During his earlier career as a political reporter, he no doubt frequently found himself on the receiving end of “you-didn’t-hear-it-from-me-but” calls from politicians, candidates, aides, lobbyists, and the like looking to plant stories that would smear the opposition.  So when he jumped to the other side and entered the PR world by joining Burson-Marsteller, that’s the playbook he brought with him.

Mercurio and his colleague Jim Goldman, another newly hooked BM employee fished from the journalism sea (Goldman is a former CNBC reporter), soon learned that what works in the political world doesn’t necessarily translate to the business sector, particularly when public – or soon to be public — companies are involved.  There are simply too many constituencies with a real vested interest — investors, employees, customers, analysts, vendors, and regulators, to name a few — for the usual chicanery of politics to prevail.  If Mercurio and Goldman didn’t know that when they set out on their secret mission to raise privacy concerns about Google’s Social Circle, my guess is they do now.

The media’s outrage to date has focused primarily on Facebook’s hypocrisy for secretly trying to point a damning finger at Google given its own track record with user privacy transgressions.  Despite founder Mark Zuckerberg’s claims that he’s all about transparency, the company is reportedly close to signing a consent decree with the Federal Trade Commission for its repeated violations.  With the Burson stunt, Facebook was clearly trying to end their ignoble reign as poster child for online privacy violators by dragging Google up to the podium with them.

Despite the industry’s professional code of ethics requiring PR practitioners to reveal sponsors for represented causes and interests, it shouldn’t come as too great a surprise that Burson-Marsteller chose to violate it.  While the company insists that Mercurio and Goldman breached the firm’s ethical guidelines, BM got caught doing pretty much the same thing for Microsoft two years ago with respect to Google’s planned acquisition of DoubleClick.  Having a code of ethics is the easy part; expecting employees to adhere to it is something entirely different.  After all, even Enron likely had a well-written code of ethics in its new employee onboarding package.

The issue of bigger concern is the inevitable adverse consequences when people from the world of politics infiltrate senior corporate communications positions, or in the case of Facebook and Burson-Marsteller, are allowed to run entire companies. Facebook COO Sheryl Sandberg, whose responsibilities include overseeing communications, is a former Treasury Department Chief of Staff in the Clinton Administration. Elliot Schrage, vice president of communications, marketing, and public policy, also is a political veteran. Mark Penn, Burson’s CEO, was a close aide in the presidential campaigns of both Bill and Hillary Clinton.

“Reputation management” has a very different meaning in politics.  It’s about swaying public opinion by any means necessary.  Politicos and lobbyists spin and leak stories, and political reporters lap it up and keep score.  The effectiveness of this constant spinning is measured in news cycles; if you are featured positively in more news cycles than not, you’re ahead.  Is it any wonder that Congress and the media are routinely ranked as America’s least trusted institutions?

Accordingly, individuals steeped in politics instinctively see nothing untoward about anonymously casting doubt on a rival.  I believe BM’s claim that it was Facebook that insisted it not be identified as the sponsor of the campaign against Google, but I’m highly doubtful that Sandberg and Schrage weren’t a party to the decision.

Moreover, the very cynical side of me suspects that, despite the negative press, Penn, and perhaps Sandberg and Schrage, view BM’s whisper campaign as a huge success.  Yes, the disclosure that Facebook was behind the campaign is somewhat of an embarrassment but the fundamental message points have been well reported.

Sadly, the Facebook-BM-Google debacle isn’t an isolated incident of a dubious corporate PR campaign being run by a former politico.  Leslie Dach, who held various positions in the Clinton Administration, was the architect of the “Wal-Marting Across America” blog.  It was positioned as being penned by a couple of genuine pro-Walmart customer enthusiasts, but was really an initiative of Walmart’s PR firm.  That ill-advised campaign ranks among the biggest PR blunders by a major consumer corporation.  Dach launched the campaign while working at Edelman, but he’s now Walmart’s executive vice president for corporate affairs. (For more on Dach and his corporate communications activities, read this damning profile in The New Yorker.)

The financial services sector is now turning to politcos for its communications counsel.   Citibank recently hired Ed Skylar, a former aide to Mayor Mike Bloomberg, as its head of public affairs, and Goldman Sachs last year retained Clinton aide Mark “Master of the Disaster” Fabiani to help clean up its image.  John Thain, CEO of CIT and the former head of the NYSE, has relied on former state department spokeswoman Margaret Tutwiler for his communications counsel for several years.

All of these companies are in some sort of trouble, whether it be financial, competitive, or reputational.  It will be interesting to see the tactics these companies use to turn themselves around.

Share This Post

The Internet provided an opportunity to level the playing field. The rise of the blogosphere quickly cut the media down to size and exposed their rampant irresponsibility. Mainstream publications and broadcast outlets were held to an unprecedented accountability standard and many reporters crumbled under the scrutiny.  An untold number of prominent media stories have been retracted because of eagle-eyed bloggers.

Harnessed correctly, the Internet can be a powerful marketing tool, but it’s also an effective vehicle for fraudsters, flim-flam artists, and for companies with no qualms about using deception and unscrupulous tactics to win over customers.  It’s in the best interest of the PR industry to promote and adhere the highest standards of ethics in Internet marketing.  The more credible the medium, the more potent its efficacy.

Sadly, the PR industry has contributed mightily to the corruption of the Internet.  One of the biggest global agencies was caught years ago for running the “Wal-Marting Across America” blog, supposedly penned by a couple of customer enthusiasts who turned out to have been shills paid by the PR firm.  The person responsible for overseeing the Wal-Mart account was recently deemed one of the most influential professionals in the industry, underscoring that there are no material career consequences for dishonest or questionable practices.

Some PR firms also were caught secretly paying off or bribing bloggers with products to post positive reviews, but fortunately a PR blog named “Strumpette” was quite aggressive about exposing the practice and some industry leaders became quite vocal about condeming the practice.  While blogger payola has not yet been eradicated, fortunately most recent exposed incidents didn’t involve PR firms.

Nevertheless, some PR firms still can’t resist employing deception as part of their “strategic” arsenal.  Last week, the Federal Trade Commission settled charges with a California PR firm for having its employees “pose as ordinary consumers posting game reviews at the online iTunes store, and not disclosing that the reviews came from paid employees working on behalf of the developers.”

Rather than taking the high road and saying the firm settled the matter in support of the FTC’s desire to ensure greater transparency on the Internet, the company’s owner haughtily dismissed the agency’s concerns as a “frivolous matter”, saying they only agreed to settle to save on the cost of litigation.  Perhaps most disappointing of all was the disclosure in the New York Times that the deceptive reviews in question were written and posted by interns.  Thus, a new generation of PR professionals was taught that deception is an acceptable communications tool.  That’s a toxic message to teach impressionable college students interested in pursuing a PR career.

Sadly, there is no shortage of PR firms who will welcome the skill-set these interns acquired.  It’s an open secret that other PR firms regularly engage in having employees post reviews on behalf of clients.  Let’s hope that the head of the FTC’s advertising practices division successfully eradicates the practice.  Now there would be someone I could get behind as deserving of the “most influential leaders in the PR industry” title.

Share This Post

Enron, for example, had a strongly worded code of ethics that proclaimed it was “dedicated to conducting business… with the highest professional and ethical standards.” But, employees no doubt knew that the creed was a sham, nothing more than pretty words on a piece of paper to be tacked up on the local office bulletin boards by someone in HR or internal communications.

More recently, there is technology giant Hewlett-Packard and its broken moral compass.  H-P’s business conduct standards reportedly require employees to consider how any business decision “would look in a news story.” Hmmm….so “how it might look” should take priority over the rightness or wrongness of the action itself? That certainly seems to be the message, intended or otherwise.  And, if that’s the case, then the decision whether to do something unethical will simply come down to how likely it is that they’ll get caught.  Who knows how much that played into former H-P CEO’s decision to allegedly fudge his expense account – something rarely scrutinized at his level on a day-to-day basis – but I’m guessing it played a part.

Given H-P’s concern for how actions might be viewed if reported in a news story, it’s a wonder that contractor Jodie Fisher was ever hired to interact with the company’s major clients at corporate events. Her background does not scream “seasoned Corporate America professional.”  That Ms. Fisher reportedly commanded as much as $5,000 a day to appear at corporate events is a pretty sad commentary on how H-P peddles its IT products to its biggest customers.

Equally eyebrow-raising, given their “think of how it will look” standard, is H-P’s choice of outside PR counsel when the bad news started to snowball.  Let’s just say that firm has garnered more than a fair amount of negative coverage for itself over the years (see here, here, here, and here).

As for Mr. Hurd, his response to his transgression has not exactly been inspiring.   Rather than take responsibility and unequivocally admit he made a major mistake in judgment and by doing so betrayed H-P, its employees, and its shareholders (and likely garner a considerable measure of sympathy), he hired a PR firm known for its aggressive “scorched earth” tactics.  According to the Wall Street Journal, one of the firm’s message points is that Mr. Hurd’s expense account transgressions were quite small and that he offered to repay the amount, seemingly hinting that the punishment didn’t fit the crime.

When it comes to corporate ethics and reputation risk, potential bad press should have no bearing.  None.  Zero.  Zilch.  Adherence to a company’s guiding principles of integrity, trust, and responsibility should not depend upon what the press may report.  A code of conduct is a company’s line in the sand about what is right and what is wrong, about what it stands for, and about how it  defines itself as a member in some greater community.  Sometimes that means companies and their leaders must do the proverbial right thing even when it invites media fallout. Just ask Royal Caribbean.

Early this year, Royal Caribbean faced a very difficult decision in the wake of the catastrophic earthquake in Haiti, the cruise company’s tourism partner for nearly the 30 years.  The cruise company’s private resort called Labadee, located 85 miles or so from Port-au-Prince, suffered very little damage, with all facilities in prime condition to continue hosting ship passengers scheduled for a day of fun there.  But as Chairman and CEO Richard D. Fain wrote at the time:

Should we bring guests to our private destination in Haiti or should we simply bypass the island and bring them to another destination further away from all the suffering? Bringing our guests to Haiti could be characterized by some as insensitive to the suffering of the Haiti people in the rest of the country, and we wrestled with this sentiment ourselves. After the government of Haiti asked us to continue to call on Labadee, there really was no choice; bypassing Haiti would do more harm to an already ravaged people by taking away essential income from our employees and their families.  The Haitians told us they were desperate for our return and we couldn’t refuse… I remain convinced that we took the only honorable path and I remain convinced that we and Haiti will be better off in the long run because of it.”

As soon as the first ship dropped anchor and started tendering passengers ashore, the “how dare they?!” newspaper articles started, as Royal Caribbean’s management and savvy PR team undoubtedly knew that they would.  The initial press was unfavorable, but Royal Caribbean stayed the course, working to explain their rationale for returning to Labadee and their broader contributions to Haiti’s recovery, both financial and in terms of getting much-needed food, materials, humanitarian aid, and other much-needed items to the country. In other words, they did what they thought was the right thing, backlash be damned.

Given the competitive nature of business today, adhering to ethical and moral business practices is more difficult than ever.  Staying on the honorable path requires a strict moral code and a team with shared values. Given H-P’s code of conduct and the company its board and Mr. Hurd chose to keep, it’s little wonder they find themselves in such a messy and distasteful situation.

Share This Post

When the SEC first unveiled charges alleging that Goldman misled investors when it sold a package of risky subprime mortgage-related securities known as Abacus, the mighty investment bank wasted no time to thunder that the civil allegations were  “completely unfounded” and vowing it would  “vigorously” challenge them.  A few hours later, Goldman issued a second statement, saying that it had lost more than $90 million on the transaction and proffered that it couldn’t have honestly believed the investments would fail given the firm’s own exposure.

Admittedly, quite a few reporters initially bought Goldman’s argument, repeating it without any objective analysis.  However, all Goldman’s strategy bought them was time – not a free pass – as the media wasn’t duped for long.  Within days, The New York Times reported that Goldman had insurance in place on the Abacus transaction to offset the $100 million loss and, separately, internal Goldman Sachs emails made public by a Congressional committee also suggest that Goldman handsomely profited as the housing crisis escalated.  The Columbia Journalism Review has gone so far as to warn reporters to be wary of Goldman’s “forked tongue.”  In addition to combating charges of fraud, Goldman must now deal with the fallout from being publicly accused of lying.

Regretfully, there are now other known incidents of spin that suggest that Goldman views the intellect of Congress and the public as cynically as the investors who were long on the Abacus deal.  Goldman took out prominent ads in Politico, a newspaper closely read by Washington’s political elite, trumpeting that it was the biggest issuers of Build America Bonds; the ads neglected to mention that Goldman earns considerably higher commissions on the bonds.  Goldman also seems to have leaked a story that it is mulling a requirement to compel its top executives to donate a certain portion of their earnings to charity.  Giving to charity is an admirable initiative but it won’t alleviate the public’s anger about the firm’s perceived ill-gotten gains.

Goldman’s lament that the SEC’s charges are politically motivated is pretty tenuous. Decrying politics is a tad hypocritical given that many people believe that Goldman’s political connections were responsible for Washington making the firm whole on its AIG contracts.  In any case, the interests of the SEC and The New York Times are closely aligned in making the fraud charges stick so the argument just won’t fly with the newspaper at the forefront of the media hunt for the rest of the story.  Tongues are wagging that the SEC gave the Times a sneak preview of the fraud charges before they were even filed, perhaps as a reward for its dogged reporting.  Even if the fraud charges are dismissed on summary judgment, the Times has pretty much secured itself a Pulitzer Prize.

Finally, there’s the issue of Robert Khuzami, the SEC’s enforcement chief and a prosecutor whose credentials include taking on organized crime.  Although it’s been reported that Robert Khuzami previously oversaw a team of lawyers at Deutsche Bank who also were closely involved in structuring subprime mortgage-related investments similar to Abacus, Goldman would be wise to resist even veiled attacks on the enforcement chief.  Given Khuzami’s impressive track record standing up to hardened criminals without the proverbial white collars, the public will likely relish the prospect of a proven legal tough roughing up Goldman’s top brass, regardless of the merits of his case.

For Goldman Sachs to survive this reputational crisis, the firm will have to devise a credible strategy that addresses both the legal and moral issues relating to its profiteering from the housing collapse.  Its practice of deception and playing with the facts could potentially doom the firm.  Because here is a secret that a spinmeister will never tell you:  When you utilize spin as a strategy to minimize a crisis, the crisis will almost invariably spin right out of control.

Share This Post

On the service and value front, Charles Schwab is quietly becoming the financial services industry’s closest equivalent to Nordstrom. But they’re not entirely there yet, and founder Charles Schwab would be wise to take a closer look at the customer service playbook of Blake Nordstrom, the CEO who runs the retailer that bears his surname. (While Schwab is no longer CEO, he remains chairman and apparently is active enough in the business to command more than $3 million in annual compensation).

Although I maintain some of my assets with Schwab, I readily admit that I am highly distrustful of the company. Allow me to explain the paradox.

My relationship with Schwab is currently limited to plain vanilla bank products where I’m certain I have virtually no risk (or at least the faith and backing of the U.S. government). I would never buy an investment product from the firm because, unlike what I’ve learned to expect from Nordstrom, I do not trust Charles Schwab to stand with integrity behind the products they push.

In the past few years, Schwab has unloaded some highly dubious products on its customers, including quasi money market funds called Schwab YieldPlus and long-term bonds known as auction rate securities. Schwab faces class actions suits relating to the sale of its money market funds and has been charged with Martin Act Fraud by New York Attorney General Andrew Cuomo for peddling the auction rate securities. (Important Disclosure: S&A represents an attorney who has a case against Schwab relating to Schwab YieldPlus. That said, the comments in this blog post represent my thoughts and observations and are mine alone).

My outrage and lack of confidence in Schwab is not simply that it sold the money market funds and auction rate securities, but rather its failure to do right by clients who allegedly were misled. While most of Schwab’s competitors have settled with regulators and reimbursed their clients for losses relating to auction rate securities, pass-the-buck Chuck is following the old-school Wall Street strategy of saying the clients were entirely to blame: “Roughly 90% of the clients who invested in (auction rate) securities came to Schwab asking us to locate and make available these investments for them,” Chares Schwab wrote in a Wall Street Journal op-ed last August, emphasizing his firm “never guaranteed individual success.”

While that may be true, customer service is not simply about written guarantees, Chuck. It’s also about ensuring your customers view you as trustworthy and reliable.

People shop at Nordstrom because they can do so with confidence. If something goes wrong with a purchased product, there’s little if any doubt that the store will do the right thing when you bring the defect to their attention.

In truth, when it comes down to the fundamental principles of effective brand management and customer service, it really doesn’t matter what you are selling. As Donald Porter of British Airways once aptly put it, “Customers don’t expect you to be perfect. They do expect you to fix things when they go wrong.”

So why didn’t Charles Schwab do the right thing with respect to making customers who essentially were sold defective products whole again? Perhaps the lawyers deemed doing so too great a legal risk.

While that stance may have a significant upside in the courtroom, it will not be without a significant downside cost elsewhere. By not stepping up as other firms have done (voluntarily or otherwise) to make allegedly misinformed product purchasers whole again, Charles Schwab will squander immeasurable current and potential client goodwill and badly undermine the impressive work of those responsible for creating Schwab’s Nordstrom-like experience.

In truly world-class organizations, the legal and marketing functions do not operate as separate silos, in good times or crisis, and a measured balance is routinely struck between their sometimes conflicting interests – and for good reason. After all, the only ones to ultimately benefit from letting Legal call all the shots are, well, the attorneys themselves.

Customers have talked, Chuck. Perhaps it is time you started listening.

Share This Post

The Internet is typically blamed as the primary reason for the accelerating decline of daily newspapers, but I don’t buy that argument.  Quality neighborhood news cannot easily be found on the Internet and a newspaper that is staffed by journalists who understand and respect the communities they cover will always be in demand.   Sadly, most daily newspapers don’t appreciate their readers’ interests and values, and accordingly, cannot establish, let alone maintain, a connection to their subscribers.  Sometimes the disconnection is so egregious it leads to the publication of appallingly offensive articles.

Mark Whicker, a columnist for the Orange County Register, serves as a poster boy for why daily newspapers are dying.  His column in question is so asinine that I’d prefer to just link to it, but I note that sample reader responses under the apology he was subsequently forced to issue are considerably more intelligent, thoughtful, and better written than the column itself.  That Whicker’s column made it into print speaks volumes about the editorial leadership of the Orange County Register.  The newspaper clearly is in need of some adult supervision.

The company that owns the Orange County Register filed for bankruptcy last week but promised there would be no changes to the newsroom’s operations.  If that’s the case, The Register deserves to go out of business.

Herewith is Whicker’s commentary:

http://www.ocregister.com/articles/world-won-most-2555260-never-one

Share This Post

Meet Lauren Olney, our Holy Cross intern this year.  Although Ms. Olney is well travelled and has lived in world-class cities as London, Toronto, and Rome, like S&A co-founder Jackie Condie she takes great pride in being – ahem — a Jersey Girl.   Ms. Olney believes the much maligned Garden State unfairly gets a bad rap and argues there is much more to New Jersey than storage tanks, strip malls, and nail salons. Here is Ms. Olney’s recommended PR positioning for the Garden State (We decided to let it slide that she chose to attend a college in Massachusetts). — S&A Staff

“New Jersey.”

What pops into mind when you see or hear the name? A vision less than flattering I bet… including smog and big poofy hair perhaps?

Now, imagine living there and telling out-of-staters. Imagine seeing their expression turn sour. Imagine meeting a man in Rome – who first asked if the state of Seattle was above New York – knowing people “no like New Jersey.”

Trust me, it’s not easy.

People have poor opinions of New Jersey, as the media often captures the dramatic, not qualifying, aspects of the state. Thus, the general public is left with several common misconceptions, leaving a lot to be desired of New Jersey’s reputation management skills.

Myth #1: “What people see in Newark is what the rest of NJ looks like”

New Jersey is not just factories and roads, but few people venture beyond the Turnpike or airport to see aspects like the twenty percent of Jersey’s productive farmland. Does the average American know that NJ ranks 2^nd in blueberry production, 3^rd in spinach, and 4^th in bell peppers among many? Or that the state has the most horses per square mile? I once visited Central Jersey, and with open fields and large farms, and at first I had to ask if we were in the same state. Houses were modest, clothing choices were understated. Certainly, “The Real Housewives of New Jersey” featured nothing of the sort.

Myth #2: “New Jersey has the worst drivers in the country”

Despite what some people may think, New Jersey residents are tested the same as other states, and aren’t really the worst (sorry, New York.) New Jersey has the highest population density per square mile, thirteen times higher than the national average. That means everywhere, including roads, are more crowded. How does anyone expect us to be docile or forgiving on the road? To endure such a dense setting, one must anticipate and use survival-of-the-fittest maneuvering tactics. Hence explaining outbursts of aggression?

Myth #3: “Everyone from NJ is like The Soprano’s, or the Real Housewives”

“Joisey” accents, sprawling Vegas-like mansions, Italian-American family life, and criminal organizations are what these shows make New Jersey seem like. I (despite my dreams of being Italian) am a combination of Irish and Slovak heritage. My neighborhood also is very diverse, which isn’t unusual given that New Jersey ranks among the highest religiously and ethnically diverse states. There always has been a broad Italian base in Jersey, but the Asian-American population currently is the fastest growing in the state (and they aren’t in the Sopranos…?)

Myth #4: “Nobody from New Jersey is very smart”

Many people think that New Jersey residents are unintelligent. But it may be a surprising fact that NJ is tied for second with Massachusetts for the highest number of high school graduates that go to college, and placed sixth for percentage of residents who completed a Bachelor’s degree. With the statistics as back up, New Jersey is one of the smartest states.

Myth #5: “Nothing good ever happened in New Jersey”

New Jersey was once known as “the Crossroads of the Revolution” as it housed more battles than any colony during the Revolutionary War. Princeton became the nation’s capital for four months, and New Jersey became the first state to ratify the Bill of Rights. Among other New Jersey accomplishments, are the first drive in movie theater, Miss America pageant, brewery, can of condensed soup, submarine, boardwalk, and the first solid body electric guitar. Our state housed the first organized baseball game, first professional basketball game, and the first intercollegiate football game. Famous names such as Thomas Edison, Clara Barton, Grover Cleveland, Frank Sinatra, Stephen Crane, Paul Simon, Chelsea Handler, Bruce Springsteen, Jon Bon Jovi, and Derek Jeter were all from the state. Nothing good? The facts beg to differ.

So, please, the next time we tell you we’re from New Jersey, hold back the urge to give us the same, distinctive response. Our reputation needs to be improved by shedding more light on our positive attributes, because proudly, we have many. And, even though nobody likes us, there’s a reason why we have one of the lowest depression rates.

Instead, perhaps an old New Jersey state slogan says it best: “come see for yourself.”

Share This Post

The banking industry’s public response to the current headline-making credit card legislation underscores how far America’s bankers truly are removed from reality. Public loathing of America’s banks has become so profound that even Congress can no longer acquiesce to the industry’s demands – despite the best efforts of a powerful lobby – hence the expected passage of legislation requiring credit card issuers to cease practices that are both unfair and unscrupulous. Rather than take the offensive and ostensibly embrace the inevitable legislation with campaigns touting “We Want to Help Restore America’s Economic Vitality”, the banking industry has effectively responded with “Paybacks are Hell.” Consumers, even those with unblemished credit histories, are told to expect new or higher annual fees, less affinity benefits, and a further tightening of available credit. Bankers just can’t help themselves.

The credit card business doesn’t have to be inherently anti-consumer. Nordstrom Bank, which is wholly owned by the retailer of the same name, is a case in point. I opened a credit card with them last year and have been impressed with how well it maintains Nordstrom’s vaunted reputation for exceptional customer service. Its approach is in stark contrast to those of the major card issuers with which I’d previously dealt.

Let’s start with its call centers. When I first called the 800-number to activate my card, I resigned myself to getting an automated response. Instead, a friendly representative who, it turned out, was incredibly knowledgeable about the card’s benefits, answered my call within 60 seconds and quickly helped me activate my card. Thinking it unlikely Nordstrom had built the call center capability from the ground up, I assumed she worked at an outsourcing company. The woman assured me she was a full-time employee of Nordstrom Bank.

As one who firmly believes that consumer-focused companies that truly care about the customer experience would never outsource the customer service function, I contacted Nordstrom CEO Blake Nordstrom to see if he shared my view. In a reply to my e-mail (how many other Fortune 500 CEOs respond to e-mails from ordinary customers?) he said:

We are one of only three retailers that I know of that still own their credit business. Everyone else has sold it and outsourced it. As merchants, we don’t profess to be bankers. We do feel strongly, though, that we work one on one with our customers and not have a third party in between to potentially jeopardize our relationship. We do have two call centers: one in Denver, the other in Southern California that are staffed 24/7 with Nordstrom employees.

Nordstrom Bank has further earned my admiration for its acts of graciousness. When I called the bank after realizing my first payment would not reach them by its due date, the phone rep waived the accrued late charge and interest penalty without any prompting from me. The bank also did not charge me a fee to make an electronic payment over the phone, an atypical practice that the rest of the industry will now have to adopt, as mandated in the current credit card bill. Since then, I’ve called the bank a number of times, and without exception I was speaking to a customer rep in less than a minute because once you are “in the system” you can simply hit zero and a real person comes on the line. Such respect for customers’ time and connectivity preferences, coupled with an affinity program that is honest and transparent, has earned them my appreciation and loyalty.

Interestingly, Nordstrom doesn’t have a slogan or even a logo, and it doesn’t spend a great deal of money on advertising buys, yet the company is one of the country’s best known retailers. Nordstrom preserves its enviable brand reputation the same way it established it: by giving shoppers impeccable service, great selection, competitive prices, and no-nonsense sales practices. And that’s what consumers want from their banks. Vernon Hill, the banking maverick who turned Commerce Bancorp into a retailing powerhouse in the mid-Atlantic region, was one of the few bankers who understood and embraced this reality.

Banks and the executives who lead them would do well to remember that the responsibility for reputation management does not begin nor end with the folks in the marketing and public relations department. It truly is a shared obligation that touches on every aspect of banking operations. Banks that fail to quickly grasp this fact will continue to find themselves a day late and more than a dollar short. They better heed this reality because they have no more political currency left to support yet another taxpayer-funded bailout.

Share This Post

I went to a neighborhood local Chase branch yesterday to attend to some S&A corporate banking needs. As our assigned client relationship manager Olga (a banker exceptionally good at her job) is based at another location, I met briefly with a Chase employee who is clearly not marching lockstep with Mr. Dimon on the issue of whisper campaigns.

As he looked after the day’s business needs, the employee casually asked whether I personally had an account with Chase. I told him that I did not.

And that’s where things went off track.

He asked me where I banked and why I didn’t do so with Chase. I told him that I was a satisfied customer with a more recent entrant to the New York banking scene and that one of the primary reasons I banked with them was because I never had to wait in long lines like the one currently in his lobby (ok, I admit that was a tad snarky but I was under some time pressure to get back to the office and engaging in an unsolicited sales pitch wasn’t going to keep me on schedule).

After repeating the name of my bank, he paused and then continued, “Hmmmm… you DO know what happened to IndyMac, don’t you?” While he did not come right out and say that parallels should be drawn between IndyMac’s financial health and that of my own bank, he said it in such a way that his connect-the-dots insinuation could hardly be misconstrued.

While certainly insulted that he mistook me for someone who might be gullible enough to fall for the scare tactic, I was more taken aback by the brazen and cavalier way he threw out such an irresponsible and reckless suggestion about such a grave issue. At a time when consumers’ economic confidence has ebbed to the degree that the FDIC chairwoman actually sees the need to assure people via a national morning TV show that our banking system remains sound, making false representations, even on a one-on-one basis, about a competing bank’s financial condition is a rather indefensible sales approach.

I’ve worked with the financial services sector for more than a dozen years and have more than a passing familiarity with my institution’s financial wherewithal, so I was able to quickly call the employee on his devious sales approach. But what about the average customer who walks in off the street? How many of them are now needlessly worried about the health of their bank? How many are now whispering in the ears of friends and family that they heard their bank may be the next one to go under?

While I certainly applaud Mr. Dimon for stridently weighing in on the deleterious consequences of market speculation and rumor-mongering gone rampant, his message would have far more credibility, at least in my eyes, if I hadn’t just had a run-in with the one employee out of 180,000 who engaged in similar antics, albeit on a smaller scale.

Share This Post

Reporter: “How can the company justify paying 300 times book value to acquire a failing company owned by the CEO’s son-in-law?”

Spokesperson: “NEWCO is proud of its corporate governance practices and its commitment to increasing shareholder value. We look forward to expanding the NEWCO brand through this merger of equals.”

Ok, so maybe I’ve crafted more than a few statements in PR-speak myself.

That said, how incredibly liberating to come across a corporate comment in the newspaper that not only speaks directly to the issue, but does so with real gusto…a statement that puts the inquiring reporter in his place and publicly questions his news judgment….a statement where the spokesperson stops being a shiny, happy person for a millisecond to say what he or she is really thinking.

Surprisingly, such a statement was issued by none other than CBS News. In response to a question about the embattled Katie Couric possibly – but not definitely – but, let’s face it, increasingly likely – “barring a change” – possibility of quitting as the anchor of “CBS Evening News”, CBS issued the following statement to the New York Post:

“We think readers are extraordinarily bored with this infantile and nasty pilling on… and will continue to focus not on baseless rumor and conjecture, but on the quality and depth of the broadcast – which is second to none.”

Wow – that’s a big change from the more traditional “we’re very proud of…” and “we have no plans for any changes regarding…” statements reportedly issued earlier.

Alas, the Post didn’t report whether a name was attached to the more recent statement, so I don’t know the identity of the verbal sharpshooter. But whoever you are, I applaud your courage and candor. I’d be delighted to buy you a drink.

Something tells me you could use one.

Share This Post

Or ask someone in private equity. That sector is most often associated with the likes of Blackstone’s Stephen Schwarzman, who has reaped billions of dollars by buying healthy companies, crippling them with debt and massive layoffs, and then selling them at a huge profit. Although there are countless private equity firms who have contributed mightily to the economy and the public good, the average Joe or Jane steadfastly identifies the industry with greedy individuals who pillage companies and feast on $40 crab claws.

The PR profession certainly isn’t immune to public misperceptions either, which is more than a tad ironic. Indeed, we are the proverbial shoemaker’s children when it comes to our own reputation management. Our public credibility gap has, sadly, only widened lately thanks to the headline-generating missteps, blunders, and ethical breaches of some high-profile practitioners. While these individuals may occupy corner offices, I am loathe to use the term “industry leader” to describe any of them for they have shown via their actions, words, or values that they do not represent the trail-blazing people in the PR industry who truly deserve professional respect and admiration.

Mark Penn, the CEO of Burson-Marsteller, is the industry’s embarrassment du jour. While the mainstream media has been highly critical of Senator Hillary Clinton’s decision to allow Mr. Penn to keep his day job while serving as a key advisor on her presidential campaign, Burson-Marsteller has largely been given a free pass on its equally problematic decision to allow Mr. Penn to continue on as its CEO.

As someone who has generated a significant amount of new business through referrals from people with whom we work, I appreciate the value of having a CEO who is so connected as to have the ear of someone who could very well be the next president. But one of the cardinal rules of reputation management is that you should never act behind the scenes in a way that would prove to be embarrassing or detrimental if it was covered on the front page of the newspaper.

Mr. Penn’s decision to meet with officials from Colombia, which hired Burson no doubt in part because of Mr. Penn’s connection to Senator Clinton, and subsequent apology after his meeting became public, was an insult to the firm’s employees who dutifully uphold the firm’s published commitment to avoiding conflicts of interest and to all the clients who were taken in by the firm’s grandstanding about its ethical approach to business. It also demonstrated that Mr. Penn’s greater loyalty is to the Clinton campaign rather than to Burson’s clients.

But the Colombia incident isn’t the only instance of ethical malfeasance at Burson under Mr. Penn’s leadership. The Wall Street Journal in September reported that Burson was aggressively waging a campaign advocating against Google’s planned acquisition of DoubleClick. But in its outreach to reporters, Burson representatives failed to disclose to reporters that it was working for Microsoft, a major Google competitor. According to the Public Relations Society of America (PRSA), such subterfuge is wholly improper and a significant ethical breach.

Harold Burson, an industry luminary and the co-founder of the firm that employs Mr. Penn, also has ethical problems with PR firms not disclosing their vested interests. “I’m totally opposed to front organizations that do not disclose where their funding comes from and to my knowledge – we’re a big company – we have never started or organized a group where the funding sponsorship was unknown,” Mr. Burson said in a 1999 interview that was first cited by PR blogger Mark Rose. Things have clearly changed at Burson since Mr. Penn assumed the leadership.

Further, Mr. Penn reportedly has been actively involved in Burson’s representation of troubled mortgage lender Countrywide Financial. For an inside look at one of the most dubious reputation management campaigns ever waged, this article in the Wall Street Journal and this one in Salon is must reading.

Regrettably, Burson isn’t the only global PR firm causing the industry considerable embarrassment. It was reported on Gawker, a media-focused website, that Edelman, which also made pledges about its ethical approach to business and commitment to honesty, tells clients that it is okay to lie to the media. CEO Richard Edelman denies the story, of course.

I’ve met Richard Edelman and even once entertained thoughts of joining his firm (heck, we once cheekily considered calling this blog “5:45 a.m.” as opposed to his own “6 a.m.” blog to suggest we were at work before the Big Boys of the industry). My take from afar? Mr. Edelman is decidedly one of the most decent, personable, trusting, and gracious senior executives in the PR business. But his trust has repeatedly been misplaced. In recent years he has increasingly chosen to surround himself with political operatives, including Leslie Dach, who worked at Edelman for nearly two decades, albeit with some sabbaticals to work on various political campaigns.

Mr. Dach, the subject of an extremely damning profile in The New Yorker, formerly oversaw Edelman’s Wal-Mart account and he has since joined the giant retailer. During Dach’s leadership, Edelman initiated the “Wal-Marting Across America” blog, supposedly penned by a couple of customer enthusiasts who turned out to have been bought and paid for by the PR firm. That campaign was one of the most egregious communications frauds in recent memory. Edelman still retains the Wal-Mart account, which suggests the controversial retailer wasn’t too chagrined after being outed for the deception.

Then there is the issue of Ronn Torossian, the CEO of 5WPR, which claims to be one of the fastest growing PR firms in the industry. Mr. Torossian has a penchant for threatening litigation (see Strumpette’s Torossian Lawsuit countdown clock), a brash style, and a rather skewed perception of where he fits in the pecking order of industry giants (To wit, he reportedly said this a few years ago with respect to legendary PR man Howard Rubenstein: “5WPR are the new kids on the block to challenge him as the leading PR person in NYC.”). I will let the folks at Gawker fill you in on a major reason why Mr. Torossian comes to mind while writing this particular post.

Finally, there is Michael “The-Flack-When-You-Are-Under-Attack” Sitrick. As I’ve noted before, I admire Mr. Sitrick’s willingness to rough up reporters who write negative stories about his clients (although some of the reporters he has taken on are among the smartest and fairest in the business) and I salute Mr. Sitrick for his ability to dupe 60 Minutes into doing an uncritically sympathetic story about his controversial client Biovail being an unjustified victim of short sellers. Yet his outrages and messianic attacks on short sellers for their dubious activities loses some of its steam when you read that his firm has apparently engaged in some highly questionable practices itself.

(Full Disclosure: I briefly was retained by an attorney to assist in a matter involving Spyro Contogouris, a hedge fund researcher who was a prime target of Mr. Sitrick’s attacks)

Over the years I have been frequently criticized by PR people for being “extremely naïve about PR” and “thinking too much like a reporter.” I’ve been told that PR is an inherently dirty business that often requires the use of dishonesty and deception to get the job done. But I don’t buy that, nor do the people who work here. At the end of the day, our reputation for integrity and transparency is our most cherished corporate asset, and no client, project, award, or piece of business is worth its sacrifice. These values have served us well.

The PR industry has no shortage of practitioners who are quick to advise others how to manage their reputations. It’s high time we did something about our own.

Share This Post

I just don’t “get” technology. I barely passed computer science in seventh grade and it’s been an uphill battle ever since. When something goes wrong with my computer or iPod or whatever, there’s never an easy fix. My colleagues, friends, and probably Dell and Mac’s combined support staffs have learned to dread my phone calls begging for help.

But it seems there’s hope for me yet.

Six months ago I reluctantly leased a BMW. I say “reluctantly” because I actually wanted to lease another Acura, the car I previously leased for a blissful trouble-free 39 months. Heck, I would have been happy to buy my old Acura, but the buyout payment was ridiculously prohibitive, especially considering an unbelievable offer a local BMW dealership gave me. Even the Acura salesman agreed the BMW deal was just too good to pass up. So, despite a panic-attack-inducing dashboard full of high-tech bells and whistles, I went with the BMW.

I’m glad I did. Anyone who knows cars knows that BMWs are legendary for their handling. Having spent some time in the driver’s seat, I can confirm that the reputation is well deserved. I haven’t enjoyed driving this much since I first got my driver’s license! Forget “The Ultimate Driving Machine”, BMW’s marketing folks should call it what it really is – “The Ultimate Driving Technology“.

Whereas some people may pride themselves on having a BMW parked in their driveway, I’m not one for “status symbols” so the car means nothing to me on that level. The pride I derive from the car is being able to triumphantly say, believe it or not, that I have mastered its myriad technology operating functions and amenities. I’ve actually figured out how to use all the “extras” on my dashboard. I can listen to my iPod, use the GPS, or talk hands-free on my cellphone without breaking out the driver’s manual or calling my salesman. Remember, I was essentially a Luddite when it came to embracing new technologies so this is a really big deal for me.

There once was a time when I was equally in awe of Apple Computers’ ability to make user-friendly and reliable technologies. Mac computers were once considerably more intuitive and reliable than those of its PC-based rivals, and the company’s tech support staff was equally accessible. Sadly, those days seem resigned to the history books.

I recently was staying away from home for a while in a corporate apartment. The cable Internet connection wasn’t working with my G4 laptop, so I called Apple, thinking that its tech people would be trained to quickly and easily help me with such a basic function. Guess again.

After waiting a good 30 minutes in the Apple tech support queue, I connected with a technician and told him my dilemma. Imagine my shock to be told dismissively that Apple doesn’t support products that are more than three years old (Excuse me? Yeah, that’s a whole other blog post waiting to happen.). After I begged and pleaded, he said Apple would support me “this one time.” I’m sure there was some significant eye-rolling at the other end of the line.

To make a long and rather unpleasant story short, it took the Mac “genius” more than an hour to troubleshoot my problem. Regrettably, he managed to create a host of other problems along the way that he wasn’t able or willing to correct, including disabling the functionality of my Verizon Wireless card. Fortunately, someone at Verizon Wireless was able to get me back up and running within minutes. As Verizon Wireless doesn’t officially support Apple products, the assistance was twice as much appreciated.

My growing disenchantment with Apple isn’t tied to that one incident. About a year ago, the company redesigned its mac.com email program, for which I paid about $100 a year to use. The upgrade was fraught with major hiccups and glitches, including system outages where the site itself would be down, denying users access to their messages. And if you did log on, it would frequently log you off as you were drafting an email, losing whatever you’d written thus far. Emails you thought were sent never went through to the recipient. It was frustrating to say the least.

Other Mac users, including talk show host Rush Limbaugh, report having other problems. Indeed, Mr. Limbaugh recently appealed on air to Apple CEO Steve Jobs for help with a computer problem after failing to get an issue resolved via the company’s tech support desk. Apple’s response? They dispatched an engineer to go work with him. If only the rest of us could get such high-touch, personal customer service.

There is also a broader concern about reliability. Dao, our former creative director who left us to join the Peace Corps, convinced me that she needed an iMac to do her job. Well, guess what? Less than a year later we had to send back the computer because its internal workings were “fried”. Even the new MacBook Dao eventually took with her to Macedonia was infected with gremlins. I believe the tech term would be “Random Shutdown Syndrome.” According to BusinessWeek, problem-plagued Macs are clearly not limited to my little private circle.

Yet Apple continues to enjoy a cult-like following simply because of the lack of formidable competition when it comes to functionality and design. Even I can readily appreciate the superiority of the Mac operating system. And while Apple’s standards for reliability have declined significantly over the past few years, it has never introduced a product as flawed as Microsoft’s Vista operating system, which is so problem-plagued that even Microsoft’s own senior executives have issues with it.

Still, it seems Mr. Jobs is increasingly willing to compromise on the reliability of Apple products in the rush to be first to market. His tolerance of launching “almost good enough” technology is a common mindset in Silicon Valley and the focus of a highly insightful commentary by Stephen Baker in BusinessWeek last September. Technophiles don’t seem to mind the shortcomings and compromises; Dao steadfastly remains a devoted Mac user and sees nothing wrong with needing a software upgrade immediately after buying her laptop. Her successor, Jake, is another devout iPhone-carrying Apple head. (When I told Jake that Apple will no longer support my laptop, he unabashedly replied, “Well you know it is more than three years old.” UGH!!!!!)

Perhaps it’s a generational thing, but I refuse to go along with the “almost good enough” mentality and the constant – and sometimes immediate – need for upgrades after products are introduced. In a way, I blame BMW. My experience with them has taught me that technology can be made both simple and reliable, and explained at a level that even a technophobe can understand. To the best of my knowledge, no one has yet seen the need to publish a “BMW for Dummies.”

Maybe I’m mistaken, but I suspect that if BMW decided to make computers, their engineers and designers would adhere to much higher performance and service standards than those currently demanded by Mr. Jobs. And the folks at BMW could no doubt give Mr. Jobs a hell-of-a-run on the marketing front. Ah yes, dare to dream…

The thought of BMW making computers might sound absurd today, but who would have thought just a few years ago that Mr. Jobs would one day be peddling music and cell phones. Suffice to say, Mr. Jobs had better hope that my dream never becomes his reality.

Okay, you die-hard Appleheads who blindly worship Mr. Jobs, give me your best shot.

Share This Post

As it turns out, I should have done my homework before signing up. AARP’s slogan “The Power to Make it Better” doesn’t seem to always apply, at least not when it comes to the products they endorse.

I once received a mailer promising me the lowest auto insurance rates available in New York. Even though I was content at the time with the level of service and coverage I had with GEICO, I figured I’d see how much better the AARP plan could do. I called, I gave my personal details, I was given a quote – which happened to be significantly higher than my existing policy. So much for getting great deals!

Turns out specious claims are not only reserved for AARP-endorsed insurance products. BusinessWeek’s Anne Tergesen makes clear in the magazine’s February 25th issue that, in most instances, the endorsement program that AARP offers on third-party financial products may be a better deal for the AARP than it is for most of its members. Royalties from the sale of financial products in 2006 contributed $400 million to the organization’s $1 billion budget, or almost twice the income of monthly dues.

A spokesperson acknowledged to BW that its products are “not always the cheapest.” That said, he also suggested that they don’t necessarily try to compete solely on price, saying that the organization believes it offers “a higher-quality plan with elements that are not included in a lot of competitive plans” and that the products are “designed in part to serve those who might otherwise be excluded from the market.”

Fair enough. But if that’s the case, the promotional literature needs to come with something akin to one of those “viewer discretion” advisories they flash before those paid programming shows they run in the wee hours of the morning: “The following is a paid product endorsement. AARP advises members that better-suited and better-priced products are likely available elsewhere.”

Retirees are typically people most in need of protection from predators hyping financial services products that are not in their target’s best interest. How ironic – and disturbing – that AARP is complicit in the financial exploitation of its own members. AARP would be strongly advised to review its reputation management practices.

Share This Post

According to the New York Post, Starwood – whose properties include the Westin, Sheraton, St. Regis, Le Meridien, and Four Points hotels – has reportedly notified affinity program members that it plans to dramatically raise the number of reward points needed to get a free night at more than 200 of its properties – in some cases by as much as 133%. I never got the email notice supposedly sent to members, so I’ll have to trust the Post on this one.

If it’s true, it’s a big disappointment. Unlike the major airlines, which almost never let me use my frequent flyer miles when I want to, I’ve had great experiences with the Starwood program. Rooms are almost always available where I want to stay and on my preferred night(s). I must have stayed at one of my favorite hotels in the country, the Westin on Market Street in San Francisco, using Starwood points more than a half dozen times in the last year. It would have been half a dozen and one times, but there was an occasion last summer when I was told the hotel was fully booked – even though I was able to subsequently get in by securing a room at the same hotel for the very same night via hotels.com. (Hmmmm… so much for no blackout dates, eh?)

As one blogger pointedly noted, it appears that the Starwood program has been incredibly successful and the company now wants to “steal back tons of Starpoints.” Having used my Starwood card almost exclusively since I received it more than a year ago, I feel cheated. If Starwood wants to change the rules of the game, I’m sure the fine print that came with the sign-up sheet gave the company the right to do so. What may be legally permissible, however, is not in this case customer service-wise. The latter would dictate that those of us who essentially invested in the company by using its co-branded American Express card should be permitted to continue redeeming existing points under the prevailing terms when we signed up for the card.

Assuming Starwood won’t be adding such a grandfather clause, I hope other disappointed program members join me in boycotting the company’s properties. As Starwood is certainly not alone in upping its point redemption requirements recently, I am not sure which, if any, major chain will become my new favorite. There are plenty of quality independent hotels to choose from; perhaps I’ll give some of them a go. Who knows – maybe I’ll even find some with the marketing smarts to offer special discounts for disgruntled Starwood refugees in need of a new hotel to call home.

Share This Post

Cable companies until just recently enjoyed such monopolistic freedoms, though their industry is probably better defined as an oligopoly. Individual cable providers long-enjoyed exclusive contracts to provide service to entire communities and apartment buildings, which has allowed them to raise prices more than a whopping 90 percent over the past 10 years. The ensuing monopolistic mindset is best reflected by their rigid pricing approach and broadly bundled channels, uniformly bad customer service, and appalling practice of expecting their customers to put up with a three- or four-hour time estimate of when a technician will be on-site to provide installation or maintenance service. Imagine a restaurant or your local pizzeria delivery joint trying to get away with that approach…

The Federal Communications Commission appears poised to serve the cable industry its just desserts. The New York Times reports today that the agency is preparing to invalidate all contracts that give individual cable companies exclusive rights to provide service in apartment buildings. The decision will likely prove to be a big boon for consumers, as studies show that when an alternative cable service is made available, prices can drop as much as 30 percent.

Verizon Communications and the new AT&T (not to be confused with the old, “Ma Bell” monopolistic one) are still in the process of rolling out their fiber optic services, but they do seem inclined to make an aggressive play for marketshare. Unfortunately for consumers, these two companies are also notorious for bad customer service, so I doubt we’ll find much relief on that front. But hey, if the increased competition drives down service costs across the field, that will be a small victory enough.

The cable industry has signaled it will challenge the FCC’s rule in court. No doubt the hearings will be scheduled to start sometime between 1 p.m. and 4 p.m.

Share This Post