Samsung in a rush to snuff fallout from Galaxy Note 7
After initial stumble, recall is being praised for its transparency
Samsung’s GalSAN FRANCIS CO axy Note 7 problem has burned it in the stock market and among some smartphone users, but a strong pivot into crisis management may minimize the damage.
The South Korean electronics giant’s evolving strategy in coping with igniting batteries in what was a top-selling product — and taking quick steps to notify customers — offers a playbook on how to effectively handle a recall, consumer advocates say.
Samsung last week announced a recall of 1 million Note 7 devices after it discovered some of their batteries burst into flames when charged. When it first offered to swap devices, in an early September voluntary recall, more than 2.5 million units had sold since their release last month.
The initial response was criticized as slow, with any confusion made worse by increased reports of damage to homes and cars from exploding Notes. A recent survey suggests many of the original buyers may avoid a replacement model. And Thursday, the South Korean government ordered Samsung to undertake additional safety measures on Note 7 batteries, according to Reuters.
Samsung has launched an outreach and exchange program that uses promoted tweets, newspaper ads, the Samsung+ app, emails, a special website and 800 number, and search-engine marketing to prod owners to handing over possibly dangerous devices.
If an owner somehow missed those exhorts? A software update pushed to all recalled devices means that when a recalled Note 7 is plugged in to charge, a notification screen urging the owner to turn it off and on pops up.
“Samsung has been more transparent than the average company is for this recall,” says Scott Wolfson, senior adviser to the chairman of the U.S. Consumer Product Safety Commission.
Samsung said 500,000 replacements for the 5.7-inch phablet- sized phones would be available for exchange Wednesday. A company spokeswoman said a “vast majority” of Note 7 owners chose another Galaxy smartphone, but she didn’t specify a percentage.
Samsung has been burned through a plunge in its stock that shaved more than $10 billion off its market value, lost sales and an expected price tag of about $900 million for the recall effort.
“Established brands can take a hit,” says David Rogers, a digital marketing expert at Columbia Business School. “But if you’re perceived as doing something to cheat the system — Wells Fargo and Volkswagen come to mind — it has lasting damage.”