How TSB must respond to its service disaster and restore customer trust

With half of its customers unable to access their online accounts for several days, TSB's reputation is in tatters. How can it restore customer faith in its service?

It has been a bad week for British customers of TSB, many of whom have been unable to access their online accounts for several days. And the bank has subsequently felt the full force of the dissatisfaction of its disgruntled customers.

Problems first arose last Friday when TSB attempted to migrate customer accounts to a new platform. However, the migration didn’t go to plan, and it is estimated that around half of its customers have since been unable to access their online accounts.

Unsurprisingly, this has caused chaos for customers, some of whom run small businesses that could collapse if they lose business by being unable to pay contractors.

TSB boss Paul Pester has admitted that the bank is "on [its] knees", but has pledged to “get up and come back fighting”.

So what can the bank do to rescue its reputation in the wake of such a significant service disaster?

Chris Clarke, director of Shrink Consulting, highlights Dell’s reaction to the problem of exploding PC batteries in 2006.

He says: "Dell and its exploding computers [battery recall] was the largest recall in the history of consumer electronics, and a good example of how to best handle an issue. Dell has since become a model for how a company can rapidly and accurately respond to its customers by:

• Using open dialogue and clear communication. Communication channels included a customer service line and a website with details and instructions for customers.
• Taking responsibility. Dell handled the crisis even though the batteries were manufactured by another company.
• Demonstrating responsibility as a brand when things go wrong. Dell recalled the batteries despite the incident occurring in six out of 20 million batteries in the marketplace.”

Nirmalya Kumar, professor of marketing, Singapore Management University, also shares the following advice:

• Be candid – address the problem openly and head on. “Unfortunately, hope often trumps reality,” he says. “Many companies wish their problems would stay under the radar screen, they stonewall the public, or even worse, issue outright denials. Exxon famously responded with “no comment” in wake of the Valdez oil spill. Merck went as far as instruct its sales force not to disclose information over the Vioxx crisis. Understandably, companies may feel threatened by a deluge of press inquiries, but speed and clarity of response is essential. The media may be converted into an ally, and internally, it is vital to maintain staff morale.”
• Be contrite and assume responsibility. “Johnson & Johnson immediately took responsibility over the tampering with Tylenol, even though it was hardly to blame. In contrast, Exxon confused the issue of taking responsibility with taking blame. The level of contrition expected by the public varies with whether the recall is an outcome of a malicious attack, accident, or an internal quality failure. Of course, culture matters here. After the Japan Airlines crash that claimed 520 lives in 1985, JAL’s chief executive publicly apologised and tendered his resignation. While, ultimately, it is important to ascertain where responsibility for the failure lies, the burning need of the moment is that the company is seen to take responsibility.”
• Be compassionate, be personal. “Press releases simply will not do. Johnson & Johnson managers were seen weeping on television cameras as they attended victims’ funerals. In contrast, Lawrence Rawl, Exxon’s chairman, waited two weeks after the oil spill to fly to Alaska. Sadly, all too often the only personal attention the affected receive is being ambushed by company lawyers and photographers.”
• Be committed – this requires a cross-functional response team with top management and should not be a public relations exercise. “The team’s priority should be immediately to assess the source and potential impact of the crisis. Once the programme is announced, how will the company wholly commit itself to making the process as customer-friendly and effective as possible? Obviously, preparation helps. A well-prepared company goes beyond buying crisis insurance. It has mechanisms, people and policies to help avoid and manage crises. The brand also needs to consider how to get back on its feet. J&J introduced triple tamper-proof seals on its packaging, coupons and deep price cuts to win back the market, and seminars by its sales force to doctors. Goodwill still has to be converted into sales.”

Whether TSB will be able to fully restore its reputation will depend on more than just its response, however.

Research by the Institute of Business Ethics has discovered a pattern amongst those that have successfully rebuilt their reputations internally and externally. The damage to reputation trustworthiness when something goes wrong is mitigated by two things - the way the company responds to it, and the other thing is prior reputation of trustworthiness.

This suggests that if TSB had a strong reputation prior to the event, and a strong relationship, then the good will from stakeholders will mean they will be more forgiving. However, if there has been a history of things going wrong then it will be more difficult to recover.

Provided that this has been an extraordinary event, rather than the latest in a series of calamities, Kumar believes that this kind of product/service disaster represents a moment of truth for brands.

He concludes: “A poorly-managed response can unmask a brand promise as a hollow boast. But a well-managed product recall converts the crisis into a chance to demonstrate a company’s regard for its customers. Business as usual rarely offers such opportunities.”