Leadership Marketing

Brand Betrayal and its Impact on Your Customer Relationship

The next time you’re struggling with betrayal on your hands, as it happens from time to time, pull out this formula and apply it to your customer experience. You’ll be surprised that the intention of how you plan to make your customer whole and how the situation is treated will return a happier customer and potentially lifelong fans.

After publishing pieces on Brand Promise and Brand Values, I wanted to explore a conversation about Brand Betrayal. To lay it out on the table, brand betrayal is essentially developed when a customer has a previously established a strong connection — and that connection is fractured causing deep dissatisfaction. 

In recent years several brand betrayal cases have entered the limelight including Volkswagen and Facebook to name a few. After personally going through the hardship of my company’s brand promise getting challenged by a customers’ feelings of betrayal I have been mindful and purpose-driven in what is being promised to the customer.

Our customer experience was built around the notion of “Creating Happiness.” We were a full stack software design and development agency that served entrepreneurs who launched their businesses and needed some sort of app, website, or a combination thereof. We focused our core values internally to support the employee experience and applied them to the ethos defining our customer expectations. The hard part was learning that “creating happiness” had a different meaning to everybody and it became increasingly difficult for our agency to quantify delivering on that promise.

The betrayal resulted in a very unhappy customer who challenged our promise of creating happiness. It was young entrepreneur who had a vision for the product and an idea of how the investment would deliver exponential return based on the scope of work we built together. Their unhappiness took shape in several ways including a few very prominent review sites that put our agency on display and as a result, we experienced a significant downturn in leads, client trust, and unexpected morale hit on our leadership team. The point of this example is not to point out who was right or wrong in this instance but to provide an anecdote that supports the importance of the brand promise, betrayal, and how it can impact the relationship of the customer. If a customer feels betrayed, it doesn’t matter who is in the wrong — the brand needs to address the situation and do what they can to make the customer whole.

So what did we do to repair the relationship and assuage the fears of current and future customers? We followed a simple formula. Getting this out of order or missing a single bullet made our clients very angry in the past. In my experience, this is how all customer responses should go when the brand could be perceived as being in the wrong. While we didn’t regain the upset customer, how we handled it allowed us to rethink our customer engagement, realign our promise to meet the needs of the organization, and our customers’ expectations. 

Volkswagen used this formula to respond to the scandal of 2015, here’s how: 

 1) Explain what happened:  Although it took time, Volkswagen fully acknowledged that they had manipulated the vehicle emission tests only after being confronted with evidence regarding the “defeat device.”* Several announcements into the development of the scandal and an explanation was due to the public eye.

2) Explain how and when the problem was discovered: A formal acknowledgment of the deception was made by Volkswagen executives in Germany and the United States to EPA and California officials during a September 3 conference call, during which Volkswagen executives discussed written materials provided to the participants demonstrating how Volkswagen’s diesel engine software circumvented US emissions tests. That admission came after the EPA threatened to withhold approval for the company’s 2016 Volkswagen and Audi diesel models. *

3) Explain the plans to/or have already fixed it going forward so that it can never happen again: A few weeks later, on September 28th, 2015, it was reported that Volkswagen suspended Heinz-Jakob Neusser, head of brand development at its core Volkswagen brand, Ulrich Hackenberg, the head of research and development at its brand Audi who oversaw the technical development across the Volkswagen group, and Wolfgang Hatz, research and development chief at its sports-car brand Porsche who also heads engine and transmissions development of the Volkswagen group. In addition to the internal investigation, they hired an American law firm as well as the ex-FBI director Louis Freeh, alongside former German constitutional judge Christine Hohmann-Dennhardt. Volkswagen was taking the scandal very seriously as to not lose their customer loyalty entirely.*

4) Make the customer whole: As an act of reconciliation, on September 29, 2015, Volkswagen announced plans to refit up to 11 million affected vehicles, fitted with Volkswagen’s EA 189 diesel engines, including 5 million at Volkswagen brand, 2.1 million at Audi, 1.2 million at Škoda, and 1.8 million light commercial vehicles. On November 9, 2015, Volkswagen announced that 482,000 diesel Audi and Volkswagen owners in the United States would be eligible to receive $1,000 vouchers or a $2,000 bouncer for current Volkswagen owners for trade-ins.* I had a co-worker at the time who had a Diesel VW and he was made whole by accepting a rebate to put toward the trade-in of a brand new Volkswagen, which was in his perception one of the best ways to keep a raving fan of your brand after a crisis.

5) Tell them how much they’re valued as a customer: The new Volkswagen core values promise “accountability, teamwork, servant’s attitude, and integrity.” The popularity of the brand confirms that it diligently serves and satisfies the needs of all its customers. This is among the various practices that VW is known for, together with being a responsible corporation due to its core values. The company has also managed to withstand both internal and external challenges in its business because of how it values teamwork and doing things right. Since the scandal of 2015, it’s new model launches, technology advances and additional retail offers including diligence to any safety recalls keep them in a strong position in terms of brand loyalty to their customers. 

Missing any one of those points could cause a loss of a customer at a much higher percentage rate and in doing so following this formula works very well if you intend to keep your customers on board. The next time you’re struggling with betrayal on your hands, as it happens from time to time, pull out this formula and apply it to your customer experience. You’ll be surprised that the intention of how you plan to make your customer whole and how the situation is treated will return a happier customer and potentially lifelong fans. 

*https://en.wikipedia.org/wiki/Volkswagen_emissions_scandal#Initial_response_August,_September_2015 

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