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Crisis Management Lessons Learned From Starbucks

  • Written by  Jonas Sickler, Reputation Management

0aaaJonas Sickler Reputation ManagementThere are no shortages of public relations disasters among retail brands. Whether a crisis is caused by social media, employee scandal, data loss or racial discrimination, the impact on brand reputation and revenue can be severe. Some companies struggle to repair their search landscape for years, yet Starbucks search results seem to be immune to negative press.

So how did Starbucks develop a seemingly bulletproof online reputation, and what can other retail brands learn from them? The answer is as simple as it is obvious; Starbucks has a textbook crisis management strategy and they execute it perfectly. Let’s dig into their recent racial discrimination incident to understand how they recovered so quickly.

How The Crisis Unfolded

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On April 12, 2018, two black men asked to use the restroom in a Philadelphia Starbucks. They were denied access because they hadn’t made a purchase as required by corporate policy, and they were asked to leave. After refusing to comply, a white manager called the police and the men were arrested on suspicion of trespassing. It was later learned that the gentlemen were waiting for a business associate before making a purchase.

Accusations of racial bias in the days following the arrests prompted a wave of protests and boycotts. Media coverage became predominantly negative and Starbucks’ brand sentiment was falling. The coffee giant needed to find a swift resolution and assure customers that this was an isolated incident which would never again happen.

How Starbucks Controlled The Crisis

Company leadership understood that their response must be clear, meaningful, actionable and systemic. The company’s crisis management strategy can be broken down into three parts: communication, resolution and recovery.

Communication

Companies often attempt to mitigate crises by issuing vague, canned responses that downplay the severity of the situation. This approach often backfires because brands appear disingenuous, sparking further backlash from customers and the media.

In contrast, Starbucks’ crisis communication plan was effective because it was clear and simple. They designated a single spokesperson, CEO Kevin Johnson, to deliver one clear and consistent message: this was wrong; we’ll do better. Johnson wasted no time in stepping up and shouldering the blame himself. Not only did he accept responsibility for the policy that led to the incident, he denounced the treatment of the gentlemen in the following statement:

“The circumstances surrounding the incident and the outcome in our store on Thursday were reprehensible, they were wrong, and for that, I personally apologize to the two gentlemen who visited our store.”

Starbucks’ communication strategy was laser-focused on five key points that could all be tied back to their core message: this was wrong, we’ll do better.

  1. Accept responsibility
  2. Denounce the situation
  3. Fix the problem
  4. Make amends
  5. Move forward

Resolution

While individuals should be responsible for their actions, shifting all blame to lower-level employees can be problematic. Doing so could leave bad policies and ineffective managers in place, in addition to risking a similar incident in the future. Starbucks went above and beyond to demonstrate that the company was serious about change by executing the following crisis resolution strategy:

  • Address the employee involved — Starbucks determined that it was in the best interest of both parties to remove the manager from the store.
  • Negotiate a settlement with the gentlemen — The details of the settlement aren’t public, but the agreement included an offer for free college tuition.
  • Revise customer restroom policy — After an internal investigation, the company decided to update its policy to allow anyone to use store restrooms without making a purchase.
  • Close stores for racial bias training — In a controversial move, Starbucks announced that it would close all locations in the U.S. for racial bias training. Initially the decision ruffled investors, but the ultimate cost of closing for a few hours was much less than the impact of continued boycotts and protests.

Recovery

While Starbucks’ crisis response was textbook, their online reputation management strategy has been second-to-none. It’s common for a brand’s search landscape to remain contaminated with negative press long after a public relations disaster has been resolved. Yet it only took three months for the incident to vanish from the first two pages of Starbucks’ search results. The company did two things that htraining. The statement demonstrated how serious the company was about correcting the issue while giving Starbucks more control over their brand’s narrative.

Additionally, resolving the situation within 30 days reduced the amount of negative content that could be published. For example, once the training had been concluded, the story was essentially over and the press moved on. Had the resolution been pushed out several months, the Internet could have been flooded with hundreds more articles.

Positive media blitz: After resolving the crisis, Starbucks executed an aggressive public relations strategy to shift the narrative away from the crisis. It was no small feat to convince the media to drop the racial bias story, either. To do so, the coffee company pushed out six major news stories that leveraged multiple types of press releases.

  • Staff — Howard Schultz, outgoing Starbucks chairman, was rumored to be considering a 2020 presidential run. This story exploded across news outlets, quickly pushing down articles about the crisis.
  • News — On July 9, Starbucks announced that the company would eliminate plastic straws by 2020. This is a perfect example of corporate social responsibility that builds positive brand sentiment, and the story was picked up by many top-tier news outlets.
  • Launch — The coffee brand announced that it would be opening 1,000 stand-alone bakeries under the name Princi back in November 2017, but the first was officially unveiled on July 31 of this year. The exciting press release sparked a round of positive articles with mouthwatering photos, further drowning out the stale crisis story.
  • News — Starbucks and McDonald’s teamed up to save six billion paper cups a year from landfills. While the original announcement came in March, it was overshadowed by the breaking crisis before being revived again in August. This press release is yet another great example of CSR that drives positive brand perception.
  • Product — On August 8, Starbucks-owned juice brand Evolution Fresh launched a new Organic Kombucha line of products.
  • Promotion — Starbucks also began promoting a BOGO happy hour special throughout July and August. This was the most sales-oriented press release, but it certainly generated excitement and garnered positive mentions in articles.

Crisis management is a nuanced process that must be taken seriously. If brands take note of how Starbucks navigated their situation, they’ll be more likely to emerge unscathed. Keep things simple, and follow these guidelines: 

  • Define your strategy before a crisis breaks;
  • Be accountable and empathetic;
  • Control the narrative;
  • Clearly communicate your solution;
  • Resolve the situation quickly; and
  • Promote your brand’s positive initiatives.

 

Jonas Sickler marketing director at ReputationManagement. He is an expert in online reputation management. He writes about marketing and crisis communications to help businesses avoid common public relations disasters. His advice has been featured in more than 60 publications, including Forbes, Washington Post, CNBC, TheStreet, and U.S. News. Follow along on Twitter.

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