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.

  • Shore up your own reputation. Are you known for safety? Eco-friendliness? Overall excellent quality? Sustained, thoughtful and clear communication of your company story will build your reputation over time. The stronger your foothold, the less susceptible you’ll be to the impact of issues that pop up within your industry.
  • Pay attention. Tune in to the conversations happening online (and offline) so you can identify shifts in tone and react quickly when you need to. A dedicated social media monitoring system is never a bad idea, but even something simple like Google alerts goes a long way. And remember: It’s not just about monitoring posts about your Use broad keywords and competitor names to keep an eye on what’s being said about your industry as a whole. A perverse halo might be taking shape out there …
  • Have a plan ready. If your brand came under fire right now, would you know how to respond? Having a clear plan of action of when, and how, to escalate concerns will allow you to move quickly if the need arises. How brands react to crisis can make or break their reputation, and adequate preparation is the first step in managing an issue.

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?

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