Domino’s loses 10% of its value in one week

Social Media Case Studies,Social Media Risk 15 March 2010 | 1 Comment

Overview

As a prank, two Domino’s employees engaged in several health department violations, re- corded their activities and posted them to YouTube. The videos quickly “went viral” and consumers all over the web were exposed to Domino’s employees doing a variety of unseemly things to their pizza.

Response

Domino’s, in an effort to not draw attention to the video, waited days to respond, and did not bring on additional resources to help. Eventually they started a Twitter account and published an apology video on YouTube, but the damage was already done. Domino’s eventually was able to get the videos removed from YouTube, but did not realize that a majority of the dialogue related to the story was actually happening on Twitter.

Outcome

-Domino’s stock price dropped 10% over the week costing shareholders millions.

- With 65% of respondents in a follow up study indicating that they were less likely to order from Domino’s after the release of the video, Domino’s sales suffered.

- Additionally, follow up investigations revealed that the store owner was a sex offender, and this news ex- tended the story’s life even further.

Key Takeaways

-QUICK RESPONSE IS CRUCIAL: Diffusing the situation early can keep it from getting out of control and into mainstream media.

-ADDRESS ALL AVAILABLE CHANNELS: Don’t assume that because the situation is happening due to an action on one network, that it isn’t being discussed elsewhere. It most likely is.

-HAVE AN EMPLOYEE POLICY ON SOCIAL MEDIA: This is a tough issue to address with employees, but having a the right policy in place can help prevent actions like these before they happen.

Research for this post came from Wall Street Journal

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One Response on “Domino’s loses 10% of its value in one week”

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