From a 'cultural meme' to a comeback kid: How Samsung overcame its Galaxy Note 7 fiasco

Samsung has pulled a successful comeback from its exploding phones fiasco last year, with its brand value up 9%, according to Interbrand.
The company managed to pull the feat by holding itself accountable, getting to the root of the cause and then communicating that effectively to its employees and consumers.
It also used the opportunity to find a bigger brand purpose for itself and creating an internal culture of change that encourages and prides itself on taking risks.

In 2016, Samsung was blowing up — quite literally.

The phone maker was battling its biggest ever brand crisis, after defective Galaxy Note 7 smartphones began exploding around the world. A battery malfunction was threatening to permanently damage both its business and its reputation: its mobile sales were down 15% by October 2016.

"We became a cultural meme, a daily announcement on every flight," said Pio Schunker, svp of integrated marketing communications at Samsung Mobile Communication, speaking at the Association of National Advertisers' Masters of Marketing Conference on Thursday. "There was wave after wave of negative commentary — not just from the press, but from consumers as well."

But a year later, the South Korean company seems to be on the path to a full recovery. Just last week, it went up from the seventh to the sixth position in the marketing consulting group Interbrand's 2017 Best Global Brands list, and saw a 9% increase in brand valuation despite the crisis. Samsungs's profits are up in 2017 and its new Galaxy 8 has been selling well, according to Marketwatch.

Here's how Samsung managed to pull its comeback:

By embracing accountability

When disaster struck, Samsung knew that it had to be proactive and take responsibility, according to Schunker.

"We knew we couldn’t afford the luxury of a fetal position and just lie there, so the first thing that we did to make things right was to take accountability," he said. "For Samsung, it wasn’t just the right thing to do, it was the only thing to do."

The company promptly held a press conference, in which it took full responsibility for the crisis. It was also forthcoming in its admission that while it didn’t know what was causing the battery malfunction, it would not rest until the actual cause was discovered.

The company then moved into decisive and meaningful action, getting 700 researchers and engineers, 200,000 phones and over 30,000 batteries tested in every extreme condition possible. In a company first, Samsung also opened up to third party auditors.

When Samsung eventually figured out what exactly had gone wrong, it communicated that out to the public. In January, it announced a quality assurance program and other safety features, including an 8-point battery safety check, rolling them out the very next day.

By building 'brand love'

Once the issue at hand was addressed, Samsung turned its attention towards recovering people's love and trust. It focused on finding a bigger purpose that both its employees and consumers could rally around, made its brand more inclusive globally and tried to create an internal culture of change.

"This time the stakes were much higher, because we not only had to recover from all the damage that had been done, but do it during one of the most competitive smartphone launch seasons we’d ever seen in advance of the S8 launch," he said. "We needed to reclaim our leadership."

The brand sought to break away from its "immensely fragmented brand identity which lacked warmth and humanity," and instead inspire purpose beyond just its bottomline. It tapped into its inherent DNA of relentless innovation, crystallizing that into a bigger brand purpose encapsulated in the tagline "Do What You Can’t.”

Bringing all its regions and markets together around a common vision ended up propelling the brand even further.

"The brand focus was incredibly empowering, helping in creating great work and scaling up the brand faster than HQ initiative could have done," he said.

By relying on its partners

Social media 'war rooms' — where brand and agency teams coalesced to take on tentpole events on social media in real time — may be a thing of the past. But desperate times call for desperate measures, as was Samsung's case when its phone scandal broke out last year.

According to Schunker, Samsung and its agencies set up a war room in the immediate aftermath of the crisis, monitoring media reports and consumer sentiment online day in and day out to make sure everyone was on the same page and up to speed on the latest.

"They were instrumental, we could not have done this without our agency partners," he said.

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