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| Photo by Michael Dawes |
(Reprinted from Six to Nine Scholar)
In the triathlon community, any controversy that arises is eventually discussed heatedly on the forums at Slowtwitch.com, the leading forum for endurance athletes. On the last weekend of October, the forums at Slowtwitch were active with a new scandal revolving around the World Triathlon Corporation (WTC), the owners of the Ironman Triathlon brand. The negative outburst from the community, and the subsequent handling of the event by the WTC reminded me of a framework for managing scandals we learned about in our Marketing courses. I’m not certain if the WTC management used the exact steps we covered at school but the way they responded to the situation certainly fit into the framework provided.
The framework for managing scandals comes from the case “Let the Response Fit the Scandal” by Alice M. Tybout and Michelle Roehm. The case provided a step-by-step guide for companies to craft a proper response to negative events that may cause damage to their brand. The framework provided had four steps:
- Assess the Incident - Is the scandal or negative event pertinent to the central attribute of the company or brand? If the negative event is tangential to the company or brand, is there a chance of a spillover effect damaging the company or brand?
- Acknowledge the Problem - If the company is likely to be impacted by the scandal, it should be swift in publicly acknowledging the problem and outlining steps it is taking to investigate and stop further damage from the scandal.
- Formulate a Strategic Response - Once a company has acknowledged the problem, it must craft a strategic response to the scandal. This includes clarifying false allegations or creating a plan to address and resolve true allegations.
- Implement Response Tactics - Once a strategic response has been prepared, the company must then work on implementing the response and communicating the plan to the consumer in a proper fashion.
With this framework in mind we’ll look at the incident that took place on October 30th at the inaugural Miami Ironman 70.3 race in Miami, FL and the WTC’s response to the triathlon community.
The World Triathlon Corporation (WTC) is a for-profit corporation, owned by Providence Equity Partners, that organizes, promotes and licenses the Ironman Triathlon, Ironman 70.3, and the 5150 series of triathlon races. The WTC is also the owner of numerous "Ironman" related trademarks used both in connection with Ironman race series' and in conjunction with various goods and services. (Wikipedia)
On October 30th the inaugural Rohto Ironman 70.3 Miami race took place in Miami, FL. The event was run by Paramount Productions, a local event management company, which had licensed the Ironman 70.3 name from the WTC. (The WTC charges $150,000 for event naming rights). Unfortunately for race participants, the event was not run properly and left many dissatisfied with the experience. Some of the reported problems at the race included overcrowded transition areas, lack of water at aid station, and a poorly planned race course that had some athletes running over the same bridge eight times. Race participants and spectators quickly flooded popular social media sites like Twitter, Facebook and Slowtwitch with their complaints about the Miami 70.3 race.
On November 2nd, the WTC responded to the complaints in a press release (Ironman.com):
WTC recognizes the many problems that athletes experienced in Ironman 70.3 Miami this past weekend. While this event is licensed to Miami-based Paramount Productions and not produced by WTC, we take your dissatisfaction seriously. In an effort to restore full confidence in the quality, safety and overall experience in this event, WTC is doing the following:
1. Effective immediately, WTC is taking over the operational planning, management and execution of this event for 2011. The event will be incorporated into our operations system and produced at the high-quality level you expect from our other races.
2. For all athletes who competed in the race on Saturday, WTC is offering a complimentary race entry into any of the 70.3 races in 2011 listed below, to include next year’s Ironman 70.3 Miami. WTC will contact those competitors on December 1 with registration instructions.
WTC and its family of races appreciates your support and looks forward to seeing you in 2011.
Using the framework presented above, we can break down the incident and review the WTC management’s response to the situation and see how it fits into the guidelines provided.
- Assess the Incident - Although the event was not run by the WTC itself, it had licensed the brand name to Paramount productions and as such it was tied directly (in the mind of their customers) to the scandal. A high level of quality is expected at all Ironman and 70.3 events around the world and the Miami 70.3 race failed to live up to this expectation.
- Acknowledge the Problem - In this day and age of social media, the negative word of mouth can spread almost instantaneously. Even before the race started reports were spreading out about the sloppy conditions at the race. By the end of the weekend many participants had taken to Twitter, Facebook and popular forums such as Slowtwitch to express their dissatisfaction with the race. The WTC had to act quickly to curb the negative feedback from the community.
- Formulate a Strategic Response - The WTC quickly mentioned that the Miami 70.3 race was not put on by its production company, but rather by Paramount Productions. In doing so they attempted to clarify the false allegations that it was a poor WTC-run event. However, they also addressed the true allegations stemming from the race itself for future participants, by immediately taking over the operational planning, management and execution of the event for 2011, assuring a high level of quality that is expected from the Ironman brand.
- Implement Response Tactics - The WTC press release detailed the strategic plan above but went one step further and extended a complimentary race entry to any other WTC 70.3 event. The WTC also indicated that they would contact the competitors on December 1st with registration instructions. In doing so the WTC ensured that their message would be received by all impacted customers. This offering also served as a gesture of goodwill to the community that was then quickly shared through the same social media that was used to spread the scandal.
For the most part the community response has been positive, with many applauding the WTC for its swift response to the Miami 70.3 scandal and its gesture of goodwill towards participants. However, one thing to consider is how this event will weigh on the minds of athletes when they go to sign up for their next Ironman or 70.3 race: are they signing up for a WTC-run event or a WTC-licensed event with an unknown production company?
All this comes on the heels of another scandal generated by the WTC itself. The week prior to this incident, the WTC rolled out a new program called Ironman Access. The program was a premiere service primarily designed to give customers priority access to future race registrations along with other small benefits. The program charged a $1,000 a year for membership. The feedback on this program was overwhelmingly negative, with many decrying the WTC for being overly greedy and out of touch with their customer base. In response to this sharp reaction from the community, the WTC ended the program one day after it started and Ben Fertic, President and CEO of WTC, issued a public apology.
Was the WTC losing touch with the everyday triathlete? Long time members of the triathlon community say the WTC began to lose touch in 2008, when it was purchased by Providence Equity Partners. Since then, the WTC has experienced massive growth that has led to an expansion of WTC-branded races and the exploration of new revenue opportunities that have not always been viewed favorably by the triathlon community. Was the WTC abusing its dominant position as the triathlon market leader?
The WTC and the Ironman brand operate in a near monopoly model in the long-distance triathlon race market. There are a few individual non-WTC races throughout the US, including a small competing Rev3Tri brand, but for the most part when people refer to an Ironman distance race, they are referring to a WTC branded event. (In fact, the term Ironman is itself a genericized trademark, similar to Kleenex). The price to compete in an Ironman event has steadily increased over the last couple of years ($550+), leaving many to harbor ill feelings towards the WTC and its perceived greedy corporate practices. Still, the majority of Ironman races continue to sell out each year, and the WTC has added more Ironman races around the world in an attempt to meet the surging demand for long-distance triathlon races.
In 2006 the WTC extended its brand into the middle-distance triathlon race market with the introduction of the Ironman 70.3 brand. The 70.3 brand refers to half Ironman races (the 70.3 being the total distance in miles covered as opposed to the 140.6 in a full Ironman). The WTC has been rapidly growing this brand through the introduction of new middle-distance races and acquisitions of competing middle-distance races.
Recently the WTC announced that they would extend their brand even further down the triathlon ladder into the Olympic distance race with the introduction of the 5150 brand (5150 being the total distance in kilometers of a standard Olympic distance race). For the rollout of this brand the WTC has primarily acquired existing races and re-branded them under the 5150 banner. The short-distance triathlon race market is much more fragmented and has more independent players than the middle and long distance market. It remains to be seen if the 5150 brand will have as much success as the Ironman 70.3 brand.
Although the World Triathlon Corporation has earned some goodwill with its handling of the Miami 70.3 scandal, it still has work to do to restore its brand image and earn back the brand loyalty it had from years past. Consumer sentiment is at an all-time low towards the WTC and many believe the brand is being spread too thin across the triathlon market, and that the WTC is abusing its position in the market and simply trying to satisfy its investors rather than its consumers. As the WTC continues to step into new distances it encounters more competitors: Rev3Tri, TriRock, Life Time Fitness and even the ITU (International Triathlon Union). Can the World Triathlon Corporation continue its aggressive expansion plan and how will consumers react to its new events in 2011 and beyond?
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