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COMMENT: Why Telstra Has A Major Problem

As tens of thousands of customers express their anger at Telstra due to their recent network failures the Company has resorted to conducting nationwide reseach studies to discover just how bad their reputation has been damaged.

Some say that Telstra’s reputation is in the gutter and that there is no way that the Company can quickly get back to being a “Premium Carrier”.

Tony Jaques seen below,  is a specialist in Crisis Management he claims that you know you’re in trouble when the news media start compiling lists of your failures, and the list gets rolled out and updated with every subsequent issue.tony-jacques-cropped-headshot

He claims that’s the problem facing Telstra as the incumbent premium telecoms supplier in Australia.

In an interview with ChannelNews Jaques commented on an article he initally wrote for Mumbrella.

He claimsthat what’s even more damaging to reputation is not just its repeated system outages but the company’s inadequate communication to hundreds of thousands of angry customers.

In February, Telstra suffered a massive outage – reportedly caused by “an embarrassing human error” – followed by two further failures in March which affected up to 8 million customers.

CEO Andrew Penn offered users a ‘free data day’ and said: “As CEO I take full responsibility … and I regret the impact on our customers and the fact that we let them down.” It was pretty much a textbook apology, accompanied by a commitment to review the system.Andy Penn

But when the network went down again in mid-May, affecting 10% of the company’s internet customers, the CEO was noticeably quiet.

Perhaps it was because the latest failure happened just one day after he boasted at a function that a review of the network showed its “incredible strength and resilience,” and how Telstra was committed to meet, if not exceed, customer expectations.

After the new outage, instead of more public assurances from the embattled CEO, customers saw anonymous messages on the Telstra website – under the unhelpful heading Unplanned Service Disruption – which twice reported the system had been restored, and twice had to admit it wasn’t true.

candice falzon telstra tweetDoubtless Mr Penn was very busy, but after four days he returned to social media and tweeted; “pls know I’m reading all your comments and our team is on it.”

It’s hard to imagine how anyone thought that message from the CEO would improve the situation.

the simpsons twitter telstra frustrationIn fact a whole week was allowed to pass before Telstra finally wheeled out their Chief Operating Officer, Kate McKenzie, to offer an executive apology and to concede that, despite earlier assurances, several thousand customers were still offline.

Predictably there was a technical explanation for the prolonged outage and the premature claims of success. But this was not fundamentally a technological crisis – any complex system is always going to have outages, but how you communicate about it is what makes the difference.

Reputational damage doesn’t just add up, it multiplies. When your company is repeatedly under fire – and the news media are compiling lists – every fresh problem starts to gain a cumulative importance that it doesn’t necessarily deserve.

That’s the situation Telstra is now in, and it needed a lot more than a confident CEO who took the limelight, then seemingly left it to someone else to face the media.

The role of the CEO in any crisis is critical, especially the question of when to use the CEO and when to use someone else.

Telstra’s latest experiences surely provide a lesson on how to manage such important decisions.

A Parting Thought: “A reputation once broken may possibly be repaired, but the world will always keep their eyes on the spot where the crack was.” – Bishop Joseph Hall 1574-1656

Tony Jaques is the director of issues and crisis communications company Issue Outcomes

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