Using Negative Publicity as Negotiating Leverage

Shakedown of BMW of North America

The disclosure last May that Facebook had hired public relations firm Burson-Marstellar to initiate a smear campaign against Google’s “Social Circle” raised the hackles of many PR practitioners who labeled the tactic as unethical.  Although there’s no direct reference to the practice of using accurate information to disparage a competitor’s reputation in the PRSA’s Code of Ethics, it certainly can be classified as a bare knuckles strategy that most companies would not attempt.

A related behind-the-scenes tactic that’s more widely practiced (often by law firms on behalf of their clients) involves using the threat of negative publicity as a negotiating ploy. In many high-profile divorces, disputes involving celebrities or sports personalities, corporate mistakes or shortcomings, and misdeeds of senior executives, the direct or implied suggestion that unpleasant, embarrassing or damaging information will be disclosed to the media often serves as an effective bargaining chip.

Having witnessed the power of negative publicity, I decided to use it for personal advantage in my dealings with BMW of North America involving the lease of a 1992 318i, which over the course of less than a year had 27 different problems – including engine failure, faulty muffler system and a sideview mirror that simply fell off the car.  After multiple trips to my local BMW dealer, I felt it was time to bypass Lemon Laws and escalate the issue.

So here’s the strategy I developed:

  • I created a simple tombstone ad that read: “Looking for Reasons NOT to buy or lease a BMW 318i ? Call me. I’ve got 27 Good Ones for you.”
  • I drafted a press release entitled “Irate BMW Owner Places Ads in New York Times and Wall Street Journal After 27 Problems With 318i,” that detailed the car’s various issues.
  • I compiled a comprehensive list of automotive editors at every major publication.
  • I drafted a letter to the CEO of BMW of North America that said, in effect, “As a courtesy, I thought you would like to see the advertising and press release that’s scheduled for distribution next Wednesday.”
  • I FedExed the letter, the advertisement, the press release, and the editor list to BMW headquarters in New Jersey.

Two days later, I received a call from BMW’s head of service, who opened with, “Mr. Andrew. I understand you have a problem with your 318i?”

“In fact,” I responded, “I’ve had 27 problems with the car.”

“Have all of those 27 problems been fixed to your satisfaction?” he asked.

I countered with, “What is BMW’s slogan?”

“What do you mean?” he said.

“What’s your tag line, your advertising slogan, the phrase BMW uses to distinguish itself from other cars? “ I said.

He said nothing.

“Doesn’t BMW claim to be The Ultimate Driving Machine?” I asked.

His tone of voice changed. “What do you want from BMW, Mr. Andrew?”

“I want a new car.” I said.

He laughed. I didn’t.

“Here’s the deal” I said. “You give me a new car, or I place the ads and distribute the press release on Wednesday. It’s your call.”

After a very long pause, he asked, “Can you give me more time than that?”

I said, “You have until Friday. Thanks for your call.” And hung up the phone.

On Thursday, I received a call from my local BMW dealership, asking me to bring my car in as soon as possible for “an inspection.” When I arrived at the dealership the next morning, I noticed that all of the parts & service staff were wearing ties. I asked the service manager (who was also wearing a blazer with a BMW logo on the pocket) why everyone was dressed so formally. He pulled me aside, and whispered, “Mr. Andrew, I’ve worked at this dealership for 7 years, and no one from BMW of North America has ever been here for any reason. Today the head of service for all of BMW will be here, and he’s coming to look at YOUR car.”

Bingo!

Here’s what BMW offered me: If I paid for taxes and registration, they would swap the 1992 4-cylinder 318i clunker for a brand new 1993 6-cylinder 325i.  I took the deal, and never had a single problem with the 325i while I owned the car.

The lesson in this for people looking to use negative publicity as negotiating leverage, is that you must:

  1. Possess truthful information that’s likely to cause tangible reputational / brand damage
  2. Convince the other party that you have the ability to disseminate that information credibly
  3. Demonstrate that you either have nothing to lose, that you have a few screws loose, or both

The lesson in this for BMW of North America is that by dealing with me fairly, they created a lifelong customer. I believe BMW does live up to its Ultimate Driving Machine claim, and I currently drive a 2011 328xi for that reason. But the assumption BMW should have made in its negotiations with me is that there was no way a guy who was too cheap to drive one of their 7 series cars would have made good on a threat to place ads in the NYTimes or WSJournal.  I was bluffing, but with negative publicity as a card I might be holding, I won the hand.

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