Brand + confirmation bias = hope for Volkswagen

It must be tough being a Volkswagen sales person right now. But those who say the eighty-year-old brand is fatally damaged don’t understand how brands work. If people see the bad behaviour as out of character with the brand or company as we believe them to be, then mostly people will forgive or excuse that bad behaviour – or, quite quickly, forget about it. It’s the johnny-come-latelys whose fragile brand equity can be swept away by a catastrophic error or a calculated deception.

Media reports of this story invariably mention the reputation of German engineering in the car industry, suggesting it will now be destroyed. Who now remembers that the first generation Mercedes A class had to be withdrawn because it had a dangerous stability problem? It was somewhat prone to rolling over if you cornered too fast. Logically, that should have undermined our confidence in Mercedes engineering. How could they make such a fundamental and dangerous miscalculation? But no. We believe Mercedes know about engineering. So they made a mistake? They put it right. That reinforces our belief. The car was relaunched, and the early problems were quickly forgotten.

In this country, German car engineering does indeed have a fine reputation. Yet the objective data, collected via the massive JD Power survey, points to Japanese cars being the most reliable. The JD Power report is widely publicised every year, by the way, but harder to remember if it doesn’t fit what you already “know”.

This is confirmation bias. As human beings, we can’t constantly reconsider everything we believe, or reappraise a person, brand or product when there’s new information. Instead, we tend to filter the information we hear so as to confirm and retain our view, quickly forgetting the bad stuff. A brand is built through consistent messaging over many years, backed by a consistent experience, and it tends to be resilient. This makes it resistant to dissonant messages.

This works both ways. In the years after BT was privatised, it was changing for the better, and people’s experiences were mostly good. In research, customers would report that they had encountered a very helpful person in the call centre, or a dedicated engineer at their home – and how surprising and lucky that was. They saw these people as delivering good experiences despite their employer, rather than as part of it. The same thing is happening now in the NHS. Surveys consistently show that people in the UK think the NHS is in a worse state than it used to be, and at the same time, the vast majority of people report that their own personal experience of the NHS is as good as it’s ever been.

Corporate reputation is another matter. Volkswagen’s share price has crashed. It is damaged goods as a stock to invest in, as a company to work for, as a lobbying voice among its peers and in the halls of power in Europe and elsewhere. But we also see the cars, we know what we think about them, and it’s effortful to change that view. A personal bad experience, perhaps with a rude salesperson or a Friday car, is much more likely to change someone’s purchasing behaviour than an $8bn fine in the USA or an orchestrated misrepresentation of emissions.

Volkswagen can salvage their reputation, with a rapid, honest response. But for a time they’ll be in the news, and not in a good way. Marketing teams at Volkswagen will be tearing their hair out. They needn’t despair. Consistently good customer experiences will always trump bad corporate behaviour.

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Read more from Fiona McAnena in our Clubhouse.