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Annals of Marketing
Turning Disaster into Triumph
Sunday, 21st August, 2011  - David Farmer

Mistakes happen in business and in marketing and sales all sorts of errors creep in. It's how you handle the error which is the key and I have yet to see a retailer handle the apology in the correct way. It is indeed possible to turn disaster into triumph.

A bad error may lead to the company being prosecuted by a government body protecting the consumer's interests. This can generate a lot of interest particularly when an apology has to be advertised. For most consumers what the apology says is of little interest but what they do know is the big stick of government has taken to the company and this public humiliation means they must have done something very bad. This increased publicity is very valuable and in turn creates a one off opportunity to capitalise on the public's interest. I cannot stress enough the value of these rare events.

Here is an example of a retailer making a bad error, being forced to apologise and missing the opportunity both to make amends and turn disaster into a triumph.

In mid 2000 the Target chain began a combined press and T.V. campaign discounting clothing with the headline:

25% - 40% Off Every Stitch of Clothing

This is a powerful headline but if you wish to make big, bold statements there can be no exceptions. Alas there was as 'every stitch' did not apply to underwear, socks, hosiery, and accessories such as ties and belts. The small print qualified what was on sale but as soon as you compromise advertising the response rate declines, plus you will upset a lot of customers. In the TV advertisement this qualification took up 1.5 seconds of the 15 seconds which is 10% of the time but is quite fleeting to show a list of exclusions.

The following comments are taken from the ACCC site, Allens, Arthur Robinson case studies, and ABC the AM Report,

"In June 2000 Kerry Bergh responded to this advertisement. At the checkout she was upset to find that some of her purchases were not discounted. That afternoon she faxed a complaint to the ACCC Perth office. The Trade Practices Act specifically prohibits false and misleading claims about the price of goods. Any qualification of an offer that is needed to make it accurate cannot be hidden in fine print, but must be as bold, precise and compelling as the rest of the advertisement.

Surprisingly Target did not come to an agreement with the ACCC who then took proceedings in the Federal Court. The apology on both television and newspapers included:

'Last year at Target we offered 25% off every stitch of clothing. But by using small print we failed to adequately inform consumers that certain items were excluded and that there were no rainchecks. Target has agreed that this kind of advertising is misleading and contrary to the Trade Practices Act. And that in the future, we'll tell you the whole story. So to any consumers who were misled, we're sorry'."

Going back to the start Target have not handled this well. The original advertisement was poorly constructed and the sales and thus loss of margin on the items excluded would not have been great so a better headline would have been:

25% - 40% Off Every Stitch of Clothing
No Exceptions

Exceptions in advertisements reduce response rates by lowering the effectiveness of the headline. Customers have got used to and expect exceptions which is why bold statements can lose effectiveness. In marketing you must ask yourself, what the exclusions, if included in the sale, would cost as a percent of the total sale campaign. If the answer is a lot, then a different, more focused headline is needed.

Now consider the apology which since the 'offence' went to court was given grudgingly. This was the great opportunity lost. Being forced to comply with a court ruling is of great benefit and creates a situation that cannot be manufactured. And that is the part that appeals to customers.

What Target should have done was put the sale back on and applied it to all clothing without exceptions. An advertisement could have looked like this.

To All Target Customers - We Apologise

Last year at Target we offered 25% off every stitch of clothing. But by using small print, we failed to adequately inform consumers that certain items were excluded. Target has agreed that this type of advertising is misleading, contrary to the Trade Practices Act, and that in future we'll tell you the whole story more clearly.

To Punish Ourselves - the SALE Returns

30% off every stitch of clothing

This Time - No if's or Buts - No Exceptions

Saying Sorry is not good enough for our customers. This time it includes everything - and we mean everything down to the last belt.

So valuable are these rare events that the unscrupulous might even create them simply to capitalise later. To repeat an earlier remark the greatest advertisement you can ever write can never equal the potential of these events.

Postscript:
I was consulting to Theos Liquor in 2003 when they were purchased by Coles-Myer. So traumatised were the Coles-Myer management by the Target experience that all advertisements had to be checked by lawyers in the head office in Melbourne. At the time we were creating two major press adverts per week and dozens of adverts for suburban newspapers. Though the big effort each month was creating three different 8 page catalogues of two editions, making 48 pages, full of course with hundreds of prices, savings, pictures and multiple headlines. All of these were forwarded to Melbourne to be checked for accuracy. This quickly turned into a shambles as lawyers rewrote headlines, queried copy, demanded evidence of price savings, and proof that pictures of products were accurate. Interesting times!

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