(My colleague, Rohin Dharmakumar co-wrote this post with me)
Michael Perschke, 44, the managing director of Audi India is a confident man. And rightly so. Though a late entrant to the Indian market, under Perschke’s leadership the German car brand has grown rapidly to become a very close number two, or possibly even the number one luxury car brand in India. In just about five years.
Audi did that by doing two things – converting “class defining leaders” like Baba Kalyani, Adi Godrej, Rahul Bajaj, Abhishek Bachchan and Ranbir Kapoor into Audi customers; and using “halo models” like the hulking Q7 SUV to create an aura around the brand.
Which is why it’s ironic that an incident that took place last week featuring both of those – a “class defining leader” and the Q7 “halo model” – may have ended up dimming that halo.
The incident started when Vishal Gondal, 36, the managing director of DisneyUTV Digital, came to know that his Q7 which had been sent for servicing, was being driven across Mumbai for nearly 8 hours after midnight, at speeds much higher than official limits. It “ended” when Audi India decided to replace Gondal’s Rs.65 lac Q7 yesterday, a car which he bought just over a year back. The decision to replace Gondal’s Q7 was taken after a meeting between Perschke and Gondal on 27th, followed by another two days of discussions.
When I called Gondal to check if this was true, he said that the matter has indeed come to a close but he wasn’t comfortable sharing any details. An email sent to Audi earlier yesterday got this reply, “We are discussing and working with Mr. Gondal to resolve the concern to his satisfaction.”
Audi India would of course like to think that the matter is closed, but it is going to be disappointed.
Kiruba Shankar, a social media consultant and visiting professor at the Great Lakes Institute of Management in Chennai and Bharathidasan Institue of Management in Trichy, has already added the Audi vs Gondal incident as a case study into the curriculum of his course on digital media at the two colleges.
“I will be using this case study as part of the Crisis Management subject in my course. I want to highlight how brands react to crises; if they can negate them; and possibly even turn them into something positive,” says Shankar. Let’s just say Audi India didn’t react all too well to this crisis. For that matter the company may not even have realized it was a crisis. Which is surprising, given that it had a very visible, popular and irate customer accuse its dealer of something that ranged from irresponsible at best (using it to joyride around town in the night) or criminal behaviour at worst (for nearly two hours the car was parked near Mumbai car scrap market in Kurla).
“The thing is, even after Audi would take a hit of, say Rs.30-40 lacs to replace Gondal’s car, they are not going to get the fruits of that,” says Shankar. Because Audi has apparently told Gondal to not reveal the details of why they decided to replace his car to either the press or to his social network followers. They may be worried that doing so will open a can of worms from other Audi customers in India who then wonder, “Was it possible that my car was used in this manner?” or worse, “Did my car visit the Kurla scrap yard too?”
Unfortunately by deciding to keep things hush-hush, Audi India may only be worsening things. Customers will draw their own conclusions, including material gleamed from rumours and unverified sources. Potential buyers will wonder if they want to take a risk with Audi. Rivals will attempt to cash in on Audi’s woes. Sales practices that might have otherwise been shrugged off will now appear to be tasteless and crass.
Is there a lesson from this for big brands? Shankar says there are four:
1. Apologize, and take control early. “The first thing Audi should have done was to acknowledge the problem and promise to look into it the moment Gondal made his first post. Instead it took them two or three days to step in. Brands should especially be careful when people who can amplify news very quickly are talking about them, otherwise they risk a ‘butterfly effect’ from a single negative incident. If Audi had just accepted the problem then half of the negativity would not even have happened. But I saw every single post made by Gondal and there is not a single official Audi response to them, they were just not in the conversation. I’m sure they were reading the conversation but were afraid of being mobbed,” says Shankar.
2. There should only be one brand voice. The Audi service center kept refuting Gondal’s allegations, sending photos of his car’s odometer and a handwritten log of vehicles entries. I thought a handwritten log sheet rubs off very badly on what is otherwise perceived to be a sleek and high tech brand [ed: Audi’s global slogan “Vorsprung durch Technik” roughly means “Advancement through Technology”]. That’s when the real damage started happening,” says Shankar.
3. Be open. The most disturbing part about Audi and Gondal’s reconciliation is that it is very cryptic. Everyone who was following this issue and supporting Gondal wants to know what finally happened. Keeping things in the dark damages both Audi and Gondal. Incidents like these are like reality shows. People have been extremely supportive of Gondal with their likes and shares, so it just feels a little impolite to not finish the story,” says Shankar.
4. Use the crisis as an opportunity for change. “By not talking about this incident Audi is losing a huge opportunity. Even without accepting any wrongdoing they could have just said that they were replacing Gondal’s Q7 to erase any doubts he had, because customer satisfaction was most important for them. They could then announce corrective measures to make sure something like this never happens again, for instance new security cameras and electronic vehicle records across every dealer in the country or the appointment of a new ‘chief quality officer’,” says Shankar.