With the announcement of The Federal Reserve’s investigation into Silicon Valley Bank’s collapse, we will no doubt gain a much better understanding of how banks and other financial institutions can avoid similar mistakes in the future. But as Lulu Cheng Meservey recently pointed out, the collapse of SVB is also about a communication failure. Every organization can learn something from this incident on how they can avoid similar missteps not only during crises but also in everyday communications to build a better relationship with their core audiences.
Lesson #1: Communicate to every audience
Outreach issues started with the first communications from SVB. They addressed the initial financial concerns with a press release stuffed with legal and technical jargon. While this is perfectly acceptable for discussions between lawyers and bankers, it wasn’t accessible to a larger audience. Furthermore, it never explained why the bank needed to raise money, creating a narrative blank space for customers to fill in with their worst fears.
At the same time, this raised concerns about what exactly was going on at the bank among its customers. While those customers were mainly well-educated tech industry leaders, their engineering and business knowledge didn’t necessarily translate into the specialized legal and financial expertise needed to quickly and easily digest the bank’s reasoning behind that announcement. They needed clear and concise direction on what was happening and how it would impact their deposits and ability to keep doing business with SVB. The key to avoiding misunderstandings is to develop content that can be understood and is accessible to every audience, so your intentions are plainly laid out, and there’s little risk of wrong interpretations.
Lesson #2: Fully understand how to reach your target audiences
It’s crucial to note that a press release drove this initial outreach. However, even a well-crafted response is meaningless in the wrong channel. To avoid this in the future, companies must understand where their audience communicates and how communication occurs on those specific channels.
The bank’s customers were high-powered Twitter users that reacted to each other’s sentiments and trends in a tightly-knit community. This led to a rapidly built consensus among an audience that moves faster than any group in history, thanks to social media and other chat technologies. SVB had a full day of non-responsiveness once concern started growing. That correlates to an eon in today’s hyper-connected world and wasn’t fast enough for their target audience.
Ironically, the bank’s executives were communicating a disregard to their audience via news that SVB executives sold stock prior to the initial concerns. These actions inadvertently told customers that the bank’s leaders were either not confident in its survival or were not properly prepared, which helped turn public opinion against the bank.
A good communication strategy not only focuses on the official outreach across social, earned and paid channels but also considers other factors like employee behavior. In times of crisis, communications leaders must think and plan for how every company action can have a ripple effect that causes public narratives to grow beyond their control.
Lesson #3: You can’t tell audiences how to react
Finally, SVB did not treat customer concerns with the respect they deserved. When the bank responded with a Zoom call, former CEO of Silicon Valley Bank Greg Becker reportedly said, “My ask is just to stay calm because that’s what’s important.” When communicating with an audience, especially an agitated one, it’s impossible to dictate how they should feel and behave. By trying to tell his customers what he wanted them to do and what they should prioritize, Becker appeared as if he didn’t respect his key audience or empathize with their positions and concerns.
According to reports, he also added, “[The bank has been a] longtime supporter of you, the venture capital community companies, and so the last thing we need you to do is panic.” While he meant to diffuse the situation, his approach conveyed that customers owed him a specific reaction and set of behaviors. You should never tell an audience that they owe you something and have it taken seriously.
An ideal communicator in a similar situation should instead try the following: “We know there’s a sense of panic happening and understand why you feel that way. This is how we’re going to resolve this situation in the following ways.”
One example of an ideal communicator is how Cloudflare responded to an outage last year with full transparency, clear communication for multiple audiences (including multiple languages) and a focus on their own actions and feelings versus what they were hoping for from customers.
Preparing for the future
It may be fun to rag on some obvious missteps, but there are real consequences of SVB’s collapse and the potential for further issues. This is a precarious and uncertain time, which will require responsible and empathetic communication between organizations and stakeholders.
The good news is that there are communication professionals available to help you plan accordingly and build a strategy to properly respond to audiences in a crisis situation and avoid the missteps that lead to communication crises in the first place.