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When Good Brands Do Bad

So many readers were angered by Bill Breen's remarks on the Presidential election yesterday that it brought to mind some new research from the Stanford School of Business. The new study, "When Good Brands Do Bad," explores what happens when a "highly-trusted" or "exciting" brand offends its customers. With a few readers threatening to cancel their subscriptions to our magazine over Bill's post, the new research is worth a look.

As Fast Company's editor, I'm hoping Stanford marketing professor Jennifer Aaker is right in her conclusion that in some cases offending a customer can actually reinvigorate flagging consumer interest and loyalty.

Here's what Aaker, along with collegues Susan Fournier at Harvard Business School and S. Adam Brasel, a PhD candidate in marketing at Stanford, did to get to their counterintuitive result. They put together a two-month field experiment allowing consumers to form relationships with an online photographic service brand called Captura Photography Services. Two personalities were created for the brand: One that was "sincere." Think classic and sincere in terms of a Hallmark, Ford, or Coca-Cola. The other was "exciting." Think energetic, irreverent and cool in terms of a YAHOO!, Virgin, or MTV.

The 48 "customers" interacted with the branded service one to three times each week over two months. Then, the academics pulled a rather nasty trick on half of the participants in each group. The "customers" were told that an employee had accidentallly erased their oneline pixs. Apologies were sent out two days later when online photo albums were restored.

The findings: The "sincere" brand forged stronger bonds with consumers than the "exciting" brand—until the photos were lost. "The transgression did remarkable damage to the sincere brand," say the researchers. And even after the apology and the recovery, the sincere brand failed to show significant signs of recovery.

But here's the counterintuitive surprise: After the apology and recovery, consumers who used the "exciting" brand saw their relationship take an upturn. "The relationship became more permanent in the participants' mind," the researchers said. "And, the event allowed trust, accountability, and responsibility to be established for the first time. In this sense, the transgression operated as a mains of reinvigorating the exciting brand relationship."

"Trust," says Asker, "is much heraled in marketing, but it has a downside. When trust is violated—as it often is in long-standing relationships—particularly those established with a sincere, warm and honest partner—it can be devastating. So be aware of the type of brand partner you are, the type of relationship you are helping to create, and the expectations that are being set in the consumer's mind."

I'm hoping that Fast Company is the "exciting" brand that may have offended some readers but has the opportunity now to "reinvigorate" our relationships with readers.