Let’s be honest. When a rival brand faces congressional scrutiny or has to recall a product, you feel a certain schadenfreude.
It makes sense. It’s natural. But truth be told, a competitor’s crisis is no time to sit back and enjoy the show.
Because your competitors represent your industry. And if one of your competitors is in crisis, it’s all too easy for observers to extend their distrust, disappointment and other not-so-good feelings about that brand to everyone else in the group. Including you.
According to researchers at the University of Washington (UW), this is called the “perverse halo”: One brand’s crisis drives an increase in negative chatter about competitors. The UW research focused on auto manufacturers, but it has implications across all types of industries, from toothpaste to toys.
Whether it’s a rain cloud over your brand from the beginning or runoff from a competitor issue, negative online chatter can be both impactful and lasting. Your reputation, stock price and shareholder confidence all can suffer. And when you’re caught up in the perverse halo, you may not notice it until some damage has already been done.
So how do you protect yourself from guilt by industry association? A combination of preemptive reputation building, solid listening tools and a plan-for-the-worst mentality.
Next time a competitor stumbles, don’t assume you’re in the clear. There may be industry fallout with a direct effect on you.
Even there isn’t, you can take the opportunity to assess your own crisis preparedness: If it were your company in that situation, would you be ready?