BRASH BRANDS FINALLY WAKE UP TO THE IMPORTANCE OF REPUTATION

2 months ago

Reputation matters – but have Uber and Ryanair realised in time? Rob Lester discusses the recent crises in the transport industry.

“In all of the fallout from Transport for London’s momentous decision to deny Uber a licence to operate in London, one line really stood out: “The truth is that there is a high cost to a bad reputation.”

It didn’t come from one of the army of brand experts queuing up to offer an opinion on the crisis facing the taxi-hailing app, but rather from Uber’s new CEO Dara Khosrowshahi in an email to staff. At last, it seems, the penny has dropped. Reputation matters – and a bad one will always catch up with you in the end.

For too long under former boss Travis Kalanick, Uber strutted from country to country with little regard for regulators or – to use Kalanick’s words – the “asshole” licensed taxi trade.

So Uber’s initial response to TfL’s ruling came as no surprise. The company’s head of European operations Pierre-Dimitri Gore-Coty shot back with a barb straight out of the Kalanick playbook. He claimed the decision showed that “London is closed to innovative businesses that bring choice to consumers”.

But last week, the tone changed. Khosrowshahi wrote an open letter – published on Twitter and in the London Evening Standard – in which he vowed the company would change and added: “While Uber has revolutionised the way people move in cities around the world, it’s equally true that we’ve got things wrong along the way. On behalf of everyone at Uber globally, I apologise for the mistakes we’ve made.”

Whether some long-overdue deference will be enough to convince TfL to reverse its decision remains to be seen, but Khosrowshahi is meeting London’s Transport Commissioner Mike Brown for crunch talks today (Tuesday), so Uber’s race in the capital may not be quite run yet.

Another company famed for its aggressive, no-nonsense approach has also found itself in the headlines for the wrong reasons in recent weeks.

Ryanair admitted it “messed up” after a pilot rostering error saw more than 700,000 passengers affected by flight cancellations.

Chief Executive Michael O’Leary has been typically combative with his pilots, but offered passengers an unequivocal apology.

HSBC aviation analyst Andrew Lobbenberg noted: “I’ve been following him for a very long time and I’ve not heard him sound as contrite as he has over this issue.”

Whatever you think about how O’Leary has handled the crisis – and not everyone has been complimentary – he has taken a different tone than he would have done in the past, when quotes like “What part of ‘no refund’ don’t you understand?” were commonplace.

Maybe it’s indicative of a shift in corporate philosophy. O’Leary hinted at a softer approach in 2014 when he said: “If only I’d learned in college that being nice was good for business, I’d have done it years ago.”

Brands like Uber and Ryanair, which burst on to the scene with disruptive business models that shake up markets, aren’t used to playing nice. Their propositions are crystal clear: we’ll offer you value and convenience – but don’t expect customer service or collaboration with regulators to be anywhere near the top of our list of priorities.

The trouble is, as you move from challenger brand to market leader, those expectations change. Even if, individually, people continue to have a positive brand experience (at the time of writing, almost 850,000 people have signed a petition to “save” Uber in London), trust goes beyond just providing a reliable service. A toxic corporate reputation will always come back and bite you somewhere down the line.

The court of public – and political – opinion still matters. It’s a brave (or foolish) brand that continues to treat consumers and regulators with contempt, and expects no consequences.”