From Fox News to United Airlines to the “Trump Effect,” consumer boycotts are trending. But when do boycotts actually work, and how should business owners react?
The rise of instant media consumption certainly parallels the rise in instant outrage over large corporations’ actions (read: anything from controversial deals to actions or comments by executives) that bleed into the social or political realm. But boycotting businesses even predates Facebook. Take Shell, for example. In 1995, Germany’s arm of Greenpeace boycotted the fuel icon after an out of commission petroleum platform made moves toward deep water disposal. The aggressive public campaign against Shell resulted in (1) Shell changing the disposal plan completely, and (2) a reduction of fuel sales in Germany by nearly 40%.
In sharp contrast, and more recently, Chik-fil-A CEO Dan Cathy’s public comments opposing same-sex marriage—and the online outcry that followed—drove the company to cease funding organizations which had previously been criticized for similarly “discriminating.” The result? Sales increased by 12%.
Considering the disparity in economic effect on large companies, what is the likely risk to small business owners confronting consumer boycotts? The reality is that even small-scale efforts to ostracize local businesses can have detrimental results on owners’ financial stability. As mentioned, social media helps spread news – reliable or not – at a lightning fast pace. Opinions that have been branded “unpopular” by a majority of Twitter users could be the kiss of death for a small supplier relying heavily both on new and varied customers or long-term clients.
Conversely, businesses may want to participate in boycotts – a la advertisers from Mercedes-Benz, Constant Contact, and others versus Bill O’Reilly and Fox News. Small companies may be in a position to voice concern by withdrawing their own business from media outlets or otherwise.
The considerations for both being boycotted or choosing to boycott are similar:
- Know your brand. Small business owners and entrepreneurs need to know their brand, and by extension their customers. Targeted boycotts have a less-than-sure impact on the entity at issue. With that in mind, businesses should carefully consider how to advocate, if at all.
- Know your company culture. In addition, taking sides with any number of political issues can have an internal impact on employees, culture, and tone. Business owners should be wary of speaking out publicly on issues or pressuring participation if employees would react negatively.
- Play it safe. All else being equal, companies valuing brand equity would do best to avoid branding around hot-button, polarizing issues. This does risk the sin of omission, i.e., backlash for not speaking out about something. Again, companies that know their brand and customers are best situated to evaluate whether acting is worth the risk.
Beyond that, companies may need to decide whether to fight back, especially in situations where customers are not always right. Information travels at the speed of light, whether or not it is verified. Companies falling victim to “fake news” about their business practices could face boycotts, protests, or worse based on someone’s published false or defamatory statements.
Generally speaking, a company is not considered to have a reputation in the sense that an individual does. But statements that would impact a company’s financial soundness are typically considered defamatory under the law, and a company could potentially sue if statements would have the effect of deterring customers. (Note: this is not necessarily true if defamatory statements are directed only against an individual within the business.)
So, what steps can a business take when circuited or published information is entirely false and directly affects its ability to operate?
- Consider using a reputation management service. If the issue is pervasive, providers of these services can aid companies with search engine optimization, the goal being to bury negative statements behind more favorable material.
- Sue, if necessary. Consider retaining counsel to initiate a formal demand for a retraction, and if that is unsuccessful, pursuit of litigation. Proving damages will be a critical aspect of any lawsuit. Companies will need to carefully examine the economic impacts any defamatory publications may have caused to establish the loss suffered. The cost benefits of pursuing a lawsuit must be evaluated against the potential adverse effect the suit could create by amplifying the issue.