-in-a-lifetime event was founded and promoted by entrepreneur Billy McFarland and Grammy-nominated rapper Ja Rule as an industry-changing event for musicians and artists to host concerts for fans who wanted to see them up close and personal.
The entire ordeal was a series of unfortunate events caused mostly by poor planning and decision-making by McFarland. His goal was to bring in as much revenue as possible in a limited time frame, but he had no guarantees that the festival would actually happen. Investors were lied to about details regarding the festival’s progress, the owners of the original island where the festival would be held pulled out due to branding issues, and local citizens of the Island of Exuma were hired for work but never received payment for it.
Where Fyre Fest Went Wrong
The Fyre Festival went wrong in several areas:
The festival planners delayed canceling the event after evidence appeared early on that suggested the festival would not happen. Instead, the company offered tickets to the next Fyre Festival scheduled for 2018, but that never came to fruition.
Misrepresentation of the Product
The Fyre Festival Instagram page featured videos and photos of models marketing the festival, but no images of the lodging accommodations were shared, and details about travel arrangements weren’t released until days before the event.
With hundreds of festival-goers eager to have the time of their lives on a private island in the Caribbean, McFarland and his team ran into several issues and deflected responsibility for them up until they called off the event. After day one, the crew canceled all flights coming into the Exuma Islands citing “circumstances beyond our control.” Eventually, the team did issue a formal apology and offer refunds (and next year’s tickets) to make up for the inconvenience.
A Better Approach
There is rarely an instance where a company won’t benefit from being transparent and honest when things are or aren’t going well. Communicating early and often can address customer needs before they ask for help. Authenticity, empathy, and accountability are requirements for a successful crisis communication plan — especially when the crisis is brought on by the business itself.
When specific parts of an event or product launch aren’t progressing according to plan, assess whether the setbacks are temporary or if they’ll have a substantial impact on your brand. For example, you wouldn’t want to unnecessarily alarm customers of issues that your team can and will fix that won’t have any impact on them in the short- or long term. On the other hand, you’ll want to notify them of difficulties that could affect their decision to do business with you.
The Fyre Festival did the right thing, but the timing could’ve been better. Business owners can learn from this, though. Waiting until the point of no return to start crisis management isn’t helpful for the business or the customers. While investors may have been unhappy with canceling the event at any point in time, it’s best to put integrity at the forefront of the business and make the right call early on rather than pulling out all the stops in an attempt to recoup revenue.
This crisis was one of the biggest in 2017 — and arguably one of the biggest of the latter half of the 2010 decade. While the Fyre Festival doesn’t have a happy ending, it teaches business owners exactly what not to do in a crisis which can be just as helpful as best practices are.
Next, we’ll dig a bit deeper into crisis management situations with the case study below.
Crisis Communication Case Study
The COVID-19 pandemic pummeled the hospitality and travel industries and cruise lines faced unique challenges navigating the outbreak at sea. In February 2020, the Diamond Princess cruise liner found itself stranded at sea due to the pandemic. According to a case study conducted by the Boston Hospitality Review, one of the ship’s passengers that had disembarked January 25th in Hong Kong had tested positive for COVID-19. Health officials in Hong Kong then used contact tracing to track down the ship and notify the captain.
Instead of immediately notifying the crew and passengers, the captain waited two days, which allowed the virus to spread throughout the ship. Once the captain did notify the crew and passengers on February 3rd, ship activities continued as normal until roughly 11 PM that night when the captain asked everyone to remain in their cabins.
The ship docked in Japan’s Yokohama port where health officials boarded the ship to administer tests to passengers. On February 5th, the first round of virus tests came back positive which kicked off the ship’s quarantine. Passengers were stuck on the ship until the end of February when the last passengers were repatriated. After that, the crew of 1,045 was then left to quarantine on the ship for two weeks.
With a crew from various countries — all with different repatriation guidelines, it was a challenge to comply with multiple government regulations. The Diamond Princess finally left Japan in May of 2020 and waited out a no sail order with 20 other ships off the coast of the Philippines.
- Delays in communication were costly: Waiting to report the initial COVID-19 case onboard allowed the virus to spread quickly throughout the ship. While the pandemic was in the early stages and people were unsure of how it was spread, taking action earlier could have helped contain the virus.
- Having an emergency action plan is essential: Having a standardized set of guidelines for different emergencies cuts down on confusion and can help ensure crew and passengers are all on the same page. The crew of the Princess Diamond was forced to take care of the passengers and the pandemic situation as best they could, without any training for how to handle a pandemic. At one point the passengers were still doing scheduled activities on the ship after positive cases were found, which allowed the virus to spread further. Additionally, the crew didn’t have enough personal protective equipment (PPE), which put them at risk.
- Staying on top of repatriation policies: One of the challenges of the Princess Diamond cruise outbreak was figuring out how to get passengers and crew back to their home countries. As each nation had its own set of rules, passengers were left confused about how to get home while the crew was trying to figure out a solution as the crisis unfolded.
In any case, lack of clear communication between captain, crew, and health officials left passengers in a lurch. Additionally, the confusion around proper emergency protocol can make customers less confident in the company’s ability to handle a crisis should one arise.
Preparing for the Problems You Can’t See
Naturally, you can't plan for every type of crisis, so it's important to use your best judgment. Certain communication strategies, such as humor, can be vastly effective in some cases and absolutely inappropriate in others.
At the end of the day, every response to a crisis should prioritize the customer, putting the company and its property second. A genuine consideration for consumers is what will help your crisis blow over while your business comes out on top.
Editor's note: This post was originally published in January 2020 and has been updated for comprehensiveness.
Originally published Mar 9, 2022 7:00:00 AM, updated March 09 2022