Crisis management: what is it, why is it important and how to do it

Crisis Management

Doing the best crisis management is critical for the survival of companies, so it is necessary to plan before the problem happens

It is a mistake to think that a company cannot be hit by a crisis. Every business, no matter the segment or size, is subject to problems involving its image, whether due to natural disasters, legal nature, failures in equipment or services, work accidents or fiscal obstacles.

It is to deal with these moments that crisis management exists. In this article, understand what it is, how important it is and how to invest in this set of practices that can save your business from many losses. Also, find out how the Customer Success area can minimize these problems and help you deal with the situation.

What is crisis management?

Crisis management, also called crisis management, is a set of practices that aim to deal with an unexpected problem, internal or external, that can cause financial losses and damage to the company’s reputation. This type of problem tends to happen by surprise, pose a threat to the business and require quick decision-making.

In addition to dealing with problems as they occur and the effects they cause, crisis management also includes identifying sources of risk to deal with them before the crisis sets in.

Because dealing with crises in the best way is critical for the survival of companies, many businesses create a contingency plan in advance, which must be followed as soon as problems arise. In addition, it is necessary to learn from the mistakes that have already occurred, devising strategies so that they do not happen again.

How important is crisis management?

Crisis management ensures that the company reduces the damage caused by problems that arise suddenly and that, if not properly resolved, could even cause the business to go out of business. These are some reasons why the company should invest in good crisis management:

  • Act quickly and efficiently when faced with a problem;
  • Contribute to the company’s survival in the market;
  • Preserve the company’s reputation in the market;
  • Reduce the impact of the crisis, both internally and externally;
  • Learn from mistakes, avoiding them in the future.

How to do crisis management?

Being in the market means being constantly exposed to crisis situations. Therefore, it is important to have a prior crisis management plan in order to preserve the credibility and image of the company, preventing any negative impact or even using this as an opportunity to intensify or generate new business.

There is no magic rule or mathematical model that can and should be followed for these moments of conflict, so each company must work according to its reality and be constantly updating itself. However, there are some points that can avoid or help to minimize the effects perceived in the repercussions of the crisis:

1. Know your customers’ perceptions

Knowing your customers’ perception of your company also helps to avoid crises. But how?

Through this information, it is possible to understand how your business is seen in the market. To find out, use satisfaction and branding surveys. By monitoring customer satisfaction, the company understands how the customer relates to them, if they are satisfied and if they are loyal. You also better understand how to communicate with these people.

By creating this relationship with the consumer, it will be easier to overcome crises.

2. Invest in customer experience

Offering a good experience is essential in today’s competitive market. What you may not know is that this action also helps to deal with crises.

This is because, if a customer has a good experience with the company, it is easier to retain them. If, in addition to going through a crisis, the business offers a bad product or service, or even poor service, it will be easy to replace it.

3. Set up a crisis management committee

The company does not need to have employees exclusively dedicated to crisis management, but it is important to have a group of people whose attribution, albeit partial, is to deal with these problems when they arise.

This team must be multidisciplinary, formed by the CEO and also by a legal representative, in addition to managers from different departments. It is also important to have public relations or marketing professionals.

4. Understand the risks that the company runs

Before developing the crisis management plan, it is helpful to know the company’s weaknesses.

Every business is at risk and some may be more obvious for certain businesses. To find out yours, convene the crisis management committee and list possible problems that might occur. Hence the importance of having a multidisciplinary team, by the way. In this way, no potential risk is left out.

Customer feedback is another good source of company weaknesses. Look at the responses consumers have given to the surveys you’ve done and raise potential risks.

5. Create a crisis management plan

Planning for crisis management should start well before problems arise. At this point, the company must work on its image and prepare for any problems that may arise.

It’s hard to make predictions, but having a team and a plan in place helps a lot when (and if) the crisis breaks out. When the company doesn’t prepare, on the other hand, it’s easier to make wrong decisions in the heat of the moment. The business may also make inaccurate or misaligned statements, extending the problem.

It is important not to use a generic model, but to make a customized plan for your business, considering the risks raised above. The crisis management plan must include:

  • Who are the members of the crisis management committee;
  • What are the criteria to identify whether the problem is a crisis or not;
  • What are the monitoring practices to identify a crisis early on; signals
  • Who are the spokespersons for each channel in the company;
  • Who are the emergency contacts;
  • What are the processes for assessing the severity of the crisis;
  • What are the procedures for responding to the crisis;
  • How to assess the effectiveness of crisis management after the work has been done.

6. Know how to communicate

Communicating in the right way with customers, the market and stakeholders is essential in times of crisis. Therefore, it is not enough to define a spokesperson, it is necessary to know how to communicate well and say the right things.

It is important that the chosen spokesperson knows how to deal with the media and is comfortable in different media. The crisis management team must assist in the preparation of coherent statements for the press, always striving for transparency.

7. Work consistently and continuously

After the crisis, after all the wear and tear, keep in mind that the work is not over yet. Remember that a company’s image is built over the years, so the damage suffered will not be recovered overnight.

This moment serves to analyze and reflect, based on the data collected, on the positive and negative points caused by the crisis, its reflections on the opinion of customers, the means to review processes created, the training of areas and also improve planning with the responsible.

Crisis management work must be consistent and the business must learn from past mistakes, always seeking to update the management plan.

In addition, crisis management goes hand in hand with other teams such as marketing, branding and customer service. All of these teams must bear in mind the problems brought about by the crisis, continually working to reverse the damage.

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What is the role of Customer Success in crisis management?

Blue World City believe that customer relations are important and not by chance. This area, responsible for keeping its customers and common especially among SaaS businesses, must be quickly informed when a crisis occurs. It is extremely important to maintain the image of the business with consumers, in addition to being a possible facilitator for solving the problem that has occurred.

It must not be forgotten that the main consequence of a crisis is the breakdown of relationships. A crisis that is poorly managed in this way can result in customers cancelling the contract, which is especially harmful to companies that use the recurring revenue model. In business development and service provision, good relationships are essential for the company’s success.

Below are some recommendations that can be useful for the Customer Success area during a crisis situation:

1. Take responsibility for the crisis

In times of crisis, quick and coherent actions must be taken and the ideal is to be proactive and take charge of the situation, investigating the facts, assuming mistakes and pointing out possible solutions. Keep calm and make every effort to ensure that the incident does not take on alarming proportions.

When it comes to answering questions, remember that a company that assumes it is susceptible to mistakes and successes is more likely to regain the trust of its customers.

2. Know the customer and their needs

This is a classic mistake. At the time of crisis management, you show your client how important he is and how much he is valued. Knowing what customers like can help you prevent crises, in addition to facilitating the process of communicating and understanding with the customer. Do not forget to communicate it and effectively clarify the situation.

3. Inform, educate and guide your customer

During the relationship with the customer, you should help them in many things and, in the moment of a crisis, even more. Keep track of the situation by informing them of the fact and telling them how best to do something and how it might impact you.

Communicate all the bad news at once and avoid creating expectations that will not be met. In addition to informing, we need to educate customers to take the necessary actions according to their needs, such as submitting an erratum or a clarification note. In this way, customer orientation can create even more value for your company.

4. Be empathetic

When a crisis happens, the reactions of the people involved are diverse, and the biggest difficulty for those who face a problem like this is putting themselves in the other’s shoes. Always understand and respect your customers’ concerns and feelings, even if the company is not at fault.

5. Be clear and transparent

The omission in service is another point that takes any customer seriously. As simple as it is, this can significantly improve a company’s service standard, leaving customers more satisfied and confident. If you don’t have deadlines for solutions, don’t promise what doesn’t exist and what you can’t deliver—the worst thing you can do is create false expectations.

Know that, in these moments, nothing is more important than trying to maintain a good relationship with customers and partners, no matter how bad the scenario. The company can only meet customer expectations through transparent communication with them. Do not omit, lie, or comment on hypothetical situations. Be clear and make sure you are being understood, as everything can be considered a communication problem.

6. Don’t leave the customer without a solution

The biggest cause of customer loss is poor service and lack of problem-solving. Take advantage of the failure and fix the cause of the problem, go to the root, apologize and resolve. This type of posture directly contributes to the maintenance of the company’s credibility.

It has been proven that when the company solves a problem, most of its customers forgive it and continue by their side. If the problematic situation is not possible or quickly resolved, try to help the client to find palliative or alternative solutions.

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