Toyota is Blowing It, Say Crisis Experts; Here's How to Do Better

Toyota has utterly failed in the recall crisis, say crisis managers, and unless it starts to do a better job of responding to its customers, its image will be broken beyond repair. It doesn't help when the company's own former counsel goes on network television to accuse the company of fostering a culture of "hypocrisy and deception."

"This is a real calamity, and Toyota has certainly mishandled it," says Chris Rosica, president of New Jersey-based crisis-oriented Rosica Public Relations. "The company is supposed to be contrite, honest and open. That's how you defuse a situation: You affirm your commitment to customers. But when Toyota finally addressed the issue, the president [Akio Toyoda] showed attitude, like it was beneath him to have to participate in a press conference. He's acting with more humility now, but it's very late in the game. How you handle these issues from the beginning is key."

Rosica, himself the owner of a 2008 Toyota Sequoia, notes that his local dealership in New Jersey, which called customers to offer support, has acted with more aplomb than the parent company. "The best thing for the company is to be totally honest and disclose everything it knows."

Gene Grabowski, senior vice president of Levick Strategic Communications in Washington and chair of the company's crisis and litigation practice, is more sanguine about Toyota's approach. "I think they're on the right track now," he says. "The difficulty is staying with it. The matter can't be handled with one apology on the morning talk shows. Consumers have to be constantly assured and kept up to date."

Still, he is critical of Toyota's sugary 30-second commercial assuring consumers that it is on the case. "TV ads in the middle of a crisis are often marginal at best," Grabowski says, "and they can be misinterpreted. It's like if I went out in the blizzard we're experiencing now and started shoveling my walk--it wouldn't help very much." (Grabowski knows what it is like to be in the middle of a media blizzard: He worked with Rosie O'Donnell through her fraught lawsuit with Gruner + Jahr over Rosie Magazine.)

What's needed, says Grabowski, is a smart social media strategy: Executives explaining matters in YouTube videos, Facebook pages, Twitter feeds, call-in radio shows, CSPAN appearances. "Social media is where consumers are looking for information," Grabowski said.

Another skeptic is Michael Gordon, the principal in Group Gordon Strategic Communications in New York City and Norwalk, Conn. Toyota, he says, has failed to act boldly to begin to recover the "seismic damage" to its brand.

"The issue is that consumers are going to be hesitant purchasing Toyotas in the future, so the company needs to give them an unheard-of financial incentive so they will try Toyota again," Gordon said. He likes the idea of rebates to Toyota owners involved in the recalls or experiencing sudden acceleration issues. "The alternative is being tainted with this scandal for a long time," he said. "The business journals are littered with companies that have successfully handled crises, and all have done so in a very compact time frame."

A $500 rebate for 8 million cars would cost $4 billion (assuming everyone grabbed it). That's a big chunk of change, more than a quarter of the auto company's 2008 profits.

But Toyota has to be asking itself: How much is our reputation worth? So far, it doesn't have a good answer to that.