How TSB can recover its reputation

Heathrow’s Terminal 5 offers a surprising example of a reputational disaster turned into an advantage

Out of all the most recent reputation crises to hit British businesses, the ongoing IT debacle at TSB stands out as the longest-running and most complex to unravel.

But how can the reputational cost of this disaster be quantified? And more crucially, how can brands recover from the kind of onslaught the champion of local banking has been exposed to?

Let’s start with understanding the magnitude of the situation. Clearly, TSB has been hit hard. When an IT migration failed over eight weeks ago, more than half the bank’s customers were unable to transact.

Small businesses lost the ability to pay staff and suppliers, and heart-breaking stories emerged of customers losing out on life-defining purchases like wedding day payments. TSB waived £10m in fees and even more in extra interest payments to avoid hemorrhaging customers in the wake of the issues.

Until this point, the failure was clearly a case of a competency-based reputation crisis, as opposed to an issue driven by TSB’s behaviors or values. And it was especially sensitive as it affected the financial well-being of consumers. When a reputational issue hurts us either physically or financially, it tends to live much longer in the minds of the general public.

The crisis was then compounded by very slow customer service response times and the opportunity for fraudsters to exploit the situation and steal thousands of pounds of customer funds. CEO Paul Pester’s subsequent two appearances in front of the Treasury Select Committee, where his original testimony was called into question, moved the crisis into the realm of behavior as well as competency.

Real-time reputation tracking that measures consumer perceptions of TSB shows the brand in a vulnerable position. Over the preceding 30 days, brand and reputation consultancy Caliber Group reported last week that TSB’s reputation has sunk to 55 on a 0 – 100 scale.

This score places TSB at the bottom of all retail banks measured, performing as poorly as a perennial whipping boy, the Royal Bank of Scotland.

It also ranks second lowest only to BP across all major UK companies measured (see table).

Unsurprisingly, consumer behavior towards TSB has changed as a result of the crisis; the likelihood to consider, recommend, or speak positively about the brand all rates 25% or less.