Peloton's plight offers lessons for brands dealing with recalls
After standing behind its Tread+ treadmills last month amid safety warnings from the U.S. Consumer Product Safety Commission last month, Peloton recalled the products earlier this week. In a public statement of apology, CEO John Foley admitted the brand made a mistake by initially refuting the CPSC warnings. Peloton, which is researching the issue and planning a software update, offered customers a choice in receiving a full refund or moving services for a room where children and pets do not have access.
The about-face was a rare misstep for a brand that has seen its popularity skyrocket in recent months as customers clamored for home-based fitness products during pandemic lockdowns. Yet Peloton’s plight offers a lesson to other brands when it comes to trying to regain consumer trust following a costly recall.
“When these things happen, it’s a good wakeup call for every company—are we prepared?” says Jim Stengel, former chief marketer at Procter & Gamble. “It’s going to happen in the course of a career to everyone, but we don’t talk enough about it.”
Below, some expert advice on how brands should prepare for and deal with recalls.
Always be ready
As Stengel points out, product recalls happen more regularly than consumers might think. To avoid the backlash of a public fight with the CPSC, brands should always be ready for a recall with a best practices document ahead of time.
“Strong brands plan for these very scenarios and are prepared to take action right away,” says Martin Predd, managing partner at Brand Amplitude, a brand strategy firm. Karen Doyne, president of Doyne Strategies, a crisis communications firm, says that before making a decision on taking a product back, brands should “game things out” to see how the situation might develop publicly with different scenarios. “It helps them make informed decisions about the pros and cons and the costs of action vs. inaction,” she says. “If they ultimately decide to resist, at least they know what they’re in for and how to prepare.”
Timing is key
By delaying a recall decision and refuting the CPSC, Peloton made the situation worse, experts say. But not responding immediately is a common mistake, and one most notably made by Fisher-Price with its Rock n’ Play baby sleeper, which was recalled in 2019 after the deaths of 30 babies over a series of several years. Subsequent reports found that the baby brand never ran safety tests despite accident reports. Experts say brands should make it a priority and take action right away if there is a hint of a safety concern. Peloton, for example, could have committed “to work with [the CPSC] to investigate the matter and determine if additional safety measures were needed” and paused product sales in the process, says Denise Lee Yohn, a brand leadership expert. “The company’s lack of action and defiant messaging was not only misguided, it also seems in direct conflict with the ‘for the people’ spirit and values of the brand,” she adds.
Apologize right away
Though it waited on an apology and recall, Peloton was able to salvage some of its brand equity by issuing a strong admission of fault from the top with Foley’s statement. To rebuild trust, brands should keep an open dialog with customers after recalls, and also use a voice of sincerity. “They should smother affected families with love and provide a sounding board for thousands of others who were not directly affected, but remained concerned,” says Predd. “It’s not only the right thing to do, it’s also likely the smart thing to do,” he adds, noting that “the cost of eroded brand trust doesn’t neatly appear on a balance sheet, but can last for years.”
Use data to come out on top
Brands should immediately try to understand what went wrong with a product and how to fix it by using investigative teams to talk to customers and research. Experts suggest a deep-dive assessment looking into what happened with the product. “Run to the site, get the data, then act accordingly,” says Stengel. He notes that Toyota, which recalled its floormats in 2009 for an issue regarding the car pedals, compiled a lot of data to understand the root cause of the safety issue, and that worked out well in the long-term for the automaker.
Recovery is possible
Brands like Fisher-Price and Toyota, and even Volkswagen, which lied about its emissions, have all reemerged from recalls with their brands largely intact. Fisher-Price products are regularly highlighted on Wirecutter, New York Times’ product review site. Toyota today ranks as the world's most valuable auto brand according to Brand Finance, which publishes an annual ranking of brand values. Volkswagen's sales largely recovered from the emissions scandal. But the automaker is now dealing with backlash over an April Fools' Day stunt in which it pretended to rebrand as "Voltswagen." While that had nothing to do with the emissions issue, reporting on the prank raised questions about why the brand would tread into falsehoods, even in a joke, after having its credibility hurt not long ago. It proves that brands must never forget their recent recall past, even if most of the damage is in the rearview mirror.
As it investigates and makes product changes to its Tread+, Peloton has an opportunity to be an advocate for safety in the entire treadmill industry, which has a long history of accidents involving children and pets. “This will be a chance for them to take an industry leadership position,” says Stengel. “It’s about the safety of everyone—[they can say] ‘We’re going ti take the high road and help the industry figure it out.’”