A prime example is Volkswagen ' s " Dieselgate " scandal . In 2015 , it was revealed that Volkswagen had installed software in millions of diesel vehicles to cheat emissions tests . The scandal led to billions in fines , a significant drop in stock value , and a severe blow to its reputation . The New York Times reported that " Volkswagen ’ s deception has profoundly damaged its brand ."
Long Term Consequences
The long-term consequences of being known as a lying brand can be even more devastating .
Trust is fundamental to any brand ’ s success . It takes time for candid and consistent communication and delivering on promises . When a brand lies , it damages the relationship with its customers , tarnishing its story and breaking the magical connection .
Erosion of Brand Equity : The value derived from consumer perception can be significantly eroded . Once trust is broken , it ’ s challenging to rebuild .
Increased Scrutiny : Regulatory bodies and watchdog organizations may scrutinize the brand more closely , leading to more frequent audits and a heavier compliance burden .
Talent Drain : Employees , especially top talent , may leave the company due to ethical concerns , impacting the brand ’ s ability to innovate and compete .
Over the last few years , the worldrenowned airline manufacturer Boeing has been in the news due to the two disastrous crashes of the Boeing 747 Max . Business practices shifted about two decades ago , with an eager executive focused more on profit and compromising safety . This saw a steady drain of engineers , resulting in growing design flaws in its 747 planes and grave outcomes .
The case of Enron is a stark reminder of the long-term impact of dishonesty . Enron ’ s fraudulent accounting practices led to its collapse in 2001 , erasing billions in shareholder value and significant job losses . As Bethany McLean and Peter Elkind noted in their book , The
Smartest Guys in the Room , " Enron ’ s story is a powerful cautionary tale about the importance of honesty and integrity in business ."
Is it Possible to Re-Build Trust ?
While the damage caused by being known as a dishonest brand is significant , it is not always irreparable . Rebuilding trust requires a strategic and genuine effort :
Transparency : It is crucial to be transparent about past mistakes and the steps being taken to rectify them . This can include public apologies , detailed reports , and open communication channels .
Consistent Actions : Trust is rebuilt through consistent actions over time . Brands must ensure they adhere to ethical practices and deliver on their promises without fail .
Engagement : Actively engaging with customers , listening to their concerns , and showing that the brand values their trust can help mend relationships .
In today ’ s market , authenticity is more valued than ever . Consumers are attentive and can detect when a brand is disingenuous . 86 % of consumers in a 2019 Stackla survey found that consumers were drawn to authenticity when selecting the brands they like and support . Therefore , authenticity should be at the core of any brand ’ s strategy . Brands prioritizing authenticity and transparency tend to build stronger , more resilient relationships with their customers . Patagonia , for instance , has built its brand on environmental sustainability and ethical practices . When the outdoor apparel brand makes a mistake , it owns up to it and takes corrective action , further solidifying its authenticity and trustworthiness .
The impact of being a brand known to lie is profound and far-reaching . Once broken , trust is challenging to rebuild , and the repercussions can affect every aspect of the business . The costs of dishonesty are steep , from immediate consumer backlash and sales decline to long-term erosion of brand equity and increased regulatory scrutiny .
However , with a strategic and genuine effort focused on transparency , consistent ethical actions , and authentic consumer engagement , it is possible to rebuild trust and restore a brand ’ s reputation . The key takeaway for brands is to prioritize honesty and integrity in all their dealings , as these values are the foundation of long-term success .
As Warren Buffett famously said , " It takes 20 years to build a reputation and five minutes to ruin it . If you think about that , you ’ ll do things differently ." Brands must heed this wisdom and strive to maintain their customers ' trust and loyalty through unwavering honesty and authenticity .
Rose Odengo is seasoned Strategy and Communication Consultant . You can commune with her on this or related matters via email at : Ask @ roseodengo . com