As the iPhone 4 antenna problem is slowly spiraling out of control (some people even start discussing a recall) I thought it would be a good time to review a few key points how to react to (serious) product problems as a company. I learned my share back in the AbeBooks days when we had a period of frequent down times that we didn’t manage that well. From my experience, there are 3 simple rules for dealing with serious product problems:

• Be honest and open: denying the problem usually doesn’t work and only destroys your credibility as a brand. Corporate speak also isn’t effective. Just be completely honest with your customers and share as much information as you can: what happened, why it happened and what you are doing to fix it
• Over-communicate with your customers: a disgruntled customer gets even angrier when he does not get timely updates about the problem so start communicating with your customers right away and provide frequent updates. If you don’t know yet what the problem is and when it will be fixed (e.g. in the case of a downtime where you still looking for the root cause), say so which is still better that not informing your customers at all.
• Take the short-term financial hit: a recall of a product or crediting customers for service interruptions can cost a lot of money but if you are interested in building a great brand for the long-term, you must take the short-term financial hit. Your customers will reward you many times over with increased loyalty and positive word of mouth.

I don’t know if this antenna problem is serious enough for a recall of the iPhone 4 but I do know that Apple is currently destroying quite a bit of its incredible brand equity by being the (negative) headline story of many newspapers and blogs.

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