Turning Bad News Into Good Vibes - New Siegel+Gale
Simplicity Survey Finds Organizations Can Strengthen
Customer Relationships in Times of Crisis
Tuesday July 28, 2009 - 13:45 PM EDT
Source: PRNewsWire News Releases
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NEW YORK, July 28 /PRNewswire/ -- During times of economic crisis, organizations struggle to
communicate unfavorable news, from lower earnings and shrinking market share, to cuts in service and
increases in prices. The conventional wisdom is that bad news damages customer relationships and breeds
mistrust among consumers. However, a new Simplicity Survey from global strategic branding firm
Siegel+Gale finds that delivering bad news is an opportunity -- if done in the right way -- to strengthen
customer relationships and lay the foundation for increased trust and loyalty when conditions improve.
"It's important to communicate facts clearly, but clarity is not enough," says Alan Siegel, Chairman and CEO
of Siegel+Gale. "In order to strengthen relationships with customers, organizations must commit to open,
transparent communications that respect people's intelligence by offering complete, relevant, and insightful
explanations of bad news. People are tired of self-serving platitudes."
Siegel+Gale examined a wide cross section of customer communications likely to appear in the average
consumer's mailbox, and tested four representative examples, anonymously, in an online consumer panel. The
examples tested included a:
1. Charge card company letter - announcing an increase in late fees
2. Major bank letter - announcing a credit card interest-rate increase
3. Not-for-profit institution letter - announcing budget cuts and soliciting donations
4. Mortgage lender pamphlet - explaining a new mortgage summary document
"We tested communications using six criteria: comprehension, clarity, credibility, relevance, usefulness, and
engagement," says Lee Rafkin, Siegel+Gale's Global Director and Practice Leader of Simplified
Communications. "We found that even though customers didn't like the bad news they were receiving, they
still respected and trusted those organizations that clearly communicated the reasons behind the bad news."
The communications that scored the lowest on measures of credibility and engagement did very little to offer
comprehensive, credible, and contextually relevant explanations. For example, the letter from the bank
announcing a credit card interest rate increase gave as its explanation that it was raising rates "to maintain
profitability." Predictably, it drew this comment:
"It feels like the bank wants to squeeze me for all they can. They're not interested in me as a loyal customer;
I'm just a number to them."
The letter from the charge card company announcing an increase in late fees gave absolutely no reason at all
for its change. "This is even more offensive to consumers than a dubious or incomplete reason," says Mr.
Rafkin. "In a vacuum, consumers will 'fill in the blanks' and invent their own, sometimes much more
damaging explanation," as represented by this comment:
"This company just wants average customers like me to compensate them for losses they've suffered due to
their own poor business practices."
The letter from the not-for-profit was both comprehensive and relevant in the detailed explanation it provided.
It used 2 pages to explain the impact of the economic climate on revenues and fundraising, detailed how and
why it was cutting its budget, gave an overview of its plans, and reaffirmed its commitment to its core
mission. The response from consumers was dramatic. This letter scored twice as high as the bank and credit
card letters on factors including trust and loyalty. Respondents appreciated the organization's efforts to justify
"This organization seems honest and upfront. They are forthcoming and direct with their information, which
is always good."
Respect Trumps All
Siegel+Gale's Simplicity Survey found that when communicating in times of crisis, respect trumps even clarity
and comprehensive explanations. The communication that tested best overall was the pamphlet from the
mortgage lender. It explicitly stated its commitment to transparency and easy-to-understand descriptions of
loan terms and costs. It was judged to be most informative, balanced, and direct, and made respondents feel
most loyal to the company. One typical comment was:
"This pamphlet makes me feel the mortgage lender is being straightforward and inviting me into their
financial institution. I feel very good about this company."
Says Lee Rafkin: "In the current climate of mistrust toward financial institutions, it's clear from Siegel+Gale's
latest study that communicating bad news does not have to damage customer relationships. The path to
rebuilding trust and loyalty is through clarity, comprehensive explanations, and respect."
"How bad news is communicated matters," says Mr. Rafkin. "We found a strong correlation between clarity,
comprehensive explanations, and respect on the one hand, and trust, engagement, and loyalty on the other."
If customers believe that organizations are forthcoming, provide an appropriate level of relevant detail to
support their actions, and show they value and respect their customers, people are not only more accepting of
bad news, they are also willing to show such organizations deeper loyalty down the road.
Siegel+Gale conducted its online consumer panel survey in June 2009, with a nationally representative
sample of 400 U.S. respondents over age 18; 200 respondents read and answered questions for each of the
To speak with Alan Siegel or Lee Rafkin, to receive a copy of the Simplicity Survey research report, or to
learn more about Siegel+Gale's Simplified Communications Practice, please contact Davia Temin, Christine
Summerson, or Trang Mar of Temin and Company at 212-588-8788 or email@example.com.
Siegel+Gale (www.siegelgale.com) is one of the world's premier strategic branding companies and a pioneer
in simplifying complex customer communications. Since it was founded by Alan Siegel in 1969, the firm has
applied the art and science of simplicity to create branding programs that have helped many of the world's
best-known organizations excel. Driven by its philosophy of "Simple is Smart," Siegel+Gale has led the way
in bringing innovation to the corporate branding field, including transforming complex, incomprehensible
customer communications into plain English; helping clients create distinctive brand voices across all their
communications; transporting brands onto the Internet; and aligning the brand experience with the brand
The firm's clients include AARP, Aetna, American Express, Bank of America, Dell, The Four Seasons Hotel
Group, The Internal Revenue Service, Lexus, Merrill Lynch, 3M, Microsoft, Motorola, the National
Basketball Association, Pfizer, and Sony PlayStation. Siegel+Gale has offices in New York, Los Angeles, San
Francisco, London, and Dubai, and strategic partnerships around the world.
Siegel+Gale is part of the Omnicom Group Inc. (www.omnicomgroup.com), a leading global marketing and
corporate communications company. Omnicom's branded networks and numerous specialty firms serve over
5,000 clients in more than 100 countries.
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