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Fascinating analysis at in a story entitled “2002: The Year Of The Apology,” exploring the circumstances under which corporate management should apologize to its customers.

Safeway, which recently apologized to customers of its Genuardi’s division in Pennsylvania because it made changes to its stores that damaged both sales and public goodwill, is a prime case study in the piece.

Of course, it wasn’t just Safeway that’s been on bended knee to customers and/or shareholders. A broad number of companies, ranging from McDonald’s to Citigroup, had to issue apologies to various constituencies this year.

Knowledge@Wharton asks the important questions: How effective are apologies? What do they really say to the customer? When are they most effective? And when can they backfire?

The risk is that an apology can reinforce negative feelings about a company, though in the Safeway situation, according to the article, the effort clearly was to break a downward spiral that was threatening the credibility of the company.

Key to making an apology work, according to the article, is the willingness to take responsibility for actions and inactions…and then go to work in a focused, relentless way to fix the problems.
KC's View:
Excellent piece, thoughtful and well reasoned. (Of course, it’s from Wharton…so who would expect any less?)

We think that in addition to being willing to take responsibility, it’s probably also important that the apologist be sincere, and not just making a public relations move.

Nobody knows yet how the Safeway apology will work out, whether it will lure customers back into Genuardi’s stores. We think that the result will have a lot to do with how sincere the apology is, and whether the company really is active in trying to correct its mistakes.

For our money, we think that being straight with customers is always the best policy. It’s certainly what we’ve tried to do here on MNB, even when there have been technical missteps and miscalculations. Granted, we’re in a different business than retailers, but generally speaking, we think most retailers would be better off they thought of the shopper-shopkeeper relationship as a kind of community.

Speaking of apologies, by the way, you may want to check out our last story this morning…