These companies are still thriving — damaging headlines be damned.
Facebook, currently embroiled in a massive data-harvesting scandal that landed CEO Mark Zuckerberg in front of Congress, posted $4.99 billion in profits and added 70 million users in the first quarter of 2018. Uber, which has weathered a barrage of negative press over sexual harassment scandals and a self-driving car crash, still upped its revenue and ridership throughout 2017.
And while consumers say they’re frequenting Chipotle less due to food-safety concerns following the Tex-Mex chain’s E. coli, salmonella and norovirus outbreaks, the company — now helmed by a new CEO — also exceeded analysts’ first-quarter earning estimates. Meanwhile, the extramarital dating site Ashley Madison, whose 2015 data breach exposed 36 million members’ information, has since rebranded, with its newly installed CEO touting the site’s fortified cybersecurity and growth of about 470,000 new users a month.
So why don’t consumers seem to care that the companies they patronize are scarred by scandal? For starters, consumer psychologist and “Decoding the New Consumer Mind” author Kit Yarrow told Moneyish, “we are increasingly bombarded with stress, time constraints (and) other factors weighing on our mind.” So convenience, hassle reduction and immediate gratification “are more important today than they have been ever before.”
Vanessa Patrick, a professor of marketing at the University of Houston, identifies several factors at play: One is habit, she said and how hard it is to change one. “Something like Facebook is very much a habit; it’s something that you just do…The fact that things are happening doesn’t necessarily always have a direct impact on how we live our daily lives,” she said. “A transgression from a company doesn’t always result in people responding to it immediately.”
A second consideration is optimistic bias, Patrick said, or the notion that “bad things happen to other people; they don’t happen to me.” A 2010 study, for instance, found that people “display a strong optimistic bias about online privacy risks, judging themselves to be significantly less vulnerable than others to these risks.”
There’s also the consumer-brand relationship, Patrick said, which makes it harder to cut a brand out of your life than you’d expect. “This relationship can be based on more affective or emotional concerns … for example, ‘I really enjoy shopping at Target’ or ‘I really enjoy wearing my Nike shoes’ or ‘I really love my BMW,’” Patrick said. “That is very hard to break — in fact, consumers will go out of their way to defend a brand that has transgressed because they have an emotional relationship with it.”
Some relationships are simply functional, she added, pointing to the difficulty of severing ties with a social network. (Roughly two-thirds of US adults are on Facebook, per Pew Research; 74 percent of users say they visit the site at least daily and 45 percent say they get news from the platform.) “Taking yourself off Facebook or LinkedIn or any other network is not easy,” Patrick said. “If something happens with the company, you have to feel very, very strongly about it to extricate yourself from all the benefits that you get from the relationship that you have with that brand.”
Then there is “the fragmentation of attention,” said Patrick, citing one estimate that consumers are bombarded with between 4,000 and 10,000 marketing messages daily. “You could assume that a bunch of consumers don’t even know these things are happening,” Patrick told Moneyish. “Just because it’s in the news doesn’t mean that everybody is actually paying attention to it — you lose a whole bunch of people, because it’s just not processed.”
With that said, transgressing companies shouldn’t assume they can skate by on loyalty long-term. “I don’t think a company today can be calmly sure that they’re so unique, so special,” Yarrow said. “They can’t mistreat customers and survive.” Consumers today can be wary, distrustful and angry, she added, making them “hungry for an alternative.” “So companies that come along and say, ‘We’re doing things differently; we’re doing things better’ — they have an opportunity today that businesses never had in the past. And that’s where I think the old standbys crumble.”
To that end, Yarrow suggested some Facebook users had already begun to minimize their contact with the platform — clicking on ads less or avoiding personality quizzes, for example — and look for ways to get out of that relationship. Users might jump ship if there were an efficient way to migrate their information to another platform and feel protected, Yarrow suggested, or if another company were to somehow offer the same “emotional and psychological benefits” that Facebook provides.
Ultimately, Patrick said, repeated transgressions will affect the consumer-brand relationship. “Consumers do remember — not always, not everything, given the fact that they’re constantly bombarded with everything, but they do remember,” she said. “If transgressions occur over and over and over again, at some point they’re going to have to say, ‘This is it’ — and quit the brand.”