How can Robinhood rehab its brand image after the GameStop controversy?
Robinhood is facing a PR nightmare after the recent GameStop rally. Will the firm be able to recover its brand reputation?
The finance world is currently embroiled in a turmoil whirlwind with the GameStop stock rising exponentially after a group of day traders on Reddit bought incredible amounts of shares.
Robinhood, an app that promises its customers easy, accessible trading, has been caught up in the crisis. Most day traders were using the app to buy GME stocks and last Thursday, Robinhood suddenly and controversially moved to halt trading in certain shares, specifically GameStop’s and other volatile companies’ shares.
The result has been described as a ‘PR nightmare’ for Robinhood's brand
Robinhood published a blog post on Friday that elucidated its position, stating it had no other choice in the matter. The company explains that clearinghouses can raise their deposit requirements based on a company’s customer holdings and stocks’ volatility, which also explains why Robinhood raised another billion this week.
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Robinhood used to have a reputation for protecting the ‘little guys’
The firm’s mission statement says:
“At Robinhood, we believe the financial system should be built to work for everyone. That’s why we create products that let you start investing at your own pace, on your own terms.”
Recent events, however, have completely destroyed the company’s brand image and equity that it has heavily invested in over the past few years.
"Strong financial services products and brands are built on trust and objectivity," says Matt Rizzetta, Chairman of North Sixth Group, the parent company of PR firm N6A, "The instant these values are breached it can turn into a crisis that is impossible to recover from."
So, how can Robinhood rehabilitate its brand’s image?
According to Tim Derdenger, an Associate Professor of Marketing and Strategy at Carnegie Mellon University's Tepper School of Business, the company should “educate their clients or their future clients about why they took the actions that they did.”
He continues on to say Robinhood needs to communicate to users that “we’re still on your side.”
Andy Gilman, President and CEO of CommCore Consulting, says the company must be proactive and should hire a team of crisis communications experts to develop an orchestrated communications strategy.
Erich Joachimsthaler, Founder and CEO of the brand strategy firm Vivaldi Group, says the company must continue to act fast, as it did by raising money overnight to be able to at least offer limited trading.
"If you lose trust, love, and respect, then you lose the business," he said. "Many of its competitors also offer zero-fee trading now, and they are a safer choice."
Coming back from a PR crisis of this scale isn’t impossible – Facebook and Uber have both been through PR nightmares and are still leaders in their fields – however, a very careful strategy must be employed to ensure the company survives.