Lessons learned from Samsung crisis

Lessons learned from Samsung crisis

Posted: by Stericycle on Apr 10, 2019

In August 2016, Samsung released its Galaxy Note7. Reviews were strong out of the gate and the phones proved hugely popular with high levels of sales. However, what started as a dream launch quickly turned into a nightmare for Samsung.

Towards the end of August, the first report of an ‘exploding’ Note7 hit the media. Things quickly spiralled from there, with more and more people sharing their own story – and in the first few days of September the manufacturer announced a voluntary global recall of 2.5million Note7s. The reason given? Faulty batteries. As part of the recall process, Samsung allowed people to either receive a refund or to receive a new device with a different battery.

Things got so bad that airlines took the unprecedented step of putting the phone model on their list of prohibited items – which meant that people who had taken their phone overseas weren’t even allowed to bring it back into the country, such was the potential risk.

However, things were about to get even worse for Samsung. At the beginning of October, the first reports emerged of a replacement device suffering from the same issue. This was a huge blow for the company, who perhaps thought it was out of the woods – instead, on 11 October it announced a total discontinuation of the model.

A statement issued in the UK said that because “customers’ safety is an absolutely priority at Samsung, we have stopped sales of the Galaxy Note7”.

The decision to completely halt production and discontinue the Galaxy Note7 would have been a huge one for Samsung to take. However, it was clear that the device was causing colossal reputational damage and by bringing its life to an end, Samsung may well have saved itself – even though the entire sorry episode cost the company billions.

As with all recalls, there are plenty of learnings here. Perhaps Samsung was too slow in the initial phase, but it did become more aggressive, going to great lengths to ensure consumers did not want to retain the product – even issuing software updates which made it impossible to charge the phone. It also deserves praise for using text messages and emails to communicate the recall, and of course making use of social media.

Most importantly, it realised that there comes a tipping point where the best step is to realise you are fighting a losing battle. By discontinuing the product, Samsung could largely draw a line under everything. In the intervening years, the company has worked hard to prove to customers that its devices are safe and it appears to have worked, with sales recovering. Other manufacturers should take heed as this case study shows that even the most public of recalls does not have to represent a killer blow if handled effectively.

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In August 2016, Samsung released its Galaxy Note7. Reviews were strong out of the gate and the phones proved hugely popular with high levels of sales. However, what started as a dream launch quickly turned into a nightmare for Samsung.
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