Yesterday I received a very unwelcome letter from a local theater. In a page and a half of crisp copy, it dropped a bombshell: Until further notice, consider the 2009 season canceled. Worse, the money I had spent on season tickets would not be refunded.
After I recovered from the initial shock, I was able to exchange my consumer hat for my marketing cap and reflect that, given the circumstances, the theater (hereafter "The Theater Company") did a damned good job delivering damnably bad news.
I hope none of you will face a similar situation. But in this economy, hope isn't enough; we need to be prepared for the worst. Should it come, I suspect the following observations, gleaned from The Theater Company's experience, will prove helpful. You may not be able to save your business, but you can preserve your self-respect.
1. Offer your gratitude
Wisely, The Theater Company's letter opened and closed with expressions of appreciation for my years of previous support. Your message may be all business, but communicating it is personal. A genuine word of thanks creates a context of goodwill that offers the best chance for extinguishing anger before it flares up into rage.
2. Rip off the Band-Aid
The letter was dated December 30, virtually the bitter end of the previous business year. I suspect The Theater Company delayed communications in the hope that a last-minute reprieve—perhaps in the form of a sugar daddy willing to play Santa Claus—might save the day. But once it became clear that all hope was futile, The Theater Company didn't pull any punches: Employees are being laid off; the season is canceled; your ticket money will not be returned.
Ugly, to be sure. But it's better to put all the bad news out there, up front, rather than try to soften the blow by distributing it piecemeal; better to rip off the Band-Aid in one fell swoop than to pull it away slowly and extend the pain. Withholding information merely provides opportunity for rumor and fearmongering to make a bad situation worse.
3. Explain the facts—and your responses to them
We're all adults here. Respect your readers (whether customers, vendors, investors, or other constituents) by presenting the hard facts: What happened? How did it happen? Why?
More important, share your responses: What did you do to face the problem? How did you respond to trouble? What sacrifices did you make comparable to the sacrifice you're now asking of your readers?
For The Theater Company, that meant explaining the impact of a recent fire, increasing production costs, and declining ticket sales. In response, it had cut $1,000,000 in expenses, balanced the budget, considered a land sale, and pursued philanthropic requests more aggressively. Its efforts failed, but by sharing them in the letter The Theater Company assured readers that it indeed took action and has suffered its share of the pain.
4. Mitigate the damage (if possible)
I don't mean with spin or euphemism, painting a smiley face on a grisly wound. I mean offering something concrete that provides some material compensation, even if it's more a goodwill gesture than a satisfactory solution.
For The Theater Company, it meant asking readers to convert their ticket payments into a charitable contribution. By doing so, the theater gains needed funds (without concomitant debt), and participating readers get tax deductions that help them recover at least some of their money.
5. Don't offer false hope
The Theater Company made its position crystal clear: Short of a miracle, the season is over. And if I were to convert my subscription into a charitable contribution, the Theater's debt is released; should the season recover, I would have to resubscribe (i.e., repay) to get my seats back.
That's tough love, but it's still better than false hope. Honesty not only reinforces your credibility but also staves off future ill will that could be generated by your failure to fulfill new promises.
6. When you're down, hold your head high
About five years ago, a local used-book store that I loved shut its doors. Instead of exiting gracefully, however, the owner wrote a stinging letter to the local paper and blamed the city, the chamber of commerce, the paper—and even her customers (she said they spent too much at the mall, instead of at her shop)—for her business's failure. In one ill-advised gesture, she swept away all the goodwill people had for her and her store.
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Things end. I can't promise you that by following the above suggestions you'll recover from bankruptcy or resurrect your business. But you can move on with dignity. And, sometimes, when your organization faces its darkest hour, choosing dignity may be the best, last business decision you can make.