Crisis Management

5 Steps to CPG PR Crisis Planning

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For most CPG brands, it’s not a matter of IF there will be a PR crisis, it’s a matter of when, particularly if you’re in an emerging industry where the regulations are ever-changing, the research is emerging, and the deals are getting bigger. This is a perfect storm for a public relations crisis.

Most of the time CPG companies come to us because they want to share their story, appear in the press, create noteworthy and press-worthy activations and add value to their brand, all perfectly delightful reasons to hire a PR firm. It’s the fun side of PR work.


Why Plan for a PR Crisis When One Hasn’t Happened? 

According to Plos|One research, true rumors are confirmed within around 2 hours, but it takes over 14 hours for the average false rumor to be debunked. 


But the fact is, some of the most important work a PR firm can do for you is crisis planning. We recently had an entrepreneur refuse crisis planning because they “didn’t want to even think about it.” That was a major red flag for us because it’s an outright refusal to protect the brand and create a plan in which we can perform our best services in the case of a crisis; we decided the potential client wasn’t a good fit team Avaans PR and opted not to pursue the relationship. PR crisis planning is not sexy. It’s not fun. But it is important to your brand’s value and most importantly, it will help you sleep at night.

The time to manage a crisis is BEFORE it happens, you can’t expect your team to be prepared in a moment of panic. At the bare minimum, cannabis brands should put together a PR crisis plan. Exact strategies for your plan and the triggers to implement may vary, but in the world of rapid-fire news, cancel culture, and social media, having a plan is the most important step.

Step 1: IDENTIFY YOUR PR CRISIS TEAM

Depending on your brand, your cannabis PR crisis team may at the very least include:

  • Chief Executive Officer
  • Chief Marketing or Communications Officer
  • Brand Spokesperson
  • Public Relations Agency and Investor Relations Agency

Depending on the nature of the crisis

  • Law Firm
  • Human Relations
  • Product Formulation
  • Social Media Specialist
  • Customer Service

If that list seems long, that indicates how complicated a PR crisis can be. Not all  these people will be part of every single crisis. But it’s important for every one of these people to understand their role and stick to their role during a crisis. Each of these people represents different points of contact for various stakeholders. They should also have a seat at the table during the second step.

STEP 2: IDENTIFY POTENTIAL CANNABIS PR CRISIS COMMUNICATION SCENARIOS

Some CPG PR crisis scenarios are unique to CPG, others are not. But your key crisis team members need to be involved with the identification of crisis from the start. An important thing to remember is that a crisis can happen just because someone said it did, not because it ACTUALLY happened. We see this happen on social media frequently. For example, if someone accuses your company of fraud and makes the lawsuit public, whether you committed the alleged acts might be irrelevant; if the information is in the press, you may still need to defend yourself against it.  Another unforeseen example of this is the Tide Pod Challenge. When thousands of social media posts started popping up encouraging young people to eat Tide Pods, even though Tide has nothing to do with the challenge, Tide had to respond both in the immediate and long term, and researchers said the entire incident may have helped their brand image because their response was so swift and extensive. 

On the other hand, you should also determine what the trigger points are for responding to a crisis. Some crises’ need an immediate response from a company, some are better left communicated to a small audience and in other cases, in this fast-moving media world, it might be best not to execute a response at all. There is no “one size fits all,” for your response. The old adage of “get out in front of it,” still applies, in specific circumstances, but other situations require a more nuanced strategy.

A crisis that include consideration might be:

  • Injury to staff or public as a result of your product, processes, or location
  • A quality control issue, defect, or product recall
  • A natural diaster that effects your business, such as an earthquake, hurricane or flood
  • Legal action or public claims about an employee, client or customer
  • Emerging research or regulatory investigations that affect your product, your clients or the industry
  • Executive Leadership change

STEP 3: IDENTIFY STAKEHOLDERS AND AUDIENCES

Each CPG PR crisis may have multiple stakeholders who should be notified of a situation; in most cases, there will be multiple stakeholders. Your responses to each audience should be consistent but may vary in technicality, point of view, or details.

  • Employees
  • Customers
  • Dispensaries
  • Partners
  • Investors
  • Government Regulators
  • Industry Media
  • National Media
  • Local Media

STEP 4: DETERMINE COMMUNICATION FORMATS

Again, strategies will vary depending on the PR crisis, but you should determine in advance HOW you will communicate your message. For example, will you address to the media or will you issue a press release? Will you comment on social media or will you make a video? Is this a matter that needs to be released to investors and if so, what is the timeline? Press conferences are rare in the CPG industry, but there may be a circumstance where this would be an effective tool.

STEP 5: IDENTIFY WHERE IMPORTANT INFORMATION IS HELD

Your key crisis communication team should have access to important contact information for each other, including emergency contacts and follow-up contacts. Your PR firm should have at the ready multiple pieces of information which will be needed in the case of a crisis. Having information on hand can sometimes be the difference between undesirable media coverage and squashing the coverage altogether.

LISTEN UP: THE ONGOING STEP

In the day-to-day of running a CPG brand, it’s easy to miss the signals. Be sure someone from your PR team is keeping an eye on industry trends and evaluating how they might impact your overall reputation and any crisis plans in place.  Having your finger on the pulse of these waves can help you navigate changing consumer, political, and investor perceptions more adeptly. From social media listing to media monitoring, when it comes time to decide about response triggers, you’ll have more insight into what kind of response will be well received.

There’s no single solution to CPG PR crisis planning. Your plan will be distinctive to your company culture, values, leadership, and risks. But should a crisis hit, you’ll be grateful for the plan that gives you a path for decision making.

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Preparing for a Cannabis Product Recall

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Is your cannabis brand prepared for a product recall? No one likes to talk about it, but it’s probably not a question of IF, but when. Anyone who has been around consumer products for any period can tell you: product recalls are a fact of life. But for cannabis brands, product recalls are intense because of the regulatory environment and the cost of operating as a cannabis brand. We recently handled crisis communications during a cannabis brand recall. It honored us to be chosen, but it’s never fun to see the immeasurable stress a recall puts on a brand.

Because the cannabis industry is new and highly regulated, and in some locations, a medicinal-only product, cannabis recalls ARE news. A cannabis recall will get local and potentially national media coverage. So, how should cannabis companies prepare for the inevitable recall? In short, these 3 steps will help you tremendously: learn, lean, communicate.

 

Learn the Product Recall Process From Your State Cannabis Regulatory Body

Because the cannabis industry is new, so are the regulatory bodies that oversee them. Keep in mind your cannabis regulation division may not even have staff members who have started a recall. Get ahead of it.

Ask your regulatory body what their process is for recall. Who will be your contact during a call? What will they need and expect from you? How and when will they inform you? What steps will they take to inform the public? What triggers a recall? Who will be audited in a recall (the brand, the testing facility, the retailer)?

Knowing the answers to these questions will help you prepare internally. Plus, having an open and engaging relationship with the regulatory body will ease communications during the recall itself.

Lean into Industry Relationships

Ask your retail partners what their internal product recall processes are. The more you know about how they handle and store products, how they prepare their budtenders for product recalls, the better off you’ll be. Find out if you can collaborate with them on budtender communication and customer notification. Be transparent with your retailers about your process too. You should do the same for any other 3rd party in the supply chain: labs and distributors as well. If your product includes any 3rd party ingredients, then communicate with them too. Tell them who they can contact about questions if they’re doing internal planning.

Create a Crisis Communication Plan

Based on how a cannabis recall happens, preparing your internal steps is critical because you can either take the lead or be pummeled. At the very least, define the first 3 external communication steps your brand will take the moment it knows of a potential or actual recall. You should have a single spokesperson identified, while your supporting cast should know their roles and how you will handle the situation internally.

Create plans for at least two scenarios: one for if your processes and/or procedures are at fault, and one plan for if your processes and procedures are not in question.

At the minimum, you should have a statement to your retailers drafted already, as well as a social media post, an email to customers, and a statement for your website. Your spokesperson should undergo crisis communication training, in front of a camera. You can also have a shortlist of local and industry media outlets you will proactively reach out to during the recall to provide a media statement. Be prepared to be nimble during your crisis process and consider what you might do if there is very little coverage vs. a lot of coverage. Review this plan annually, and make sure everyone knows their role during a cannabis product recall.

 

No one likes to talk about cannabis product recalls. It sends a shiver down everyone’s back. But preparing for a recall helps take the sting out it. Contact us, we’re experts in cannabis PR firm if you need help creating a plan for a cannabis product recall.

Download our special report: Preparing for a Cannabis Recall

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How Much Does a PR Agency Cost?

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Maybe you’ve never hired a PR firm before, or maybe it’s been a while and you’re just unsure of what a PR agency costs. Either way, you’re asking yourself, “how much will a PR firm cost me?” Since PR usually falls within the marketing budget, let’s start there.

To grow your position in the marketplace, a good marketing allocation is about 15% of revenue. In 2022, the average marketing budget for B2C brands was 13.7% of revenue, and for B2B brands, it was about 10% of revenue.

So if you’re an average company, and you’re looking to maintain your position, you’re probably spending in the range of 10% of revenue.

If you’re looking to dominate, your budget should be higher. Ambitious startups typically allocate between 12-17%. A typical breakdown might be that 1/3 of the budget is advertising, 1/3 of the budget is content, and 1/3 of the budget is PR. Large international agency budgets can be $380,000 or more annually, while a mid-range agency budget typically clocks in at $156,000-$180,000 annually and a smaller agency budget would be $120,000 per year, a mid-range freelancer could be anywhere from $36,000-$100,000 a year. If you’re a CPG or DTC brand with a marketing spend of under $100,000, then you might consider consumer product PR sprints, which feature micro contracts that align with key buying seasons. Hiring a PR agency is an investment, but considering PR converts ten to 50% better than advertising, PR is indeed a place where the ROI pays off.

 

So what goes into a PR agency’s fees?

 

According to Muck Rack’s 2021 State of PR report, the number one cost to a company to PR is the agency, which makes sense because, unlike programmatic ad spending (a typical minimum is programmatic spend is $25,000/month), PR agencies rarely have a minimum spend or activation fee requirements outside their retainers.

PR agency rates increased, and in 2020, the average PR agency CEO billed $417 per hour, while VPs clocked in at $319 per hour and Account Managers billed $256 per hour. The average blended rate was $240 per hour. It’s safe to say that if your PR team has executive PR experience, and your agency spends an average of 10 person-hours per week on your account, your monthly retainer will be around $13,226 per month.

If you require more executive hours, your fees could go up. If you work mostly with a junior team, your rates could go down. Oftentimes, fees are different depending on your strategic objectives. For example, if you want to keep a firm on retainer for a few calls a month, and no proactive media outreach, your annual fees may be considerably less. If you are trying to secure investment or you’re pre IPO, you may find your fees are on the higher end of an agency’s fee structure.

It’s a balance to strike your budget with your goals, but when asked, I always give the same advice to CMO’s and startup founders. In 2020, 45% of companies increased their PR budget. If your budget is $400,000 or more per year, hire an agency that does $20 million+ in revenue. If your budget is $180,000 per year, hire a boutique PR firm, with less than $10 million in revenue. If your budget is $60,000 per year, don’t hire an agency, hire a freelancer.

Odwyer PR’s annual report shows rates increased considerably between 2019 and 2020, so if your agency didn’t raise its rates, you’re fortunate.

Agencies are notoriously reluctant to share minimum retainers, but in 2013, several agency executives did just that with PR Observer, an industry publication.

“To properly scope a client program and assign the proper team support, we feel $15,000 – $17,500 per month is a reasonable starting point.”—Anne Green, President & CEO, CooperKatz & Company, Inc.

“Our retainers range from $7,500 – $50,000 or so. Crisis costs are different and generally charged by the hour with a $20,000 minimum.”—Ronn Torossian, Founder & President, 5WPR

“We have some clients that pay us $100,000 or so per year, some clients that pay us more than $100,000 per week, and many clients that pay us $100,000 or so per month.”— Mark Hass, President & CEO, Edelman United States

“Our clients generally pay between $15,000-$30,000 a month depending on the workload.”—Stu Loeser, Founder & President, Stu Loeser & Co.
So what’s typically included in a bespoke retainer rate? Well, again, that may depend on each agency’s specialty. For example, if your agency specialized in digital communications, you may find that social media content creation is included, but media relations are not. But the following services are a good rule of thumb to expect within our typical PR agency retainer:
  • Strategies about how to stand out from your competitors using PR
  • Internal and external communication strategies that match your growth goals.
  • Campaign development and creative activations for marketing opportunities.
  • Media relations, and securing regular media coverage, speaking engagements.
  • KPI and business impact reporting.
  • Copywriting such as press releases, speeches, white papers, and branded journalism.
  • PR crisis planning – but not necessarily crisis management.
  • Partnership strategy and potentially management such as cause, social impact, or purpose-driven PR initiatives.
  • Executive training, including media training, interview prep, and research or executive ghostwriting.
  • Content strategy for video, social media, and inbound leads.
  • Content creation oversight, including social media, photography sessions, and video development.
  • Poll or research development, implementing the poll may or may not be within the agency’s retainer.
  • Peer agency coordination, such as with branding or advertising agencies.
  • PR campaigns that “make the news,” are designed to create word-of-mouth or media opportunities.

For a complete list of what we would include in your PR retainer, reach out to us and tell us more about your business and your goals.

Hiring a PR agency is an investment, but considering PR converts ten to 50% better than advertising, PR is indeed a place where the ROI pays off.

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Cannabis Crisis – How Communication is Different

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Creating appropriate crisis communications strategies is necessary for any business, but this is especially true for a cannabis crisis. Whether it’s a recall, or a significant event hits the industry, cannabis companies must change how they handle potential problems that could challenge their success. This is especially true for CPG companies like cannabis brands who also have the additional risk of a cannabis recall.

 

The unexpected can happen at any moment. For example, the COVID-19 outbreak limited business operations and disrupted consumer spending habits. Airlines canceled flights, and hotels stopped accepting reservations. Everyone went into lockdown, and it affected companies in every job industry.

 

You need to have a solid plan in place before you face a cannabis crisis that can significantly affect the cannabis industry. Adequate preparation could prevent a decline in profitability while you’re dealing with a new normal. You must develop necessary communications to address scenarios you could encounter. Circumstances constantly change, and it’s crucial to be ready for anything.

 

You might need to establish multiple communications channels. You should create a hub and assign specific people to lead each group. Allow your chosen leaders to review and approve statements and consistently provide updates to executives.

 

Each staff member within the groups should have scripts they use to answer external and internal inquiries. They should also have a list of updated contacts, so they have access to people they need to communicate with.

In a Crisis: Prioritize Safety

 

Consumers want to know they’re safe whenever a crisis hits. During the coronavirus pandemic, companies put safety measures in place to protect their employees and customers from unnecessary exposure. When you run a cannabis business, you should ensure everyone’s safety at all times. Anyone walking into your store or buying your product needs to know they’re in an environment that won’t make them sick.

Your communications should address safety concerns. Anyone overseeing an internal employee should work with HR and legal teams to develop policies regarding sick leave, working shifts, office health, and telecommuting options during a crisis. You should also create a plan to approach conversations between managers and employees, so information flows seamlessly throughout the company.

Instruct groups handling communication with consumers to advise the protocols you follow regarding cleaning and health. Your customers should be aware of the maximum capacity in your stores and how your workers handle cannabis deliveries without putting others at risk.

Your website is essential for communicating with the public during a crisis. Update your page frequently to inform others of your company’s policies. Advise them of the steps you’re taking to address current issues and prevent further problems from arising.

Your customers should know you take their health and safety seriously during this challenging time. You’re not willing to place them in harm’s way when there’s a crisis. All the safety precautions you take are meant to protect you, your employees, and the public.

The team you designate to handle regulatory affairs will play a valuable role in your company. They can liaise with federal and state health officials to keep your business up to date on evolving safety protocols. The team should communicate regularly with officials and share accurate and detailed information with management and staff. They should also notify officials of what your company is doing to comply with the required regulations.

 

Impact of Cannabis as an Essential Business

Many states see the cannabis industry as essential. Instead of shutting down with other businesses when there’s a crisis, these companies can remain open. However, acquiring and maintaining the status of an essential business isn’t a guarantee for success. You must have a plan to respond to the local government’s regulatory agendas and address their concerns if you want to continue operating.

You can plan how you’ll communicate the essential nature of your product by discussing the medical needs of cannabis. Lobby for an essential status designation from the leaders in your area. Taking action now could prevent a crisis from negatively affecting your company in the future.

Employees in your PR and marketing groups can explain the medical and social benefits of cannabis to a large audience. They can show the public the importance of the cannabis industry and how it can help people navigate a crippling crisis, such as the Covid-19 pandemic.

Your media team can also inform reporters of your company’s philanthropic efforts. Some businesses donated hand sanitizer to healthcare workers to keep them safe and prevent the further spread of the virus. Journalists and news outlets can get the word out about your industry’s dedication to the well-being of residents within the community.

 

Don’t Forget About Your Investors

You must maintain frequent and ongoing crisis communications with anyone with financial interests in your company, such as investors and suppliers. Instruct your team to communicate with your suppliers regarding retail challenges and inventory shortages they might face. Try to come up with solutions to the problem before they happen, so you protect your retailer’s and supplier’s bottom lines.

 

Any investors you formed a relationship with should be aware of the steps you’re taking to resume normal business operations. Your team must identify essential business functions, such as supply chain services and critical jobs, that are necessary to continued operations with limited disruptions.

Your spokespeople must warn investors of potential disruptions to operating procedures. Your investors should also know about your plans for an emergency and how you’re going to recover once the crisis is over.

Streamlining your crisis communications strategy means you can successfully navigate any crisis you face. Review statements you make before releasing them to determine whether they reflect your company culture and the impact you have on your customers. The cannabis industry can overcome complex obstacles and thrive with strategic and effective communication plans.

 

Contact Us

 

Avaans Media is a top cannabis PR agency you can depend on to effectively manage your company’s brand and implement the appropriate strategies to gain new customers and grow your business.

Since 2008, our PR team has provided comprehensive services to clients in various industries. The cannabis business is unique but expanding rapidly. You need to keep up with your competitors, so they don’t leave you behind. Our team can spearhead your campaigns to improve your credibility and reputation within the market.

 

Contact us right now if you’re interested in discussing your needs with a trusted and knowledgeable PR firm with years of experience.

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